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Thursday's Winners & Losers: Biopure, Pro-Dex, Best Buy, Disney, Engage

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  • M&A
  • Earnings/revenue
  • Analyst Actions
  • Offerings/stock actions
  • Miscellany
  • By the numbers
  • Updated from 3:46 p.m. ET

    Best Buy (BBY) this morning warned investors that its third- and fourth-quarter results will fall well below expectations. The company blamed a slower economy and lower gross margins.

    The consumer electronics retailer said it expects third-quarter earnings to come in at 27 cents a share and fourth-quarter results to be 90 cents a share. Analysts polled by First Call/Thomson Financial had expected the company to report 44 cents a share for the third quarter and $1.02 a share for the fourth. Best Buy closed down $20.31, or 38.8%, to $32.06.


    Disney (DIS) wasn't such a magical kingdom today morning, despite beating analyst estimates and last year's quarter. The company announced fourth-quarter earnings of 20 cents a share, better than the 18 cent First Call/Thomson Financial estimate and the year-ago 7 cents. Operating income doubled to $898 million from the year-ago period.

    But don't bust out the Mickey ears just yet. Analysts rushed in and cut ratings on the company after it warned about soft television advertising sales and said its first quarter would come in even to last year's quarter. Merrill Lynch cut its rating to near-term neutral from accumulate. Salomon Smith Barney cut its rating to outperform from buy. Disney ended the down $5.75, or 15.6%, to $31.13.


    After Wednesday's Close

    Lehman Brothers (LEH) may be considering a bid for Bear Stearns (BSC), but the interest is believed to be at a very early stage, and observers say there is only a slim chance of an offer, according to a report in The Financial Times.

    Analysts reportedly say Lehman is attracted by Bear Stearns' clearing business (the back office side of trading), but analysts also speculate that Lehman may be put off by cultural issues and by the high price demanded by Bear's management, the newspaper reported. Lehman closed down $3.06, or 5.3%, to $54.69; Bear Stearns was up $1.50, or 2.6%, to $58.31.


    IBM (IBM) President Sam Palmisano said in an after-hours conference call that wide availability of its newest main-frame computer would be delayed until next year. The computers had been expected to ship in mid-December, but Big Blue said it wouldn't have the supply to satisfy consumer demand in the fourth quarter.

    The company declined to talk about its fourth-quarter results, but Palmisano said a shortage of ceramic packaging, which hurt IBM's third-quarter sales, would continue through the end of the year. IBM closed down 56 cents, or 0.6%, to $99.44.

    Mergers, acquisitions and joint ventures


    After Wednesday's Close

    Italian airline Alitalia said it ordered six aircraft from Boeing (BA), with an option on six more. The airline also said that it had canceled a planned order for five jumbo jets and an option for another three. Boeing closed up 69 cents or 1.1%, to $65.69.

    Telecommunications provider Alltel (AT) announced that it will sell 20 personal communications services licenses in six states to Verizon Wireless (VZ). Alltel closed down 56 cents, or 0.9%, to $63.31; Verizon closed up 94 cents, or 1.7%, to $56.

    Dentsply (XRAY) agreed to purchase Pro-Dex (PDEX) in a stock swap valued at about $30 million.

    The deal, which calls for each Pro-Dex share to be exchanged for 0.091 Dentsply shares, is expected to close by the first quarter of 2001. Dentsply ended the day flat at $36.31; Pro-Dex closed up 19 cents, or 7.5%, to $2.69.

    A federal appeals court blocked H.J. Heinz (HNZ) from closing its $185 million acquisition of Milnot, which owns Beech-Nut baby food.

    The Federal Trade Commission sought the stay while it appealed a decision -- that denied a preliminary injunction to halt the deal -- while it challenges the merger in court. Heinz closed up 44 cents, or 1%, to $42.88.

    Westcoast Energy (WE) paid Coastal (CGP) $75 million for the half of Empire State Pipeline that it doesn't already own.

