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Monday's Winners and Losers: ACNielsen, eToys, JDS Uniphase, Donna Karan

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  • M&A
  • Earnings/revenue
  • Analyst actions
  • Offerings/stock actions
  • Miscellany
  • By the Numbers
  • Updated from 7:21 p.m. EST Friday

    U.S. market research firm AC Nielsen (ART) was spiking higher after it agreed to be acquired by Dutch publishing and new media company VNU in a $2.3 billion cash deal. That puts the per share price at $36.75.

    Nielsen's shares soared 46% to close up $11.38 at $36.

    The merger would close in the first quarter of next year and will bring divided units of Nielsen back together. VNU bought Nielsen's Internet ratings agency Net Ratings from Nielsen in November 1999.

    VNU said the acquisition and a possible sale of its Consumer Information and Education Information divisions would raise its 2001 earnings per share before goodwill amortization by 5%.


    E-retailer eToys (ETYS) was tumbling down the rabbit hole, off 73% after its rating was cut to market perform from market outperform at Goldman Sachs. ABN Amro also lowered its rating on the company to sell from accumulate. The stock closed down 75 cents at 28 cents.

    Mergers, acquisitions and joint ventures

    JDS Uniphase (JDSU) was up $1, or 2%, to close at $59.19 despite a merger delay.

    The fiber optics company said it would complete its merger with SDL (SDLI) in January, later than expected, because of antitrust questions.

    The companies had hoped to complete the $25 billion deal by the end of this month. SDL closed up $7.88, or 4%, at 212.56.

    Luxury goods maker LVMH Moet Hennessy-Louis Vuitton (LVMHY) said Monday it will acquire designer clothing maker Donna Karan (DK) for $8.50 a share, a 74% premium over its Friday closing price of $4.88. The deal is valued at approximately $195 million.

    LVMH also has agreed to acquire privately held Gabrielle Studio, a licensor of Donna Karan trademarks, and intends to combine it with Donna Karan when deals are completed. LVMH said Donna Karan, the designer and chairman of the firm, and husband Stephen Weiss would exchange a "significant portion" of their Donna Karan shares for shares of the new entity and would invest in additional shares. Karan will continue to act as chief designer.

    Shares of LVMH closed down 19 cents at $12.75, while Donna Karan shares closed $3.63 higher on the news, at $8.50.

    Investment services provider Morgan Keegan (MOR) was soaring after regional bank Regions Financial (RGBK) said today it will acquire the firm for $789 million, or $27 a share.

    Morgan Keegan will keep its name and become a separate unit of Regions. Regions shares closed moderately higher, up 4% to $25.50. Morgan Keegan shares climbed 44 cents to $26.63, higher.

    Nvidia (NVDA) closed up $1.47 at $38.43 after announcing that it would buy most of the assets of rival graphics chipmaker 3dfx Interactive (TDFX).

    3dfx said after Friday's close that it would dissolve and sell most of its assets to Nvidia. 3dfx closed down $1.59 at 18 cents.


    After Friday's Close

    Bacou (BAU), which makes industrial personal protection equipment, said it was looking to sell the company by the end of the first quarter next year. It said it was evaluating strategic alternatives for its U.S. and European entities, but that it expects that will result in the sale of both entities to one buyer in a single transaction. The stock closed up 87 cents at $24.19

    Chicago Bridge & Iron (CBI), an engineering firm, said its shareholders approved buying Texas-based Howe-Baker International, which specializes in the design of hydrocarbon processing plants.

    Chicago Bridge announced its plan for the acquisition, then valued at $145 million, back in July. It closed Monday's session down 69 cents at $16.94.

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    Earnings/revenue reports and previews

    Circuit City Stores (CC) reported a third-quarter loss that was slightly narrower than Wall Street's lowered expectations for the period.

    The company lost $62.5 million, or 32 cents a share, in the latest third quarter, after earning $51.6 million, or 26 cents a share, in the year-ago period. Analysts polled by First Call/Thomson Financial expected the company to lose 33 cents a share for the third quarter ended Nov. 30.

    The electronics retailer warned earlier this month that its loss would be wider than expected, citing sluggish sales and remodeling costs in Florida stores. Sales fell 3% to $2.89 billion from $2.98 billion in the same period last year.

    Circuit City's shares closed unchanged at $10.38.

    Diversified manufacturer Pentair (PNR) reduced its estimates for fourth-quarter earnings this morning, saying plans for a restructuring would result in an earnings charge of $25 million for the quarter. The company's shares closed down $1.94 at $22.88.

    The company plans to sell off its equipment business and has created reserves of $33 million related to receivables and inventory. The company also said it expects fourth-quarter earnings , excluding nonrecurring items, of 10 cents to 15 cents. Analysts polled by First Call/Thompson Financial were forecasting earnings of 65 cents for the quarter. The company earned 90 cents a share in the year-ago quarter.

