Company Report: VeriSign Dips, Network Solutions Zips as They Unite

VeriSign (VRSN Quote) shed 47 7/16, or 19.2%, to 200 after it agreed to acquire Network Solutions (NSOL Quote) in a stock deal valued at roughly $21 billion. Network Solutions popped 46 25/32, or 13%, to 407 13/32, trading as high as 437 1/8 intraday. According to the terms, VeriSign said it would issue 2.15 shares for each share of Network Solution, which values Network Solutions at $532 a share.

The acquisition will be completed in the third quarter of fiscal 2000. Jim Rutt will stay on as Network Solutions CEO and report to VeriSign President and CEO Stratton Sclavos.

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Investors took the entire household products sector out for an early spring cleaning after Procter & Gamble (PG Quote) released an earnings warning. Analyst downgrades quickly followed. Not that any of the red stood out in today's tumbling market, but the Morgan Stanley Consumer Index slid 5.3%. See below for more details.

Mergers, acquisitions and joint ventures

Dutch supermarket chain Ahold (AHO Quote) inched up 1/16 to 22 15/16 after it agreed to purchase U.S. Foodservice (UFS Quote) in a deal valued at $3.6 billion. U.S. Foodservice gained 3/4, or 13.3%, to 6 3/8. According to the deal's terms, Ahold would pay $26 a share for Foodservice and take on $925 million of its debt. Ahold is forecasting a 17% to 20% increase in its fiscal 2000 EPS, including the effect of the acquisition.

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eBay(EBAY Quote) rose 1 1/4 to 162 13/16 after it said it made an investment in closely held Autotrader.com and would develop an online auction for used cars.

Entrust(ENTU Quote) popped 23 7/16, or 23.7%, to 122 3/8 after it announced an e-business alliance with Ariba (ARBA Quote). Ariba added 7 1/2 to 324 1/2.

Separately, E*Trade selected Ariba's software for its supply chain system. E*Trade slid 1 11/16, or 6.4%, to 24 7/8.

Hitachi said that it set standards with Lucent (LU Quote) and France-based Alcatel (ALA Quote) for fiber-optic transceivers to make future products and devices compatible. Lucent dropped 4 23/32, or 5.9%, to 69 9/32.

Nortel Networks (NT Quote) dropped 6 5/16 to 122 5/8 after it struck a $60 million sale for its urban fiber-optic network technology to FiberNet Telecom (FTGX Quote). FiberNet gained 1, or 5.2%, to 20 3/8.

SAP(SAP Quote) inched up 3/8 to 81 15/16 and BackWeb Technologies(BWEB Quote) bounced 2 to 45 3/4 after the companies said that they have agreed to a pact that calls for SAP to use BackWeb's Polite push technology on its e-commerce Web site, mySAP.com. According to the companies, the Polite push product allows companies to deliver multimedia packages without interfering with customers' access.

Charles Schwab (SCH Quote) and Barclays said they have entered a joint venture to set up an automated foreign exchange. The companies said they expect the facility to be up and running by the fourth quarter of fiscal 2000. Schwab lost 1 3/8 to 46 5/16.

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Earnings/revenue reports and previews

(Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified. New highs and lows on a closing basis unless otherwise specified.)

Procter & Gamble warned investors that it would post third-quarter earnings 10% to 11% below the year-ago 72-cent report. The company blamed their earnings shortfall, which will be greater than earlier estimates of a 7%-to-9% decline, on the higher costs and the delayed approval of its osteoporosis drug Actonel. The 13-analyst estimate sees Procter & Gamble reporting third-quarter earnings of 78 cents a share. The stock plummeted 26 7/16, or 30.2%, to 61.

Donaldson Lufkin & Jenrette sliced its rating on Procter & Gamble to market performance from top pick, while Merrill Lynch analyst Heather Hay downgraded the stock to neutral from accumulate. J.P. Morgan also lowered its rating to long-term buy from buy.

Following Procter & Gamble's earnings warning, Kimberly-Clark (KMB Quote) said it was comfortable with first-quarter and full-year earnings estimates. Colgate-Palmolive (CL Quote) said the company got off to a strong start this year and is confident that earnings growth would meet expectations for the full-year and current fiscal quarter. Merrill Lynch sliced its rating on Colgate from neutral to accumulate. Colgate dropped 6 1/16, or 11.5%, to 46 3/4.