    The pipeline brings natural gas from the Canadian border near Niagara, through New York state to connect with other systems in central New York, near Syracuse. Westcoast closed down 50 cents, or 2.4%, to $20.81; Coastal was down 38 cents, or 0.5%, to $73.63.

    Back to top

    Earnings/revenue reports and previews

    Becton Dickinson (BDX), a manufacturer of medical devices, projected 10% earnings growth for 2001, in line with consensus estimates. At an analysts conference, the company also put forth plans to improve results going forward. Yesterday, after the close, the company posted fourth-quarter earnings of 39 cents a share, in line with the 15-analyst estimate, but down from year-ago earnings of 42 cents a share. Becton Dickinson closed down today, lower by $1.38, or 4.1%, to $31.88.

    Big trouble in little China.com (CHINA). The company announced third-quarter losses of $18 million, putting it at the high end of the $13.7 to $18 million range that analysts expected. The Asian Web company also warned of flat advertising revenue growth, while slashing 44 jobs in its Web solutions unit. Revenues did rise, however, to $36.5 million from $30.3 million. China.com ended the day down $1.81, or 14.7%, to $10.50.

    Gap (GPS) reported third-quarter earnings that met analysts' expectations but were down 41% from the year-ago period amid weak same-store sales in its Gap, Banana Republic and Old Navy chains.

    The clothing retailer earned $186 million, or 21 cents a share, down from $315 million, or 35 cents a share, in last year's third quarter. A First Call/Thomson Financial poll of 26 analysts produced a consensus estimate of 21 cents a share. Gap closed down $1.63, or 6.2%, to $24.63.

    Kmart (KM) posted a wider-than-expected third-quarter loss as liquidation of inventory undermined regular sales.

    The retailer lost $67 million, or 14 cents a share in the quarter, compared with earnings of $27 million, or 5 cents a share, in the same period last year. A First Call/Thomson Financial estimate by 16 analysts called for a loss of 10 cents a share for the quarter. Sales in the third quarter were $8.20 billion, up 3% from $7.96 billion for the third quarter of 1999. Same-store sales for the quarter grew 1.4%. Kmart closed down 13 cents, or 2.1%, to $5.81.

    Lands' End (LE) ended down $2.18, or 8.3%, to $24.03 after announcing third-quarter earnings that were down 50% from the year-ago quarter. The firm blamed unfavorable foreign exchange rates.

    The catalogue and Internet retailer said net income for the latest third quarter was $4.4 million, or 15 cents a diluted share, compared with $8.8 million, or 28 cents a share, in the same period a year ago. Nine analysts expected the company to earn 20 cents a share for the quarter, according to First Call/Thomson Financial.

    Despite lower earnings, the company's sales figures rose 3.2% to $336.4 million from $326 million in the previous year. Lands' End also lowered its gross profit margin gains estimates for the full year, blaming continuing higher-than-expected liquidations and greater-than-expected demand associated with promotions on multiple-item purchases.


    After Wednesday's Close

    Brinker International (EAT) said its comparable-store sales for the quarter ended Nov. 1 were up 5.1%. The company attributed the gains to increases at its Chili's and Macaroni Grill restaurants.

    Also, the company said it elected Ron McDougall, its current CEO, as chairman. Norman Brinker, chairman since 1983, was named chairman emeritus. Brinker closed down 81 cents, or 2%, to $39.63.

    Engage (ENGA) lowered its projections for first-quarter revenue, citing a number of factors, including an overabundance of supply in the media market, weak demand from dot-com companies and an extended sales cycle for the software segment.

    The company, a unit of Internet incubator CMGI (CMGI), also said Paul Schaut, president and chief executive, will resign, effective Nov. 20. Anthony Nuzzo will assume his duties.

    For the first quarter ended Oct. 31, Engage expects revenue of $40 million to $42 million, compared with $66.7 million reported in the fourth quarter. Three analysts surveyed by First Call/Thomson Financial had estimated $56.5 million for the first quarter.

    Excluding the amortization of goodwill and other intangible assets, stock compensation and other costs, Engage expects a first-quarter cash loss per share of no more than 25 cents, compared with a loss of 14 cents in the fourth quarter. Analysts expect the company to lose 20 cents a share in the first quarter.