    High-speed communications gear-maker Terayon Communication Systems (TERN) was plummeting after saying early Monday that it was now forecasting steep losses for the fourth quarter, as opposed to a profit. The company said it is now expecting revenues of $60 million to $63 million and a loss of $34 million to $36 million, or 46 cents to 49 cents per share. Analysts polled by First Call/Thomson Financial were expecting revenue of $130.3 million and a per-share profit of 6 cents.

    The company blamed cancellation of orders late in the quarter and an unexpected slowdown in the growth of orders for its products. Terayon shares closed down $8.31 at $5.25.

    Time Warner (TWX) said Monday it is reducing expectations for 2000 growth to reflect the poor box office performance of Little Nicky, softness in cable advertising revenue and weaker-than-anticipated music sales.

    Meanwhile, America Online (AOL), which will soon merge with Time Warner, expects to post fourth-quarter advertising and e-commerce revenue in line with Wall Street consensus expectations, the company said. Time Warner shares closed down $9.47 at $63.25 and AOL ended the trading session down $6.72 at $42.24.

    Time Warner lowered its forecasts for growth in earnings before interest, taxes and depreciation, or EBITDA , for full-year 2000 to 11% from the previous 12% to 13%. The company says it is comfortable with annual advertising revenue growth forecasts in the mid-teens and says it expects "healthy" double-digit EBITDA growth in other core businesses, including publishing and cable systems.

    The New York-based media giant also announced that it is restructuring its ownership of the Road Runner broadband Internet service, which will result in a charge of $20 million to $40 million in the fourth quarter.

    Time Warner says the combined 20% preferred interest held by Microsoft (MSFT) and Compaq (CPQ) will be redeemed and that Road Runner will distribute substantially all its assets to Time Warner and to AT&T Broadband. Time Warner and its affiliates will incur $570 million in cash expenditures related to the restructuring.


    After Friday's Close

    Southern Energy (SOE) revised upward its 2000 and 2001 EPS outlook, citing better-than-expected business performance, especially in the North American natural gas market.

    The company changed its 2000 EPS outlook to between 98 cents and $1, up from a range of 91 cents to 93 cents. The company raised its 2001 EPS projection to a range of $1.15 to $1.20 from a range of $1.07 to $1.12. The First Call/Thomson Financial 11-analyst estimates are $1 for 2000 and $1.16 for 2001. The stock closed up 75 cents at $26.25.

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    Analyst actions

    Upgrades

    Abbott Laboratories (ABT): UP to buy from outperform at Salomon Smith Barney.

    Lincare (LNCR): price target UP to $70 from $47 at Credit Suisse First Boston.

    Tenet Healthcare (THC): UP to strong buy from buy at CSFB.

    Downgrades

    Caterpillar (CAT): DOWN to market perform from market outperform at Goldman Sachs.

    MetLife (MET): DOWN to market perform from buy at Banc of America.

    Sun Microsystems (SUNW): DOWN to accumulate from strong buy at Prudential. Merrill Lynch also lowered its intermediate-term rating on Sun to accumulate from buy.

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    Offerings and stock actions

    Emulex (EMLX), a maker of data storage components, closed down 75 cents at $69.13 on a 2-for-1 stock split. The newly split stock began trading Monday.


    After Friday's Close

    Cooper (COO), which makes contact lenses and health care products, said its board increased its annual dividend to 10 cents, from 8 cents, payable semi-annually.

    The company said that the previously announced 2-cent dividend set to be paid out Jan. 5, 2001, is still in effect. Cooper shares closed down 69 cents at $34.94.

    Real estate company Grubb & Ellis (GBE) began a tender offer for up to 7 million shares at $7 a share, which is a 27% premium above its Wednesday closing price. The tender offer started Friday and will continue until Jan. 17. The stock closed 13 cents higher at $5.56.

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    Miscellany

    Brother, heal thyself. Aetna (AET), the large health insurer that has been going through restructuring, this morning announced more moves to get its house in order. Investors tend to like restructuring -- as long as the company restructuring is steady on its feet and far from bankruptcy. Aetna shares closed up $3.81 at $36.81.

    Aetna said it would cut 5,000 jobs and take after-tax charges of about $100 million in the fourth quarter to pay for the restructuring. The Hartford-based insurer also said it would take an after-tax charge of $235 million in the fourth quarter related to good will in connection with Medicare markets. Other after-tax charges for the fourth quarter include $35 million for the recent spinoff of Aetna, its health care business, and $195 million for the sale of Aetna Financial Services and Aetna International. The sale of those two units was completed last week.

    The insurer said the moves are intended "to strengthen the company's competitiveness, improve its profitability and concentrate its resources on its core mission as a health care and related benefits company."

    Aetna said it expects that move to give it $200 million in pretax savings in 2001 and $300 million in pretax savings in 2002.