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Baxter International (BAX Quote) dropped 2 9/16 to 51 13/16 despite saying it is comfortable with earnings estimates for 2000 in the range of $3.02 to $3.06 a share excluding the pending spinoff of its cardiovascular unit, Edwards Lifesciences.

Conseco (CNC Quote) slipped 9/16 to 12 11/16 after it said it is comfortable with its first-quarter and fiscal 2000 estimates.

CVS(CVS Quote) fell about 2, or 9.4%, to 28 after it said February same-store sales increased 7.3%.

Dow Jones (DJ Quote) popped 3 7/16, or 5.3%, to 67 7/8 after it said it expects to report first-quarter earnings of at least 80 cents a share, well above the seven-analyst estimate of 57 cents. The company said its latest estimate was based on current advertising linage figures for its publications and the continuation of strong trends during March.

Healthsouth(HRC Quote) slipped 5/8, or 11%, to 5 1/16, after posted fourth-quarter earnings of 16 cents a share, in line with the 12-analyst estimate but down from the year-ago 27 cents.

Verio (VRIO Quote) gained 2 7/16 to 62 5/8 after CFO Peter Fritzinger said he sees year-over-year revenue growth increasing to 60% in 2000, up from 40 % in 1999.

Offerings and stock actions

Morgan Stanley Dean Witter priced 4.35 million ADRs of Crayfish (CRFH Quote) last night at $24.50, above the estimated $22 to $24 range. Each ADR represents the right to 1/5000 of a share. Shares did not begin trading today due to Japanese regulations, Morgan Stanley said.

Net2000 (NTKK Quote) jumped 15 1/16, or 75.3%, to 35 1/16 in its trading debut. Lead underwriter Goldman Sachs priced 10 million shares at $20 each, the top of the expected $18 to $20 range.

Waddell & Reed(WDR Quote) inched up 1/8 to 31 1/4 set a 3-for-2 stock split.

Vitria Technology(VITR Quote) gained 2 7/8 to 171 after it set a 2-for-1 stock spilt.

Analyst actions

J.P. Morgan initiated coverage of Ball (BLL Quote) with a buy rating. Ball declined 1/4 to 26 13/16.

Warburg Dillon Read upgraded oil and gas exploration company Burlington Resources (BR Quote) to strong buy from hold. Burlington Resources added 1 1/2, or 5.3%, to 29 11/6.

Bear Stearns analyst Scott Ehrens initiated coverage of Buy.com (BUYX Quote) with a buy rating. Buy.com lifted 1 5/16, or 9%, to 15 13/16.

Prudential Securities raised its rating on Check Point Software Technologies (CHKP Quote) to strong buy from accumulate. Check Point Software soared 16 9/16, or 7%, to 253 1/16.

Merrill Lynch downgraded the cosmetics/household products sector.

• Avon (AVP Quote), Dial (DL Quote) and Rayovac (ROV Quote) were cut to accumulate from buy. Avon tacked on 7/16 to 29 3/16 and Dial lost 1, or 6.3%, to 14 3/4, while Rayovac skidded 2 7/16, or 11.6%, to 18 9/16.

• Clorox (CLX Quote) was cut to neutral from accumulate and stumbled 3 15/16, or 9.8%, to 36 1/8.

• Alberto-Culver (ACV Quote) was cut to neutral from accumulate and slipped 7/8 to 19 15/16.

Warburg Dillon Read upped its price target on Corning(GLW Quote) to 260 from 175. Corning sank 12 13/16, or 6.1%, to 196 13/16.

Donaldson Lufkin & Jenrette analyst W. Todd Scott started coverage of Cypress Communications (CYCO Quote) with a buy rating. Cypress Communications jumped 2, or 9.3%, to 23 3/8.

Merrill Lynch upgraded its intermediate-term rating on Firstar (FSR Quote) to accumulate from neutral. It kept its long-term buy rating on the stock. Firstar declined 11/16 to 17 5/8.

Lehman Brothers initiated coverage of First Bell (FBBC Quote) with a neutral rating. First Bell lifted 1/2 to 15 7/8.

