Updated from 12:23 p.m.
American Express(AXP Quote) said it expects first-quarter earnings per share to be about 18% below the 48 cents that it earned in the same period a year ago. The company said the losses reflect pretax charges of about $185 million from the write-down and sale of high-yield securities in the investment portfolio of its subsidiary, American Express Financial Advisors. In the same period a year ago, the company reported write-downs of $18 million. American Express ended the trading day down $1.59, or 3.9%, to $39.71. The company also said that because of the continued decline in the equity markets, and no signs of a pickup in economic activity or spending by corporate customers, earnings growth for the full year is likely to be lower than forecast. Earlier this year, American Express said growth would be at the low end of a previously announced range of 12% to 15%.
Seventeen analysts surveyed by
Thomson Financial/First Call were expecting earnings of 51 cents a share for the quarter and $2.27 a share for the full year. In a statement, the company said that, excluding losses in the high-yield sector, first-quarter earnings per share are expected to be about the same as last year's.
The company said its high-yield portfolio deteriorated in the latter part of 2000, and write-downs in the fourth quarter of last year totaled $49 million. Earlier this year, American Express had said that a persistent weakness in the high-yield market would have a negative impact on earnings, particularly in the early part of 2001.
While first-quarter earnings at the AmEx travel-related services unit are expected to increase 13% to 15%, first-quarter earnings of its aforementioned financial advisers unit will be down about 80%.
Final results for the first quarter are expected to be announced April 23.
Mergers, acquisitions and joint ventures
AOL Time Warner (AOL Quote), Bertelsmann, EMI Group and RealNetworks (RNWK Quote) said this morning that they've signed a deal to build a new online music platform, MusicNet, which will "greatly accelerate" the distribution of music on the Web. Each of the four companies will own a minority stake in MusicNet, which will operate as an independent company. The three music groups, EMI, BMG, and AOL's Warner Music Group, will license their music to MusicNet, while RealNetworks will supply its Internet media delivery technology, the company said in its prepared statement. MusicNet will initially license its platform to both AOL and RealNetworks, which plan to launch branded online subscription services later this year. MusicNet will also license its platform to other distribution outlets, including the infamous Napster, "provided such outlets satisfy legal, copyright and security concerns." "This marks the first time a majority of the major record companies has licensed music to a venture whose goal is mass subscription distribution over the Internet," the companies said. AOL Time Warner closed down $2.98, or 7.4%, to $37.17; RealNetworks was up 50 cents, or 7.1%, to $7.56. Bowater(BOW Quote) said it will acquire Canada's Alliance Forest Products(PFA Quote) for roughly $770 million dollars, including assumed debt. The boards of both companies already approved the merger. Bowater expects the acquisition to immediately add to its earnings. Quebec-based Alliance produces lumber and related products, pulp, newsprint and uncoated groundwood papers. Bowater, which is headquartered in Greenville, S.C., also manufactures newsprint, directory paper, uncoated groundwood specialties, coated groundwood paper, market pulp and lumber. Bowater closed down $1.67, or 3.5%, to $45.73; Alliance Forest was up $1.23, or 8.7%, to $15.35. Electronic Data Systems(EDS Quote), a computer services company, said it will buy German counterpart Systematics in a stock and cash deal worth $570 million. EDS said in a statement it will pay about $430 million in cash and issue about $140 million is EDS shares to acquire all outstanding Systematics shares. EDS said shareholders of 70% of Systematics' outstanding shares have already agreed to sell to EDS their shares for a total of $395 million, or $27 a share. Also, EDS will launch an all-cash tender offer to acquire the remaining publicly held shares for $175 million, or $31 a share. The deal is expected to close around the middle of the year. EDS said the acquisition is expected to be neutral to its 2001 earnings and add to them in 2002. EDS has been on a merger kick of late -- it also agreed to pay $670 million for Sabre Holdings'(TSG Quote) airline data centers and other technology assets. EDS closed down 81 cents, or 1.5%, to $55.05. The lights went out on the proposed merger between Entergy(ETR Quote) and FPL Group(FPL Quote). The two companies this morning said they jointly agreed to terminate the merger agreement they signed last July. The coupling would have created the No. 1 power distribution company. FPL's statement offered little explanation about the breakup, saying only that both companies agreed no termination fee is payable unless either company agrees to a substantially comparable transaction with another party in the next nine months. Entergy said that agreeing to FPL's terms wouldn't create the merger of equals that shareholders approved. Its board also said "there would be no prospects for regulatory approval, because commitments and representations made to regulators would be violated, and no ability to drive the unregulated growth businesses in a direction that Entergy believed would create the most value for its shareholders." Entergy's statement also said that FPL CEO and Chairman James Broadhead proposed changing the merged company management structure. Entergy's financial advisers -- Morgan Stanley Dean Witter and J.P. Morgan -- told the company "that with no premium to shareholders and a revised management structure, the transaction was equivalent to a takeover without a premium." Entergy this morning also announced financial guidance for 2002. The company said it expects earnings in a range of $3.30 to $3.50 a share. That's on track with the current estimate of analysts polled by Thomson Financial/First Call, who expect earnings of $3.40 a share. Entergy closed flat at $38; FPL was down 9 cents, or 0.2%, to $61.21. LVMH Moet Hennessey Louis Vuitton (LVMHY Quote) said it had agreed to acquire fashion design house Donna Karan (DK Quote) for about $243 million in cash. The purchase price, $10.75 per share, represents a premium of 26% over LVMH's original proposal of $8.50 a share and 120% over Donna Karan's $4.87 closing price on Dec. 15, the day before LVMH submitted its original merger proposal, LVMH said. When the deal closes, Donna Karan will be combined with LVMH unit Gabrielle Studio, the licensor of Donna Karan's trademark. Donna Karan, for whom the company was named, will continue to act as chief designer in the new company. She and her husband, Stephen Weiss, have agreed to exchange much of their Donna Karan stock for shares in the new venture. The Parisian LVMH intends to operate the New York-based Donna Karan as an autonomous company in the LVMH Fashion Group. The merger should close in the third quarter of 2001. LVMH closed down 13 cents, or 1.2%, to $9.94; Donna Karan was up $1.43, or 15.9%, to $10.41. Back to top Earnings/revenue reports and previews
