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Stocks to Watch Tuesday: Trex, Wendy's, Hollinger, AOL, Onyx Phamaceuticals

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  • M&A
  • Earnings/revenue
  • Analyst actions
  • Offerings/stock actions
  • Miscellany
  • Updated from 2:56 p.m. EDT

    Barnes & (BNBN) posted wider-than-expected second-quarter losses. The New York-based company reported a 27-cent loss, missing the five-analyst estimate of an 18-cent loss and below the year-ago 17-cent loss. The online bookseller said it still expects to turn a profit within two years. For more on these earnings results, take a look at coverage from .

    Software developer Synopsys (SNPS) announced that it expects earnings of 62 cents a share for the third-quarter ended July 29, a penny behind the seven-analyst estimate and below the year-ago 67-cent profit.

    Additionally, Synopsys warned that it will post an earnings shortfall for the fourth quarter of fiscal 2000 and for all of fiscal year 2001 because it will adopt a new method of selling product licenses. The company said it expects a loss of 45 cents a share for the fourth quarter and earnings of 90 cents a share for fiscal 2001. Wall Street estimated Synopsys to come in at 77 cents for the fourth quarter and $3.39 for fiscal 2001. The stock was cut to buy from strong buy at SG Cowen.

    For more on the profit warning, take a look at's story .

    Mergers, acquisitions and joint ventures

    America Online (AOL) and Japanese mobile phone giant NTT DoCoMo have agreed to jointly develop wireless Internet services in Japan, according to The Wall Street Journal's online edition. discussed the makings of this deal in an earlier story . Separately America Online Latin America (AOLA), a joint venture between America Online and Venezuela's Cisneros Group, cut the estimated price range of its IPO to $8 to $10 a share from $15 to $17, according to underwriter Salomon Smith Barney.

    Intel (INTC) said it will buy privately-held Trillium Digital Systems in a deal valued at $300 million in cash and unregistered Intel common stock, to bolster its telecommunications and network package to customers.

    Liberty Media (LMG.A) and Vulcan said they bought $190 million worth of shares in (PCLN).

    Nortel Networks (NT) said it won a $300 million data network equipment contract from Cleardata.

    Electronics retailer RadioShack (RSH) announced a marketing deal with Verizon Wireless, a unit of Verizon Communications (VZ), to expand Verizon's presence in RadioShack stores. According to terms of the deal, Verizon products will be offered in about 75 percent of RadioShack locations. Before, they were offered in only about 40 percent of the chain.

    Riverdeep (RVDP), an Irish educational software company, announced that it will purchase IBM (IBM) subsidiary Edmark. Riverdeep plans to issue 4.6 million ADRs, valued at $85 billion. The deal gives IBM a 14% stake in Riverdeep.
    After Monday's Close
    Flextronics (FLEX) said it agreed to a stock-for-stock merger with Chicago-based Chatam Technologies. Singapore-based Flextronics said it will swap about 8.33 million of its shares for Chatam's outstanding stock, warrants and options.

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    Earnings/revenue reports and previews

    Wendy's (WEN) posted second-quarter earnings of 43 cents a share, beating the 15-analyst estimate by a penny and up from year-ago 39 cent profit.

    Wendy's raised its base earnings-per-share goal for 2000 to a 14% to 17% increase rather than a 12% to 15% increase because of strong performance and momentum in sales growth in its core businesses, particularly Tim Hortons. Wendy's base earnings for 1999 were $1.26 a share.

    Coventry Health Care (CVTY) posted second-quarter earnings of 21 cents a share, besting the 12-analyst 19-cent prediction and the year-ago 15-cent profit.

    Florida Progress (FPC) posted second-quarter earnings of $1.11 a share, well above the seven-analyst estimate of 96 cents and the year-ago 78 cents. The company said it raised its 2000 earnings view to $3.60 from $3.50.

    Henry Schein (HSIC) posted second-quarter earnings of 41 cents a share, above the eight-analyst estimate of 39 cents and the year-ago 40 cents. The company announced it will cut 300 jobs in a restructuring and expects to post a 20 cents a share charge in the second half of the year.