    The company expects "modest" quarter-to-quarter growth throughout fiscal 2001, with total revenue in excess of $200 million, even though it said that many of the factors expected to hurt the first quarter "could persist into the next three quarters." Analysts on average expect full-year 2001 revenue of $337.8 million. Engage closed down $1, or 28.8%, to $2.47; CMGI closed down $3.88, or 17.8%, to $17.94.

    Fox Entertainment (FOX) posted first-quarter earnings of 5 cents a share, in line with the seven-analyst estimate, but a penny lower than year-ago earnings. Fox closed down $2.94, or 13.95%, to $18.13.

    Internet Capital Group (ICGE), which has seen its stock plummet more than 90% in the past year, announced several cost-cutting moves Wednesday, including the elimination of 35% of its workers.

    The company reported a third-quarter loss of 94 cents a share, compared with a year-ago loss of 7 cents a share. Results for both periods include sales and write-downs of assets. First Call/Thomson Financial lists no consensus earnings estimate for Internet Capital.

    ICG, based in Wayne, Pa., is an Internet incubator that owns dozens of companies in the hard-hit business-to-business e-commerce sector. In addition to announcing layoffs, the company said Wednesday that its European and Japanese operations would be spun off into separate entities that will seek external financing. ICG would continue to hold stakes.

    ICG's chief executive, Walter Buckley, said the company would take "decisive action" to strengthen its financial position, including reducing holdings. "We believe that giving more attention to a smaller number of companies will ... generate greater shareholder value," he said in a statement. ICG closed down $5.06, or 31.2%, to $11.19.

    Medical Assurance (MAI) posted third-quarter earnings of 22 cents a share, a penny better than the six-analyst estimate, but down from year-ago earnings of 50 cents a share. The stock closed up 31 cents, or 2.4%, to $13.56.

    Mid Atlantic Medical Services (MME) reported third-quarter earnings of 25 cents a share, beating the eight-analyst estimate and up from year-ago earnings of 17 cents a share. MME ended the day down 25 cents, or 1.5%, to $16.50.

    Premier Parks (PKS) posted third-quarter earnings of $1.49 a share, in line with the six-analyst estimate, and up from year-ago earnings to $1.46 a share. Premier Parks closed down $1.06, or 6.5%, to $15.25.

    Protein Design Labs (PDLI) reported a third-quarter loss of 13 cents, narrower than the 16 cent loss estimated by seven analysts. In the year-ago quarter, the company reported nil. The company's stock closed down $4.88, or 3.7%, to $127.50.

    AnnTaylor (ANN) posted third-quarter earnings of 78 cents a share, in line with the 16-analyst estimate and up from year-ago earnings of 65 cents a share. AnnTaylor ended the day up 81 cents, or 2.4%, to $35.19.

    Teligent (TGNT) reported a third-quarter loss of $2.90 a share, narrower than the loss of $2.99 the 13-analyst estimate had predicted. Its year-ago loss was $2.66. The latest third-quarter figure excludes a charge of $60.7 million for the company's investment in ICG Communications (ICGX). Including the charge, the company had a loss of $3.88 a share.

    Teligent, which transmits voice and data communications services through the air, also announced that it has made progress in negotiations to secure additional financing but nothing has been finalized.

    Teligent closed down 88 cents, or 13.1%, to $5.81; ICG, as noted above, closed down $5.06, or 31.2%, to $11.19.

    360Networks (TSIX) posted a third-quarter loss of 6 cents a share, which is in line with the single-analyst estimate. A year-ago figure was not available since the company went public April 26.

    Back to top

    Analyst actions

    Upgrades

    Biopure (BPUR): UP to buy from market performer at J.P. Morgan with a 12-month price target: UP to $40 from $30. Biopure closed up $2, or 8.5%, to $25.50.

    Myriad Genetics (MYGN): Price target UP to $163 from $133 at Prudential. Myriad closed up 56 cents, or 0.5%, to $120.13.