Circuit City Group (CC Quote) topped analysts' current expectations for the latest fourth quarter, but the bottom line came in below the year-ago numbers, and the company's sales declined 9% from the same period last year. The consumer electronics retailer, along with CarMax Group (KMX Quote), makes up Circuit City Stores. The Circuit City Group posted fourth-quarter earnings from continuing operations of $101.2 million, or 49 cents a share, down from $160.1 million, or 78 cents a share, in the year-ago period, including the inter-group interest in CarMax. According to Thomson Financial/First Call, analysts expected the company to earn 46 cents in the period. Total sales for the Circuit City Group in the quarter ended Feb. 28 fell to $3.18 billion from $3.48 billion in the prior-year period. Same-store sales 
fell 11% for the quarter. Excluding the major-appliance category, which declined significantly beginning late in the first quarter and from which the company exited during the third, comparable sales dropped 2% for the fourth quarter. CarMax reported fourth-quarter earnings of $7.8 million, or 7 cents a share, compared with a loss of $1.7 million, or 2 cents a share, a year ago. Total sales for CarMax rose 27% to $640 million from $504.2 million in the same quarter last year. Same-store sales increased 23%. Circuit City Stores reported consolidated total sales of $3.82 billion, down 4% from $3.98 billion in the fourth quarter of the prior year. Earnings from continuing operations totaled $103.2 million in the latest fourth quarter, compared with $159.7 million in the same period last year. Circuit City closed up 47 cents, or 4.4%, to $11.07; CarMax was up 10 cents, or 1.3%, to $7.64. i2(ITWO Quote) said it is lowering its first-quarter earnings guidance, which it expects to fall below Wall's Streets expectations, citing decreased demand due to the economy. The company also said it would lay off 10% of its workforce. For its first quarter ended March 2001, i2 expects to earn 2 cents a share, down from the 6 cents it predicted on Jan. 18. Forty analysts surveyed by Thomson Financial/First Call estimated that the Dallas-based company would earn 5 cents a share. In the year-ago period, i2 earned 4 cents a share. i2 believes it will report first-quarter revenue of $355 million, which is up from the $186.3 million it posted in the same quarter one year ago -- so obviously operating costs must have been big this quarter. According to Thomson Financial/First Call, 6 analysts expect revenue of $348.5 million. The company, an e-business software producer, said it will lay off 600 of its 6,100 employees and that it expects to take a charge of an undisclosed amount as a result in its second quarter. i2 closed up 94 cents, or 6.5%, to $15.44. priceline.com (PCLN Quote) said it is still on target to generate an operating profit in the second quarter of this year. At an analysts' conference in Las Vegas, priceline executives said they were comfortable with previous forecasts of losses of 5 cents to 7 cents a share, excluding a variety of restructuring and "special" charges, in the first quarter For the second quarter, the "name-your-own-price" e-tailer didn't give a specific earnings target, but simply reiterated its previous forecast of a 15% to 20% rise in revenue above first-quarter levels and a pro forma operating profit, again excluding restructuring and "special" charges. The stock ended the trading day up 53 cents, or 20.99%, to $3.06. Wendy's International (WEN Quote), the maker of those square hamburgers, said same-store sales for March grew by about 2.6%. The No. 3 fast-food chain also projected positive growth in the upcoming months. "We are optimistic about continuing to produce sales growth due to our systemwide focus on restaurant operations and quality products," the company said in a prepared statement. That's certainly a square statement. Wendy's closed up 59 cents, or 2.6%, to $22.91. Back to top Analyst actions
History is important. Just ask W.R. Hambrecht's Jim Liang, who upped his ratings on two semiconductor companies, Xilinx (XLNX Quote) and Altera (ALTR Quote). The pair of chipmakers, which have fallen to 17-month lows, were upgraded to buy from neutral because Liang said they'd had enough -- falling to their historical trough valuations. Keep the faith. Liang said that an industry recovery was likely to take place in the back half of 2001. That said, not everyone on Wall Street is entirely convinced that now is the time to buy anything semiconductor-related based on simple historical valuation. Judging from his strong words, Credit Suisse First Boston's John Pitzer sure wasn't convinced. "We are not big fans of the 'valuation call,'" he said, commenting on semiconductor capital-equipment makers. At issue, really, is the fact that semiconductor-equipment makers have been a haven for investors battered by ordinary chipmakers like Altera and Xilinx. And, lo and behold, the stock prices of both Applied Materials (AMAT Quote) and KLA-Tencor (KLAC Quote) withstood the past two months better that the industry tracker Philadelphia Stock Exchange Semiconductor Index. So should you jump into this stronger-than-everything-else sector? "Still too early," Pitzer wrote. "Neither fundamentals nor valuations warrant an aggressive stance on semiconductor capital-equipment stocks in the current environment. We continue to believe that deteriorating fundamentals in the face of relatively high valuations will provide investors with better buying opportunities in the summer months." Xilinx closed down $2, or 5.7%, to $33.13; Altera was down 75 cents, or 3.5%, to $20.69; Applied Materials was down $3.50, or 8.1%, to $40; and KLA-Tencor was down $4.56, or 11.6%, to $34.81.
