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Monday's Winners & Losers: Western Digital, William Lyon Homes, Optelecom, Sense Technologies

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  • M&A
  • Earnings/revenue
  • Analyst actions
  • Offerings/stock actions
  • Miscellany
  • Updated from 2:59 p.m. EDT

    Mergers, acquisitions and joint ventures

    Advanced Magnetics (AVM) called off a proposed $60 million takeover by Cytogen (CYTO). Instead, Advanced Magnetics will enter into marketing and supply agreements with Cytogen. Advanced Magnetics sank 2.44, or 32.2%, to 5.13, while Cytogen slid 9 cents, or 1.04%, to 8.94.

    Alteon WebSystems (ATON) will acquire privately held Bluetail, a Swedish-based Internet start-up, for about $152 million in a stock-for-stock shareholder exchange. Alteon WebSystems lowered 1.63, or 1.1%, to 146.13.

    Bluetail manufactures and markets content-intelligent traffic management software for high-volume Web computing environments. The acquisition of Bluetail, which will be accounted for as a purchase, will result in noncash charges for deferred compensation and amortization of good will of about $12 million per quarter.

    Applied Micro Circuits (AMCC) will buy MMC Networks (MMCN) in a stock deal worth about $4.5 billion. Applied Micro Circuits will combine MMC's network processor, traffic management and switch-fabric technology business into its own. Applied Micro Circuits fell 4.75 to 183.81, while MMC Networks jumped 31.75, or 40.58%, to 110.

    DaimlerChrysler (DCX) announced that it will invest $600 million in its Alabama vehicle assembly plant to double production of the next-generation M-class sport utility vehicle.

    Additionally, the German auto manufacturer announced an extension of its tender offer for all outstanding shares of diesel engine manufacturer Detroit Diesel (DDC). DaimlerChrysler advanced 0.38 to 54.81, while Detroit Diesel declined 13 cents to 22.75.

    Microsoft's (MSFT) holdups in supplying interactive-TV software to AT&T (T) may push back AT&T launch of interactive services through 10 million set-top boxes, according to The Wall Street Journal. Microsoft boosted 69 cents to 71.31, while AT&T slipped 13 cents to 30.94.

    Separately, Microsoft announced that (AMZN) has selected Microsoft Reader as the preferred software for's future e-bookstore. missed 81 cents to 39.13.

    Sabre Holdings (TSG) entered a deal to acquire (GTHR) for $757 million. According to the terms, Sabre will pay $17.75 shares for the online travel firm, a premium over Friday's close of 12.13. Sabre also said that it would roll out a cost-cutting plan that would reduce its work force by about 1,200 jobs. The plan would create a third-quarter charge of $20 million. Sabre Holdings dropped 94 cents to 28.81, while popped 5.06, or 41.75%, to 17.19.

    ServiceMaster's (SVM) TruGreen unit will sell its TruGreen Interior Plantcare unit to Rentokil Tropical Plant Services for $44 million cash. ServiceMaster decreased 13 cents to 9.69.

    SpectraSite (SITE) gained 2.94, or 13.99%, to 23.94 after saying it has agreed to pay SBC Communications (SBC) $1.3 billion for lease rights to 3,900 wireless communication towers. The deal, which makes SpectraSite the sole holder to the rights of the SBC towers for 27 years (on average) and includes another 800 new towers under a five-year built-to-suit agreement, would give the company the biggest tower group in the top 50 U.S. markets.

    According to the terms, SpectraSite will pay $983 million in cash and $325 million in common stock to lease the towers from the local phone company. SpectraSite reserves the right to lease the towers to third parties as well as buy the towers when the lease ends. SBC Communications advanced 25 cents to 41.44.

    Titan Cement said it reached an agreement to buy Anglo American's Tarmac America unit, a construction materials producer, for $636 million. Titan said in a statement that it will then sell Tarmac American's quarries in nonstrategic areas to Vulcan Materials (VMC) for $227 million. Vulcan Materials declined 1.19 to 43.44.

    TriPath Imaging (TPTH) said a unit of Roche Holding will invest more than $40 million in the company, upping its ownership in the company to 34% if all options are exercised. TriPath Imaging moved up 1.94, or 27.68%, to 8.94.

    UNUMProvident (UNM) said it will sell an inactive "shell" subsidiary, Provident National Assurance, to Allstate Life Insurance, a unit of Allstate (ALL) UNUMProvident lifted 1.25, or 6.37%, to 20.88.

    Also, the company said it would reinsure its in-force individual life insurance and corporate-owned life insurance blocks of business with a unit of global reinsurer Swiss Reinsurance and reinsure a portion of its long duration group long-term disability claims with Max Reinsurance.

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    Earnings/revenue reports and previews

    Cruise-line operator Carnival (CCL) expects some choppy seas ahead. The company announced that it anticipates fourth-quarter earnings to be lower by 1 cent, because it had to cancel two cruises in October and November for preventative maintenance on a ship. The company had expected to earn 40 cents a share.