Merrill Lynch downgraded its long-term rating on Globalstar (GSTRF Quote) to neutral from accumulate. The firm also sliced its intermediate rating on Loral(LOR Quote) to neutral from accumulate and cut its long-term rating to accumulate from buy. Globalstar slipped 4, or 15.8%, to 21 3/16 and Loral fell 2 3/16, or 14.7%, to 12 5/8.

Salomon Smith Barney initiated coverage of Healtheon/WebMD (HLTH Quote) with an outperform rating and a price target of 52. Healtheon/WebMD declined 2 3/4, or 6.4%, to 40.

CSFB analyst William Julian raised his rating on home-improvement retailers Home Depot (HD Quote) and Lowe's (LOW Quote) to strong buy from buy. Home Depot's 12-month price target was raised to 70 from 66. Home Depot skidded 1 5/8 to 52 3/16 and Lowe's fell 3 3/8, or 7.5%, to 41 5/8.

SG Cowen said it started coverage of InfoSpace.com (INSP Quote) with a strong buy rating and a price target of 310. InfoSpace.com shot up 6 to 259 1/2.

Prudential Securities initiated coverage of JDS Uniphase (JDSU Quote) with a strong buy rating. JDS Uniphase lost 5 1/4 to 287 3/8.

Thomas Weisel Partners analyst David Grossman initiated coverage on Lante (LNTE Quote) with a buy rating. Lante skidded 3 3/8 to 75.

Merrill Lynch initiated coverage of Magic Software (MGIC Quote), an Israel-based business solutions and software company, with a buy rating and a 12-month price target of 40. Magic Software lifted 3/4 to 27 11/16.

Warburg upgraded Masco (MAS Quote) to strong buy from buy. Masco hopped 11/16 to 18 1/8.

Goldman Sachs said Microsoft's (MSFT Quote) third quarter seems to be on track after meeting with its CFO, Jim Connors. Microsoft mounted 2 1/8 to 92 7/8.

Credit Suisse First Boston upgraded Nextel Communications (NXTL Quote) to strong buy from buy. Nextel Communications rose 2 3/4 to 135 13/16.

ING Barings analyst Vinton Vickers raised his price target on News Corp. (NWS Quote). The 12- to 15-month price target on ADRs was lifted to 75 to 80, from 65. News Corp. declined 1 9/16 to 63 3/8.

Warburg Dillon Read upgraded oil and gas exploration company Noble Affiliates (NBL Quote) to strong buy from hold. Noble Affiliates gained 3 1/2, or 13.7%, to 29.

Thomas Weisel analyst Kevin Hunt started coverage of Pets.com (IPET Quote) with a buy rating. Pets.com lost 7/16, or 6.6%, to 6 1/8.

Merrill upgraded its intermediate-term rating on Pharmacia & Upjohn (PNU Quote) to buy from accumulate. It maintained its long-term rating of buy on the stock. Pharmacia & Upjohn retreated 1 9/16 to 42 15/16.

Prudential Securities upped its rating on RSA Security (RSAS Quote) to strong buy from hold. RSA Security shot up 8 11/16, or 11.9%, to 81 5/8.

Merrill reinstated coverage of Southdown (SDW Quote) with an intermediate-term rating of accumulate and a long-term rating of buy. Southdown shed 1 9/16 to 47 13/16.

Warburg initiated coverage of Spieker Properties (SPK Quote) with a hold rating. Spieker Properties declined 1/16 to 40 15/16.

Banc of America Securities upped its price target on VoiceStream (VSTR Quote) to 161 from 117. VoiceStream plummeted 24, or 16.6%, to 119 7/8.

CSFB initiated coverage of Waste Connections (WCNX Quote) with a buy rating. Waste Connections added 1/16 to 10 15/16.

CSFB upgraded Western Wireless (WWCA Quote) to strong buy from buy. Western Wireless tacked on 2 15/16, or 5.6%, to 54 7/8.

Miscellany

Intel (INTC Quote) skidded 1 5/8 to 115 3/4 after it said it will offer all 70,000 of its employees free home PCs.

Mastech (MAST Quote) converted itself into a holding company. Mastech said the new company, known as iGate (IGTE Quote), consists of five existing and four new divisions, which would concentrate on e-services. iGate began trading today and soared 21 1/4, or 49.4%, to 64 3/16.