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Wednesday's Winners & Losers: Tech Stocks!, Lamar, Federated, Sprint PCS, Tumbleweed, Empire Electric

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  • M&A
  • Earnings/revenue
  • Analyst actions
  • Miscellany
  • By the numbers
  • Updated from 1:18 p.m.

    Coming soon to an Office Depot (ODP) near you -- a "closed" sign. Today, the office supplies retailer said it will miss estimates for fiscal 2000 and close 70 North American stores amid a huge restructuring that will result in a $280 million to $300 million charge in the fourth quarter.

    The company said that 2000 earnings would come in at 70 cents a share, much less than the 73 cents that the guys over at First Call/Thomson Financial had predicted. To offset the miss and to help shore up costs, Office Depot said it would cut 10% of its contract work force.

    Further signs of the apocalypse -- Office Depot's same-store sales in the fourth quarter fell 5% from year-ago period but said it expects 15% growth in the fiscal 2001. Office Depot closed up 81 cents, or 11.1%, to $8.13.

    Mergers, acquisitions and joint ventures


    After Tuesday's Close

    priceline.com (PCLN) and insurance holding company W.R. Berkley (BKLY) decided not to go forward with plans to create a new company to sell auto insurance over the Internet.

    Last week, priceline's founder left the struggling company. priceline closed up 41 cents, or 28.9%, to $1.81; W.R. Berkley was down 56 cents, or 1.2%, to $46.

    UtiliCorp United (UCU) said it had notified Empire District Electric (EDE) that it was terminating the merger agreement between the two companies. The deal was valued at $800 million when it was announced in May 1999.

    A clause in the merger agreement said either company could terminate the deal if regulatory approvals were not obtained by the end of 2000. The merger had not received three approvals it needed to proceed. UtiliCorp closed flat at $29.38; Empire was down $5.88, or 22.7%, to $20.

    Back to top

    Earnings/revenue reports and previews

    Ford Motor (F) reported that U.S. vehicle sales dropped 14.1% in December from record levels last year. Ford ended the day up 81 cents, or 3.3%, to $25.13.

    Headwaters (HDWR) apparently will make some headway in the first quarter this year; the company said it would exceed its per share growth estimate of 30%. And for those of you who've never heard of Headwaters -- this company turns coal into briquettes. Headwaters closed up 75 cents, or 33.3%, to $3.

    Usually, it's the Internet that's got all the problems. Now, the similar-sounding Intrenet (INETE), a trucking firm, has said it will lay off 1,700 employees and shutter its subsidiary trucking operations effective yesterday, when the last deliveries were made. No new business will be accepted. All that remains is a small skeleton crew to help sell off its assets, including INET Logistics.

    The company said fuel prices, driver retention and customers' refusal to accept higher rates were key reasons behind the fire sale and layoffs. Intrenet said it couldn't execute its business model without getting more capital, and with the higher fuel costs and too-low rates, that wasn't going to happen in the foreseeable future. Intrenet closed flat at $1.38.

    Tumbleweed's (TMWD) fourth quarter will be a ghost town, with no earnings in site and even fewer people. The company said fourth-quarter earnings would come in with a loss of $17 million to $18.1 million, a much bigger loss than the same quarter a year earlier, which had a $7.6 million loss.

    Revenues are an even bigger problem, however. The company will be missing its top-line numbers, too. Tumbleweed said revenues would miss estimates, coming in between $7.5 million and $8 million, better than last year, but lower than the company's expectations.

    And as the weed blows, the ax shall swing. The company said it would be cutting expenses and reducing the total head count by 20%. Tumbleweed also said that it will be moving toward a subscription-based pricing model. Tumbleweed was blown way on down the road; the stock closed down $6.75, or 67.5%, to $3.25.

    Williams (WMB) said it will meet or beat fiscal 2001 estimates because of good returns in its energy business. The company said it would beat the First Call/Thomson Financial estimate of $1.26 a share, with the lion's share of profitability coming from the unregulated or less regulated areas of its energy business. Williams closed down 44 cents, or 1.2%, to $37.50.


    After Tuesday's Close

    Apple Computer (AAPL) has its own New Year's resolution: to cut the prices of its PCs to unload some inventory.