    Also, Carnival said it signed an agreement to buy the remaining 50% interest in Genoa, Italy-based Costa Crociere from Airtours for about $525 million. Carnival and British-based travel supplier Airtours jointly acquired Costa in 1997. Carnival said it will maintain its 26% strategic interest in Airtours. Shares of Carnival missed 19 cents to 21.19.

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    Analyst actions

    Lehman Brothers analyst Holly Becker said Yahoo!'s (YHOO - Get Report) valuation remains rich -- though it's off its high -- but that it hasn't discounted the difficult environment the company is facing. Becker maintained her cautious stance and neutral rating.

    In a research note, Becker wrote that her "contacts suggest that the environment continues to worsen, and we believe it is only a matter of time before we see the impact on Yahoo!'s results." One issue, Becker notes, is that traditional advertisers aren't embracing online advertising. And if the company's third-quarter revenue is short of estimates -- her estimate is $275 million -- or is "low in quality," the stock will suffer "meaningfully," she wrote. Yahoo fell 12.19, or 9.08% to 122.06.

    Prudential Securities downgraded Whirlpool (WHR) to a sell from hold, CNBC reported. Whirlpool sank 4.31, or 10.16%, to 38.13.


    BMC Software (BMCS): price target UP to 30 from 22 at Merrill Lynch. BMC Software popped 2.69, or 10.44%, to 28.44.

    IBM (IBM): price target UP to 150 from 125 at Credit Suisse First Boston. IBM tacked on 1, or 0.78%, to 130.

    Biopharmaceutical company Xoma (XOMA): Price target UP to 18 at U.S. Bancorp Piper Jaffray. Xoma bounced 2.19, or 28%, to 10.


    Covance (CVD): DOWN to hold from buy at CSFB. Covance skidded 13 cents to 10.69.

    Video games manufacturer Electronic Arts (ERTS): DOWN to buy from strong buy at Banc of America Securities. Electronic Arts slumped 3.25 to 102.63.


    Arena Pharmaceuticals (ARNA): NEW strong buy at ING Barings; NEW strong buy at SG Cowen. Arena Pharmaceuticals added 4, or 13.56%, to 33.50.

    Argonaut (AGNT): NEW buy at ING Barings. Argonaut edged up 75 cents, or 6%, to 13.25.

    California Pizza Kitchen (CPKI): NEW buy at Deutsche Banc Alex. Brown; NEW buy at Banc of America. California Pizza Kitchen climbed 94 cents, or 3.9% to 25.

    divine interVentures (DVIN): NEW buy at Bear Stearns; price target: 14. divine interVentures rose 31 cents to 7.13.

    Entravision Communications (EVC): NEW buy at Donaldson Lufkin & Jenrette; NEW attractive at Bear Stearns; and NEW buy at CSFB with price target of 23. Entravision Communications lifted 31 cents to 19.75.

    Floware (FLRE): NEW buy at CSFB; NEW buy at J.P. Morgan. Floware jumped 5.69, or 26%, to 27.56.

    Resonate (RSNT): NEW buy at Chase Hambrecht & Quist with a 12-month price target of 55; and ADDED to Goldman Sachs' recommended-for-purchase list. Resonate fell 1.44 to 39.56.

    SpeechWorks (SPWX): NEW buy at J.P. Morgan; NEW buy at U.S. Bancorp Piper Jaffray and 12-month price target of 84; and NEW buy at Chase H&Q with 12-month price target of 95. SpeechWorks moved up 2.31 to 58.56.

    Trigon Health (TGH): NEW attractive at Bear Stearns; 12-to-18-month price target: 65. Trigon Health slid 25 cents to 51.75.

    Virage Logic (VIRL): NEW buy at SG Cowen. Virage Logic stumbled 1.75, or 9.03%, to 17.63.

    Group Moves

    Deutsche Bank Alex. Brown rolled out coverage of two pharmaceutical companies:

    • Genaissance Pharmaceuticals (GNSC): strong buy. Genaissance Pharmaceuticals added 88 cents to 18.88.

    • Inspire Pharmaceuticals (ISPH): strong buy; price target of 25. Also, NEW buy at Chase H&Q with a 12-month price target of 25. Inspire mounted 19 cents to 17.44.

    Lehman Brothers started coverage of two high-speed wireless access systems, both as buys:

    • SignalSoft (SGSF): 2000 loss per share estimate: $1.07 and price target: 50. SignalSoft hopped 1.75 to 39.

    • Western Multiplex (WMUX): price target: 27. Western Multiplex slipped 1.38, or 8.87%, to 14.13.

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    Offerings and stock actions

    After Friday's Close

    Lernout & Hauspie Speech Products (LHSP), a manufacturer of voice recognition software, filed with the Securities and Exchange Commission for the sale of up to $250 million in stock. Lernout & Hauspie advanced 56 cents to 30.63.

    Penton Media (PME), which provides media products that deliver business information, has filed with the Securities and Exchange Commission to offer 3.6 million shares of its common stock. Penton Media decreased 1.13 to 32.38.

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    Azurix (AZX) stayed flat at 4.94 after CEO and Chairman Rebecca Mark announced her resignation to pursue opportunities as a private investor in the water resources business. John Garrison, Azurix president and COO since March, has been elected president and COO.