    Juno Online (JWEB) posted a second quarter loss of $1.11, narrower than the four-analyst prediction of a $1.23 loss but below the year-ago 56-cent pro forma loss.

    Motorola (MOT) announced that it expects to meet Wall Street consensus estimates for 2001 earnings $1.43 per share and sales of $47 billion.

    National Oilwell (NOI) reported a second-quarter profit of eight cents a share, beating the eight-analyst six-cent estimate but below the year-ago 13-cent result.

    Upside Surprises
    Company Qtr EPS First Call View Yr. Ago EPS Number of Analysts
    Ace (ACL) 2Q 61c 60c 22c 13
    Career Education (CECO) 2Q 26c 20c 9c 6
    Genuity (Genuity) 2Q -23c -26c -19c 8
    Downside Surprises
    Company Qtr EPS First Call View Yr. Ago EPS Number of Analysts
    Checkpoint Systems (CKP) 2Q 14c 17c 14c 4
    In-Line Reports
    Company Qtr EPS First Call View Yr. Ago EPS Number of Analysts
    Affiliated Computer Services (ACS) 4Q 55c 55c 46c 4
    Beverly Enterprises (BEV) 2Q 8c 8c -$1.13 11
    Caremark Rx (CMX) 2Q 9c 9c 6c 10
    Perot Systems (PER) 2Q 12c 12c 15c 7
    Procter & Gamble (PG) 2Q 55c 55c 55c 13

    After Monday's Close
    Community Health Systems (CYH) posted breakeven results for the second quarter, ahead of the six-analyst estimate of a loss of 1 cent and the year-ago loss of 3 cents.

    Computer Sciences (CSC) posted first-quarter earnings of 56 cents a share, a penny behind the 12-analyst prediction but above the year-ago 50-cent profit. Revenue rose 11.8%, to $2.46 billion.

    Extended Systems (XTND) posted a fourth-quarter loss of 11 cents a share, a penny wider than the single-analyst estimate and worse than the year-ago earnings of 1 cent a share. The company said the its results were hurt by lower-than-expected sales of printing systems and Internet hardware products in Europe and an expected decline in infrared hardware sales to an original equipment manufacturer customer.

    Expedia (EXPE) posted a fourth-quarter pro forma loss of 30 cents excluding items, narrower than the eight-analyst estimate of a loss of 47 cents. The year-ago loss was less than 1 cent. The company was spun off from Microsoft (MSFT) last year.

    Guess? (GES) reported second-quarter earnings of 28 cents a share, 2 cents better than the five-analyst estimate and well above the year-ago 16 cents a share.

    Immersion (IMMR), a developer of computer sensory equipment, posted second-quarter losses of 19 cents a share, topping the three-analyst estimate of a 20-cent loss but below the year-ago 15-cent loss. (INTM) posted second-quarter earnings of three cents a share, ahead of the five-analyst prediction of a break-even result and the year ago 8-cent loss.

    Manufacturer of software to deliver music over the Internet Liquid Audio (LQID) posted a second-quarter loss of 35 cents a share, besting the four-analyst estimate of a negative 40-cent result and the year-ago 29-cent pro forma loss.

    Merix (MERX), which makes products used in circuit boards for computers, said first-quarter earnings, excluding the impact of a stock split, will be in the range of 66 cents to 69 cents a share, well above the consensus estimate of 47 cents. Merix also announced a 3-for-2 stock split.

    Onyx Pharmaceuticals (ONXX) posted a second-quarter profit of 10 cents a share, beating the one-analyst prediction of a 14-cent loss and the year-ago 46-cent loss. Shares of Onyx were surging on news that its genetically engineered virus has been effective in treating tumors, when combined with standard chemotherapy.

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    Offerings and stock actions

    Manufacturer of surgical and medical devices Inamed (IMDC) announced that it has authorized a stock buyback, which will initially cover approximately six million dollars worth of common stock.