    The boxmaker set plans for price cuts across its entire line of business systems, including the PowerMac G4 and Power Cube G4 desktop systems, in order to clear its backlog of unsold machines. The company reduced prices by as much as $1,100. Apple's top-of-the-line dual 500-megahertz PowerMac G4 now sells for $2,499, or $1,000 less its price on Dec. 31. Apple's top PowerBook has been cut to $2,199 from the $3,499 introductory price and last week's $2,999 selling price.

    Apple reportedly has 11.5 weeks' worth of systems sitting on dealers' shelves, up slightly from about 11 weeks' worth when the company issued a profit warning early last month. Apple closed up $1.50, or 10.1%, to $16.38.

    Caremark Rx (CMX) said it will record a fourth-quarter charge of $70 million related to the bankruptcy of KPC Medical Management, which bought a portion of Caremark's physician practice management assets in 1999.

    Still, the company said it was "comfortable" with Wall Street's earnings projections of 14 cents a share for the period. It earned 10 cents a share in the year-ago period.

    Caremark said the majority of the current charge stems from potential future real estate lease obligations that were assumed by KPC in 1999. Caremark Rx closed up 31 cents, or 2.4%, to $13.13.

    Efficient Networks (EFNT), a provider of digital-subscriber line equipment, said it expects lower second-quarter revenue, citing a lack of anticipated orders from two major customers.

    The company expects second-quarter revenue of $100 million to $102 million, representing an increase of more than 280% from the $26.4 million recorded in the same period last year. The First Call/Thomson Financial three analyst-estimate expects second-quarter revenue of $151.9 million.

    The company said that excluding revenue from these two major customers, second-quarter revenue from other customers grew more than 25% on a sequential basis. Efficient didn't disclose the names of the two customers. Efficient Networks closed down $2.78, or 22.6%, to $9.53.

    JDA Software (JDAS) said it will fall well short of Wall Street's earnings expectations for the fourth quarter, citing a delay in closing certain software licenses.

    JDA, which provides integrated software and professional services to help companies manage their operations, expects to earn 2 cents to 4 cents a share, lower than the 5 cents a share the company earned in the year-ago period. The single-analyst estimate is currently 16 cents a share, according to First Call. JDA expects revenue of $43 million for the fourth quarter. JDA ended the day down $2.88, or 22.9%, to $9.69.

    Techne (TECH), which makes biotech products, said it's expecting second-quarter earnings and revenue to be 6% to 8% below its original guidance, citing fluctuating foreign currency exchange rates as one reason for the miss.

    The company said it's now expecting earnings between 15 cents and 16 cents, short of the five-analyst estimate of 18 cents. Revenue is expected to be in the range of $26.6 million to $26.7 million. The single-analyst estimate was $28 million. Techne closed down $5.19, or 15.4%, to $28.50.

    Turnstone Systems (TSTN), a hardware and software provider, said it will record a fourth-quarter charge and indicated that revenue for the period will be lower than expected because of customer cancellations and reduced orders.

    The company expects revenue of $26 million to $28 million for the quarter, missing the five-analyst estimate of $41.7 million in revenue. Turnstone also said it expects a $13 million to $15 million charge to increase inventory and bad debt reserves. It didn't provide any EPS figures, but analysts on average are calling for fourth-quarter earnings of 8 cents, down from 11 cents a share in the third quarter.

    Turnstone also said it currently expects "continued weakness" among its competitive local-exchange carrier customer base, and as a result remains "cautious" for the "next several quarters." Turnstone closed down 63 cents, or 9.5%, to $5.94.

    Back to top

    Analyst actions

    Lehman Brothers clipped two of old technology's biggest stalwarts -- Intel (INTC) and Dell (DELL).

    This morning, the brokerage dropped its fiscal 2001 earnings per share estimate on Dell to $1 from $1.10, and lowered Intel's price target to $40 from $55.

    Although the moves don't seem that drastic -- lowered expectations and a smaller price target instead of a more severe rating change -- the words used to justify them were. Daniel Niles' report discussing Intel's future pulled no punches.

    "We believe that PC demand in the last two weeks of December was terrible, leading to lowered expectations for 2001," he wrote.

    And Niles said the future isn't so bright in tech overall, making broader comments that could affect the entire industry's fortunes, not just Intel's. He said that IT spending, a key source of revenue for many tech companies, would only grow 5% to 7% in 2001, much lower than the 10% growth previously expected.

