Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: joe who wrote (70181)	10/8/1998 4:32:00 AM
From: Dorine Essey	Respond to of 176387

By Jeffrey Hodgson TORONTO, Oct 7 (Reuters) - After years as one of Canada's stock market darlings, Newcourt Credit Group Inc. <NCT.TO> has this week found itself on the defensive, hammered by negative rumors and concerns about its access to capital. North America's second-largest commercial finance company saw its stock crumble to a 16-month low over the past week, with the share price less than half of what it was in July. Newcourt has recovered slightly in recent sessions as company executives rushed to assure analysts that its fundamentals are solid and the rumors false. But many investors remain wary of Newcourt after such a stunning fall. "It sets off the alarm bells of course and people are very, very reluctant then to decide 'well, will I stick with it or is there something going on that none of us know?'," said Fred Ketchen, director of equity trading with ScotiaMcLeod Inc. Toronto-based Newcourt has seen its sharpest decline in the past week, falling by more than 20 percent during one session as a host of rumors swirled. One said Newcourt had lost a major vending agreement with Lucent <LU.N> Technologies Inc. while another said CEO Steven Hudson was set to leave. "I understand that there were one or two shorts who were feeding in sort of a rumor a day, even the rumor of Hudson being fired," said CIBC Wood Gundy Securities Inc. analyst Mark Maxwell. The negative talk compounded what had been a steady decline by the former stock market high-flier. Analysts said even before the rumors, Newcourt, along with most other financial companies, was being hurt by concerns about a potential credit squeeze. Access to capital is the lifeblood of Newcourt, which generates revenues through a wide and elaborate range of financing transactions. Among them are agreements with Lucent and Dell Computer Corp. <DELL.O> to help their customers finance purchases. The company is involved various branches of asset-backed financing, and in June announced a major railcar leasing venture. Newcourt also gained major clout when it bought AT&T Capital last year for $1.61 billion, making it the second biggest non-bank financing company in North American after General Electric <GE.N> Co.'s GE Capital unit. In its latest deal, Newcourt said on Wednesday it would team up with Intel Corp. <INTC.O> to create Intel Financial Services. The joint venture will finance purchases of Intel equipment and Newcourt officials said it could result in "tens of millions" of dollars of financing in its first year. An inability to access capital would strike a severe blow to a highly leverage company like Newcourt. But both debt and equity analysts said the pessimism was overdone. "We have concerns right now with the liquidity issues for the whole finance company sector. But they don't relate specifically to Newcourt. I think Newcourt is probably one of the stronger players," said Brian Quinn, a Chicago-based Duff & Phelps Credit Rating Co. Quinn and other analysts said unlike its weaker competitors, Newcourt has has access to financing from a diverse array of sources in several countries. Given its more solid footing, several equity analysts have issued positive comments on Newcourt in recent days. At the same time, many have also lowered their target price on the stock to reflect a more pessimistic market. CIBC Wood Gundy's Maxwell, who has Newcourt rated as a "strong buy", said he has lowered his one-year price target to C$57 from C$95 to reflect poorer sentiment. With the sharp tumble in Newcourt's share price and the absence of solid negative news, some market watchers think it may be time to move back into the stock. "At this price, I would have to think that I might be inclined to start picking away at the stock because I think it's probably pretty reasonable value in here," said ScotiaMcLeod's Ketchen. Newcourt shares closed up C$0.50 to C$33.60 in Toronto Stock Exchange trading of more than 730,000 shares. In New York, Newcourt rose 13/16 to 22 with 553,200 shares changing hands. ($1=$1.52 Canadian) 941-8105, toronto.newsroom@reuters.com)) REUTERS Rtr 21:30 10-07-98 Copyright 1998, Reuters News Service ©