    Nordson (NDSN), a manufacturer of systems for the application of adhesives, sealants and coatings, announced a 2-for-1 stock split.

    Software developer SpeechWorks (SPWX) sold 4.75 million shares at $20 each in its IPO debut, above its revised estimated price-range of $17-$19.

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    Analyst actions

    Donaldson Lufkin & Jenrette repeated its top pick rating on Amdocs (DOX) and Compaq (CPQ).


    DDi (DDIC): UP to strong buy from buy at Thomas Weisel.

    Intuit (INTU): UP to strong buy from accumulate at Prudential Securities.

    PathoGenesis (PGNS): UP to strong buy from accumulate at Prudential.

    Tamsa (TAM): UP to buy from market perform at Deutsche Banc Alex. Brown.


    Barnes & (BNBN): DOWN to market perform from outperform at Goldman Sachs. 2000 revenue estimate: DOWN to $329 million from $360 million. 2001 revenue estimate: DOWN to $650 million from $700 million.

    National Computer Systems (NLCS): DOWN to attractive from buy at Bear Stearns.

    Reinsurance Group of America (RGA): DOWN to market performer from buy at Donaldson, Lufkin & Jenrette. 2000 earnings estimate: UP to $2.54 a share from $2.50; 2001 earnings estimate: UP to $2.90 a share from $2.80.


    Applied Power (APW): NEW buy at Credit Suisse First Boston.

    Critical Path (CPTH): NEW intermediate- and long-term buy rating at Merrill Lynch; price target: 80. (HOLL): NEW outperform at Lehman Brothers. 12-month price-target: 13.

    Newport (NEWP): NEW buy at CSFB. Price target: 145.

    ValueVision International (VVTV): NEW strong buy at Morgan Stanley Dean Witter; price target: 40.

    Group Moves

    Merrill Lynch initiated coverage on a number of satellite communications companies:

    • Echostar (DISH) at near- and long-term buy.

    • Hughes Electronics (GMH) at intermediate- and long-term buy; 2001 price target : 39.

    • Loral (LOR) at near- and long-term accumulate.

    • PanAmSat (SPOT) at intermediate accumulate and long-term buy.

    PaineWebber initiated coverage of seven semiconductor companies:

    • Advanced Energy (AEIS): NEW buy; 12-month price target: 60.

    • Applied Materials (AMAT): NEW buy; 12-month price target: 105.

    • Applied Science & Tech. (ASTX): NEW buy; price target: 35.

    • ATMI (ATMI): NEW buy; 12-month price target: 50.

    • Helix Technology (HELX): NEW buy; 12-month price target: 60.

    • MKS Instruments (MKSI): NEW buy; 12-month price target: 50.

    • Novellus Systems (NVLS): NEW attractive; 12-month price target: 60.

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    Non-wood deck-maker Trex (TWP) said in response to a NYSE query that its policy is not to comment on unusual market activity or rumors. Trex stock fell 4% on Monday; the company had come under scrutiny after its stock climbed 21% in the last two months. It was up 99% year to date.

    Hollinger International (HLR) announced that Cindy E. Horowitz, executive vice president and chief financial officer, resigned and will become vice president and chief financial officer at (RCOM) starting in September.

    Citibank Private Bank, a subsidiary of financial services giant Citigroup (C - Get Report), named Peter Scaturro as chief executive. Sacturro succeeds Todd Thomson, who was promoted to chief financial officer of Citigroup in April.

    Exxon Mobil (XOM) said its merger savings are 65% larger than it initially expected. The company also said it intends to resume its share repurchase program.

    The Heard on the Street column in the Wall Street Journal today takes a look at a study by Ned Davis Research that suggests that "fat-cat investors might want to root for Al Gore." One of the study's unexpected conclusions is that the stock market tends to do better when the incumbent party stays in power than when another party takes over.
    After Monday's Close
    Anadarko Petroleum (APC) said it raised its capital investment budget by 34%, to $1.5 billion. The company said much of the additional spending will be focused on developing North America natural gas projects.

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