    Downgrades

    Best Buy (BBY): DOWN to accumulate from buy at Merrill Lynch. As noted at top, Best Buy closed down $20.31, or 38.8%, to $32.06.

    Fox Entertainment (FOX): DOWN to near-term neutral from buy at Merrill Lynch. The firm also cut Fox's long-term price target to the low $30s from $50. As noted above, Fox closed down $2.94, or 13.95%, to $18.13.

    24/7 Media (TFSM): DOWN to hold from buy at Credit Suisse First Boston; DOWN to market perform from buy at J.P. Morgan; DOWN to hold from buy at ING Barings. The stock closed down $1.70 cents, or 36.7%, to $2.94.

    Engage (ENGA): DOWN to hold from buy at ING Barings; DOWN to neutral from buy at Bear Stearns. As noted earlier, Engage closed down $1, or 28.8%, to $2.47

    Internet Capital Group (ICGE): DOWN to long-term accumulate from buy at Merrill Lynch. As noted above, ICG closed down $5.06, or 31.2%, to $11.19.

    News Corp. (NWS): near-term rating DOWN to neutral from buy at Merrill Lynch. News Corp. closed down $5.13, or 11.9%, to $38.

    Teligent (TGNT): intermediate- and long-term ratings DOWN to neutral from accumulate at Merrill Lynch. As noted above, Teligent closed down 88 cents, or 13.1%, to $5.81.

    Initiations

    C-Cube Microsystems (CUBE): NEW buy at Thomas Weisel; price target: $30. C-Cube ended the day up $1, or 4.8%, to $21.94.

    Harley Davidson (HDI): NEW buy at Lehman Brothers; price target: $60.

    Macrovision (MVSN): NEW buy at Thomas Weisel; price target: $98.

    Back to top

    Offerings and stock actions

    Fiber-optics manufacturer Corning (GLW) announced that shareholders approved an increase in authorized common shares to 3.8 billion. This gives the company greater flexibility for future acquisitions. Corning closed up $2.50, or 4.1%, to $64.

    After Wednesday's Close

    Sun Microsystems (SUNW) said shareholders approved a doubling of the company's number of shares. As a result, the company will implement its previously announced 2-for-1 stock split. Sun ended the day down $2.69, or 2.7%, $97.63.

    Back to top

    Miscellany

    Something wicked this way comes in Lernout & Hauspie (LHSP). Today, the company was halted by the Nasdaq Stock Market nasdaq for the entire day, with the exchange saying that it would not allow trading until L&H has given the Nasdaq information that it requires. This whole mess started when L&H said it would be restating prior financial results for 1998, 1999 and the first half of 2000, citing errors and irregularities. And to make matters worse, the company is sticking by a firm "no comment" and will not be making any more announcements today.

    Maytag (MYG) said Lloyd D. Ward resigned as chairman and chief executive because of a difference with the board over the company's strategic outlook and direction.

    Ward also resigned from the board. According to a press release from the appliance-maker, Ward said that, under the circumstances, it was in both his and the company's interests that he resign.

    The company named Leonard A. Hadley interim president and chief executive while the company searches for Ward's replacement. Hadley retired from Maytag in August 1999, after 40 years there, including seven years as chairman and CEO. Maytag closed down 81 cents, or 2.8%, to $28.19.

    Ah, they're gonna sit this one out. Today, TeleCorp (TLCP) announced that it wouldn't be participating in next month's Federal Communication Commission auction of the U.S. wireless spectrum, citing an already strong wireless position and the high cost of participation as key factors. The company is one of AT&T Wireless' (AWE) biggest affiliates. TeleCorp closed down 38 cents, or 1.6%, to $22.75; AT&T was down 81 cents, or 3.7%, to $21.19.


    After Wednesday's Close

    Pacific Gas and Electric (PCG) asked a federal court for permission to recoup some $3.44 billion in excess charges from its ratepayers. The utility is facing increases in the cost of wholesale electricity.