    Cavion Technologies (CAVN) did not trade Monday after the company announced it would cut 80% of its workforce and possibly seek bankruptcy protection. The e-commerce security company also said it did not meet its payroll Friday and could not scrape up financing over the weekend. The stock closed at 94 cents Friday, down from a 52-week high of $37.63.

    Gillette (G) on Monday announced a restructuring that will result in layoffs of about 8% of the workforce and the closing of eight factories and 13 distribution centers.

    The consumer products manufacturer said the moves will generate savings of more than $125 million on an ongoing basis. In addition to laying off approximately 2,700 employees, the company says it will outsource the production of "noncore" products, flatten its management structure and write off assets.

    "These actions will significantly improve the company's operating efficiency," said Acting CEO Edward F. DeGraan.

    The moves will result in an after-tax charge of $430 million, or 40 cents per share, in the fourth quarter. The moves are expected to be completed in 12 months.

    Gillette shares closed up $1 at $34.81.


    After Friday's Close

    DaimlerChrysler (DCX) said its struggling U.S. Chrysler unit will idle three U.S. plants and part of a fourth, layoffs that will affect 13,200 employees. The closings, effective the week of Jan. 2, are an effort to cut inventories.

    Chrysler lost $512 million in the third quarter and could lose as much in the fourth quarter. The stock closed up $1.13 at $42.36.

    WestPoint Stevens (WXS), which makes bed, bath and linen products, named M.L. Fontenot as president and COO, replacing Thomas Ward, who is retiring. The change is effective Jan. 8. The stock closed down 27 cents at $6.24.

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    By the Numbers

    5 Biggest NYSE Percent Winners
    Name Price Change %
    ACNielsen (ART) 36
    11.375

    46.2%
    Morgan Keegan (MOR) 26.3125
    6.875

    35.4%
    Maverick Tube (MVK) 19.5
    3.125

    19.1%
    Crown Cork & Seal (CCK) 5.125
    .8125

    18.8%
    Lonestar (LSS) 30.65
    4.85

    18.8%

    5 Biggest NYSE Percent Losers
    Name Price Change %
    United Rentals (URI) 12.75
    3.5

    21.5%
    Safeguard Scientifics (SFE) 5.8125
    1.25

    17.7%
    Startek (SRT) 12.0625
    2

    14.2%
    America Online (AOL) 42.24
    6.72

    13.7%
    Time Warner (TWX) 63.25
    9.47

    13%

    5 Biggest Nasdaq Percent Winners
    Name Price Change %
    Stratus (SERV) 5
    .9375

    23.1%
    Braun Consulting (BRNC) 5
    .90625

    22.1%
    Chattem (CHTT) 7.9375
    1.4375

    22.1%
    ON Semiconductor (ONNN) 6.34375
    1.09375

    20.8%
    Interactive Intelligence (ININ) 27
    4.4375

    19.7%

    5 Biggest Nasdaq Percent Losers
    Name Price Change %
    Terayon (TERN) 5.21875
    8.34375

    61.5%
    International Fibercom (IFCI) 6
    3.5625

    37.3%
    Com21 (CMTO) 5.125
    2.1875

    29.9%
    Photomedex (PHMD) 5.5
    1.96875

    26.4%
    Zygo (ZIGO) 28.3125
    9.3125

    24.8%

    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.

    5 Biggest Dow Point Winners
    Name Price Change %
    J.P. Morgan (JPM) 166.625
    6.625

    4.14%
    Boeing (BA) 68.5
    3.625

    5.59%
    United Technologies (UTX) 73.8125
    2.625

    3.69%
    3M (MMM) 114.625
    2.4375

    2.17%
    American Express (AXP) 56.75
    2.125

    3.89%

    5 Biggest Dow Point Losers
    Name Price Change %
    Microsoft (MSFT) 47.8125
    1.375

    2.79%
    Merk (MRK) 89.3125
    1.0625

    1.18%
    AT&T (T) 20.3125
    .6875

    3.27%
    Hewlett-Packard (HWP) 31.125
    .375

    1.19%
    Walt Disney (DIS) 29.3125
    .0625

    0.21%

    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) 42.9375
    4.875

    10.12%
    Dell (DELL) 19.5
    .375

    1.89%
    Ericsson (ERICY) 11.625
    .375

    3.13%
    Intel (INTC) 33.25
    .5625

    1.73%
    Microsoft (MSFT) 47.8125
    1.3125

    2.66%
    Oracle (ORCL) 32
    3.1875

    11.11%
    Qualcomm (QCOM) 85.4375
    6

    7.55%
    Sun Microsystems (SUNW) 28.5625
    1.9375

    6.34%
    WorldCom (WCOM) 16.5
    .75

    4.33%
    Yahoo! (YHOO) 32
    1.25

    3.79%

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