    Also, he warned a price war is likely, with so many companies sitting on large inventories that must be cleared out so new products can enter the marketplace. A price war would lead to lower profit margins, which would affect the bottom line in order to ensure that inventories stay low and market share wasn't eroded.

    Niles didn't stop there, though. The analyst continued to hack and slash at other technology names, cutting a swath through the earnings estimates of Xilinx (XLNX) and Altera (ALTR). The two semiconductormakers were trimmed because demand for their products isn't going to be that strong going forward, Niles said.

    Xilinx's 2002 estimates were cut back to $1.55 a share from $1.62 a share. Altera's 2001 estimates were lowered to $1.15 a share from $1.20 a share. And, again, Niles didn't mince his words.

    "We believe that semiconductor stocks in general will hit new lows ... and that even these new estimates could be too high," Niles wrote.

    Intel closed up $3.17, or 10.2%, to $34.23; Dell was up $2.50, or 14.3%, to $20; Xilinx was up $7.81, or 18.1%, to $51.06; and Altera was up $6.44, or 25.2%, to $32.

    Upgrades

    Lamar Advertising (LAMR): UP to buy from outperform at Salomon Smith Barney. Lamar Advertising closed up $3.91, or 10.7%, to $40.56.

    Sprint PCS (PCS): UP to strong buy from buy at Chase H&Q. Sprint PCS closed up $2.69, or 14.9%, to $20.69.

    Downgrades

    Semco Energy (SEN): DOWN to accumulate from neutral at Merrill Lynch. Semco closed down 94 cents, or 6.2%, to $14.13.

    Adolph Coors (RKY): DOWN to accumulate from buy at Merrill Lynch. Coors ended the day down $5.38, or 6.9%, to $72.88.

    Carnival (CCL): DOWN to buy from strong buy at UBS Warburg. Carnival closed up $1.94, or 6.8%, to $30.25.

    Caterpillar (CAT): DOWN to neutral from outperform at Morgan Stanley Dean Witter. Caterpillar closed up 19 cents, or 0.4%, to $46.50.

    Core Lab (CLB): DOWN to buy from strong buy at Credit Suisse First Boston. Core Lab closed down $1.63, or 6.3%, to $24.13.

    Efficient Networks (EFNT): DOWN to buy from strong buy at Deutsche Bank Alex. Brown. Efficient Networks closed down $2.78, or 22.6%, to $9.53.

    Hewlett-Packard (HWP): Fiscal first quarter sales estimate DOWN to $13.39 billion from $13.54 billion at Salomon Smith Barney. H-P closed up $3.81, or 12.6%, to $34.06.

    Royal Caribbean (RCL): DOWN to hold from strong buy at UBS Warburg. Royal Caribbean closed up 46 cents, or 1.8%, to $25.65.

    Southwest Airlines (LUV): DOWN to accumulate from buy at Merrill Lynch. Southwest ended the day down 60 cents, or 1.8%, to $32.86.

    Texas Instruments (TXN): DOWN to neutral from outperform at Morgan Stanley Dean Witter. Texas Instruments closed up $3.94, or 8.5%, to $50.25.

    Tumbleweed (TMWD): DOWN to hold from strong buy at CSFB. As noted above in more colorful language, Tumbleweed closed down $6.75, or 67.5%, to $3.25.

    Wells Fargo (WFC): DOWN to market perform from outperform at Sanford C. Bernstein. Wells Fargo closed down 81 cents, or 1.5%, to $53.13.

    Initiations

    Akamai Technologies (AKAM): NEW buy at CSFB; price target: $35. Akamai ended the day up $4.50, or 22.8%, to $24.25.

    BEA Systems (BEAS): NEW speculative buy at Salomon Smith Barney; price target: $70. BEA closed up $14.75, or 27.8%, to $67.88.

    CheckPoint Software Technologies (CHKP): NEW buy at CSFB; price target: $175. CheckPoint closed up $33.13, or 29.98%, to $143.63.

    Myriad Genetics (MYGN): NEW buy at Salomon; price target: $106. Myriad Genetics closed up $4.25, or 6.1%, to $73.75.

    Smartforce (SMTF): NEW buy at CSFB; price target: $50. Smartforce closed up $3.06, or 9.4%, to $35.75.

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    Miscellany

    Actrade Financial Technologies' (ACRT) top guy, Amos Aharoni, will be stepping down as chief executive. Fear not, however, Aharoni will stay with the company as its chairman. Actrade closed up $3.06, or 15.96, to $22.25.