    Coca-Cola (KO) increased 1 to 57 after reporting that it is talking to Mexican regulators in an effort to avoid a legal battle over alleged monopolistic practices by the company in its biggest market outside the United States. The probe by Mexico's federal competition commission was prompted by complaints by its rival PepsiCo (PEP) and two Mexican beverage companies. PepsiCo gained 56 cents to 43.31.

    JDA Software (JDAS) said its co-founder and co-chairman, Frederick Pakis, resigned to pursue "other interests." The company said it would not immediately search for a replacement. JDA Software missed 56 cents to 11.94.

    UAL's (UAL) United Airlines and its pilots' union said Saturday that they have come to a tentative contract agreement. UAL improved 1.13 to 51.50.
    After Friday's Close

    DT Industries (DTII) announced that it has put Louis Pallay, the president of its subsidiary, Kalish, on administrative leave. The company is investigating an overstatement of certain asset accounts.

    More news from the tire front: Firestone announced that it would seek independent advice from the tire industry, manufacturing groups, and academia as it investigates the car accidents that caused the company to recall 6.5 million tires. The recalled tires are used mainly on sport utility vehicles. According to Firestone, approximately 850,000 tires had been recalled as of Wednesday.

    Ford Motor (F) announced that it would stop production at its Michigan truck assembly plant, where the Ford Expedition and Lincoln Navigator are made, for one week. The company said that the latest parts problem stemmed from a quality issue from a supplier and was unrelated to the tire recall. Ford fell 1.44, or 5.2%, to 26.38.

    Keystone Automotive Industries (KEYS), a manufacturer of replacement collision-repair products, named Ronald Foster as chairman. He replaces Ronald Brown, who resigned from the position. Keystone Automotive Industries advanced 1 cent to 5.75.

    Bank-holding company Wachovia (WB) announced that it will cut 1,800 jobs, or 8% of its work force, and that it will tack on a restructuring charge of $85 to $100 million. Wachovia seeks to cut costs and increase earnings. Wachovia fell 19 cents to 56.81.

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    By the Numbers

    NYSE Percent Winners
    Name Price Change %
    Western Digital (WDC - Get Report) 6 1/8

    CNH Global (CNH) 9 3/8

    Shaw Group (SGR) 54 1/2
    5 1/4

    Kyocera (KYO) 187
    16 1/2

    Huffy (HUF) 13 1/8
    1 1/8


    NYSE Percent Losers
    Name Price Change %
    William Lyon Homes (WLS) 5 3/8

    Silverline Technologies (SLT) 22
    2 3/4

    Whirlpool (WHR) 38 1/8
    4 5/16

    Trex (TWP) 31 3/8
    3 1/2

    Maytag (MYG) 37 11/16
    3 9/16


    Nasdaq Percent Winners
    Name Price Change %
    Optelecom (OPTC) 11 23/32
    5 19/32

    eSoft (ESFT) 6 11/16
    2 3/16

    RH Phillips (RHPS) 6 13/16
    2 1/16

    GetThere (GTHR) 17 13/16
    5 1/16

    MMC Networks (MMCN) 110
    31 3/4


    Nasdaq Percent Losers
    Name Price Change %
    Sense Technologies (SNSG) 15
    2 3/4

    Viant (VIAN) 17 15/16
    3 1/16

    Student Advantage (STAD) 6

    Pharmacyclics (PCYC) 49 1/4
    6 3/4

    Bridge Technology (BRDG) 7 1/8


    The data on NYSE and Nasdaq percent winners and losers are filtered to exclude stocks whose previous day's volume was less than 25,000 shares; whose last price was less than 5; and whose net change was less than 1/2.

    Dow Point Winners
    Name Price Change %
    American Express (AXP) 59 7/8
    3 5/16

    General Motors (GM) 74 1/2
    3 1/16

    Hewlett Packard (HWP) 120
    1 1/4

    IBM (IBM) 130 1/4
    1 1/4

    Citigroup (C) 58 7/8
    1 15/16


    Dow Point Losers
    Name Price Change %
    Eastman Kodak (EK) 64 1/16
    1 1/16

    WalMart (WMT) 49 1/2

    Honeywell (HON) 39

    Boeing (BA) 53 1/4

    Johnson & Johnson (JNJ) 94 3/4


    Dow point gain and loss data are based on New York closing prices and do not reflect late composite trading.

    Large-Cap Nasdaq Movers
    Name Price Change %
    Cisco (CSCO) 66 1/6

    Dell (DELL) 39 1/2

    Ericsson (ERICY) 19 11/16

    Intel (INTC) 73 7/8

    Microsoft (MSFT) 71 5/16

    Oracle (ORCL) 86 3/4
    2 3/16

    Qualcomm (QCOM) 59 3/8

    Sun Microsystems (SUNW) 127 13/16
    2 7/8

    WorldCom (WCOM) 37 3/16
    1 1/4

    Yahoo! (YHOO - Get Report) 122 1/16
    11 11/16


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