    The utility operates under a rate freeze, which will remain in effect until it completes its transition to an open market utility under California's 1996 deregulation of that state's investor-owned electric utilities. The transition requires the company to sell off assets and buy energy in a competitive market.

    The company said its wholesale cost of energy had risen fivefold, and by law it is unable to pass those charges on to its customers. PCG closed up 13 cents, or 0.5%, to $26.81.

    Scientific-Atlanta (SFA), which makes set-top boxes that link televisions to cable systems, named CEO James McDonald as chairman of its board. The stock closed down $2.75, or 4.3%, to $62.

    Tricord Systems (TRCD) said it has named Joan Wrabetz CEO. Wrabetz was most recently the company's president and COO. She replaces co-CEOs John Mitcham and Rod Canion. Tricord closed up 50 cents, or 3.3%, to $15.50.

    Back to top

    By the Numbers

    5 Biggest NYSE Percentage Winners
    Name Price Change %
    British Energy (BGY) 12.375
    1.75

    16.5%
    SLI (SLI) 8.6875
    .8125

    10.3%
    Western Resources (WR) 23.3125
    1.9375

    9.1%
    Trigon Healthcare (TGH) 75.25
    6.1875

    9%
    Allied Waste (AW) 12.625
    .9375

    8%

    5 Biggest NYSE Percentage Losers
    Name Price Change %
    Best Buy (BBY) 34.25
    18.125

    34.6%
    TNPC (NPW) 9.4375
    2.6875

    22.2%
    Walt Disney (DIS) 31.125
    5.75

    15.6%
    PNM (PNM) 23.875
    4.3125

    15.3%
    Intertan (ITN) 10.75
    1.9375

    15.3%

    5 Biggest Nasdaq Percentage Winners
    Name Price Change %
    Innodata (INOD) 17.8125
    5.0625

    39.7%
    Acme (ACME) 8.0625
    1.5625

    24%
    Valence (VLNC) 18
    3.4375

    23.6%
    Supergen (SUPG) 23.4375
    3.875

    19.8%
    Metro One (MTON) 18.1875
    2.8125

    18.3%

    5 Biggest Nasdaq Percentage Losers
    Name Price Change %
    Network Engines (NENG) 12.875
    13.125

    50.5%
    Pinnacle (BIGT) 8.6875
    7.0625

    44.8%
    Internet Capital (ICGE) 11.25
    5

    30.8%
    Sensar (SCII) 10.5625
    4.625

    30.5%
    Genzyme (GZTC) 16.5
    4

    19.5%

    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.

    5 Biggest Dow Point Winners
    Name Price Change %
    Coca-Cola (KO) 62.3125
    2.125

    3.53%
    Microsoft (MSFT) 70.875
    1.375

    1.98%
    J.P. Morgan (JPM) 161
    1.3125

    0.82%
    Boeing (BA) 65.6875
    .6875

    1.06%
    American Express (AXP) 58.25
    0.25

    0.43%

    5 Biggest Dow Point Losers
    Name Price Change %
    Walt Disney (DIS) 31.125
    5.75

    15.59%
    Hewlett-Packard (HWP) 42.9375
    2.75

    6.02%
    Home Depot (HD) 38.8125
    2.4375

    5.91%
    Wal-Mart (WMT) 47.125
    1.625

    3.33%
    Intel (INTC) 41.375
    1.125

    2.64%

    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) 53.25
    .9375

    1.80%
    Dell (DELL) 28.375
    1.5

    4.95%
    Ericsson (ERICY) 12.375
    .125

    1%
    Intel (INTC) 41.375
    1.125

    2.64%
    Microsoft (MSFT) 70.875
    1.375

    2.07%
    Oracle (ORCL) 27.1875
    2.0625

    8.31%
    Qualcomm (QCOM) 72.6875
    3.5

    5.07%
    Sun Microsystems (SUNW) 97.625
    2.3125

    2.31%
    WorldCom (WCOM) 16.125
    .8125

    4.80%
    Yahoo! (YHOO) 58.8125
    .9375

    9.14%

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