    Federated Department Stores (FD), the proud parent of Macy's and Bloomie's, reported that same-store sales samestoresales grew 1.2% in December. But total sales were off a little over $20 million from a year ago, so the gain in same-store sales could also be viewed as a disappointment -- at least that's how Chairman and Chief Executive James Zimmerman put it.

    "Our December department store sales were disappointing, which we think is attributable at least in part to heightened consumer concerns over a slowing economy," he said. Federated closed up $3.31, or 9.6%, to $37.69.


    After Tuesday's Close

    Great Lakes Chemical (GLK), which is a specialty-chemicals maker, said CFO Mark Tomkins is leaving to become CFO and senior vice president for Vulcan Materials (VMC).

    Vulcan, a producer of construction aggregates and industrial chemicals, said Tomkins replaces Peter Clemens III, who is retiring.

    Great Lakes said its vice president and controller, Kevin Mulcrone, will take on the role of CFO on an interim basis. Great Lakes closed up 6 cents, or 0.2%, to $36.31; Vulcan was up 81 cents, or 1.8%, to $47.

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    By the Numbers

    5 Biggest NYSE Percent Winners
    Name Price Change %
    Scientific Atlanta (SFA) 38.6875
    8.6875

    29%
    Telesp Celular (TCP) 31.6875
    6.625

    26.4%
    Technitrol (TNL) 45.625
    9.1875

    25.2%
    Too (TOO) 16.375
    3.25

    24.8%
    Global Crossing (GX) 17.6875
    3.5

    24.7%

    5 Biggest NYSE Percent Losers
    Name Price Change %
    Empire District (EDE) 20
    5.875

    22.7%
    Key Production (KP) 23
    6.5

    22%
    Edison International (EIX) 12.25
    2.75

    18.3%
    Meridian Gold (MDG) 6.0625
    .8125

    11.8%
    Specialty Laboratories (SP) 26.5625
    3.4375

    11.5%

    5 Biggest Nasdaq Percent Winners
    Name Price Change %
    Stockeryale (STKR) 14.75
    4.75

    47.5%
    Extreme Networks (EXTR) 40.5625
    12.9375

    46.8%
    Applied Films (AFCO) 24
    7

    41.2%
    Broadcom (BRCM) 106.9375
    30.8125

    40.5%
    Mcleod USA (MCLD) 16.75
    4.75

    39.6%

    5 Biggest Nasdaq Percent Losers
    Name Price Change %
    JDA Software (JDAS) 9.6875
    2.875

    22.9%
    Efficient Networks (EFNT) 9.53125
    2.78125

    22.6%
    TMNG (TMNG) 8.75
    2.5

    22.2%
    Stratos Lightwave (STLW) 12.8125
    2.9375

    18.7%
    BioSource (BIOI) 11
    2.375

    17.8%

    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 %
    IBM (IBM) 94.625
    9.8125

    11.57%
    J.P. Morgan (JPM) 50.625
    6.625

    15.06%
    Home Depot (HD) 51.4375
    5.875

    12.89%
    Microsoft (MSFT) 47.9375
    4.375

    10.12%
    Wal-Mart (WMT) 58.4375
    4.5625

    8.47%

    5 Biggest Dow Point Losers
    Name Price Change %
    Philip Morris (MO) 42.25
    3.9375

    8.53%
    Merck (MRK) 89.125
    3.875

    4.17%
    ExxonMobil (XOM) 85.25
    3.875

    4.35%
    Procter & Gamble (PG) 74.625
    3.875

    4.94%
    Johnson & Johnson (JNJ) 98.75
    3.25

    3.19%

    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) 41.3125
    8.5

    25.56%
    Dell (DELL) 20
    2.375

    13.62%
    Ericsson (ERICY) 12.25
    1.25

    11.49%
    Intel (INTC) 34.21875
    3.1875

    10.28%
    Microsoft (MSFT) 47.9375
    4.375

    10.12%
    Oracle (ORCL) 32
    5.1875

    19.62%
    Qualcomm (QCOM) 84.0625
    11.25

    15.87%
    Sun Microsystems (SUNW) 33
    7.125

    28.01%
    WorldCom (WCOM) 20
    3.875

    24.31%
    Yahoo! (YHOO) 30.9375
    2.4375

    8.65%

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