Goldman Sachs analyst John Heinbockel pushed Safeway (SWY Quote) this morning, saying the company's stock is poised for a 15% near-term rally as investors discover the supermarket stock's underperformance this year. Then again, touting the company's underperformance and telling investors to buy the stock could also help cause that 15% rally. Heinbockel said that the company was due for a boost in operating momentum, had unique long-term growth opportunities and was cheap enough to interest investors. "Safeway is the one food retailer that should hold up well in any eventual adverse sector rotation," he wrote, reiterating his U.S. recommended for purchase list rating and $65 price target. Safeway closed up 43 cents, or 0.8%, to $55.58 today.
Companies that help other companies find temporary employment were a pretty explosive bunch in the past three years, underperforming in 1998 and 1999 before rallying into 2000 and finally keeping pace with the S&P 500 as times grew tough. According to a recent note from Goldman Sachs, these guys may not be out of the woods yet. "We think earnings estimates may be 10% to 15% too high," the brokerage wrote. "Most estimates reflect some kind of bounce back in demand, which is not likely to materialize with the U.S. economy not snapping back. In fact, we think conditions could even worsen with companies cutting costs and staff." In other words, companies lay off folks -- instead of hiring them -- when the economy slows. Goldie said that earnings releases from Manpower (MAN Quote), Adecco (ADO Quote), Heidrick & Struggles (HSII Quote) and kforce.com (KFRC Quote) would be "slightly better," while Modis Professional Services (MPS Quote) and Robert Half International (RHI Quote) could "have more difficulty." Manpower closed up 34 cents, or 1.2%, to $29.14; Adecco closed down 30 cents, or 0.5%, to $64.25; Heidrick & Struggles was down $1.19, or 4.1%, to $27.75; kforce.com was down 31 cents, or 5.9%, to $5; Modis was down 18 cents, or 3.9%, to $4.42; and Robert Half was down 36 cents, or 1.6%, to $21.99.
Oil companies went on a tear in 2000, outperforming the S&P 500 by 19 percentage points, then topping it by another 12 percentage points in the first quarter of 2001. The large oil companies outperformed the market for the last four quarters, a streak unmatched since 1987. That's a pretty hot streak, all things considered. Merrill Lynch's Steven Pfeifer thinks that situation could change. He downgraded his intermediate-term rating on Amerada Hess(AHC Quote) and Conoco(COC Quote) to accumulate from buy after both stocks hit record highs unseen even in the 1987 heyday. Pfeifer maintained his intermediate-term buy ratings on Chevron(CHV Quote) and ExxonMobil(XOM Quote), however. The move is a strict valuation call. Pfiefer likes the long-term outlook of the industry. "We are still positive on the two- to three-year industry outlook, but believe that we may have the opportunity to re-establish a more aggressive position in the integrated oils at lower levels in the second-quarter 2001," he wrote. Amerada Hess ended the trading day down $3.45, or 4.4%, to $74.67; Conoco was down 69 cents, or 2.5%, to $27.41; Chevron was down 93 cents, or 1.1%, to $86.87; ExxonMobil was down $1.40, or 1.7%, to $79.60.
Upgrades Winn-Dixie (WIN Quote): UP to accumulate from neutral at Merrill Lynch. W-D was up 81 cents, or 2.9%, to $29.18. Downgrades Acxiom (ACXM Quote): DOWN to hold from buy at Credit Suisse First Boston. Acxiom closed down $9.38, or 44.9%, to $11.50. Dendrite International (DRTE Quote): DOWN to market outperform from trading buy at Goldman Sachs. Dendrite International closed down $3.31, or 23.7%, to $10.69. Network Appliance (NTAP Quote): DOWN to neutral from accumulate at Bear Stearns. Network Appliance closed down $1.56, or 9.3%, to $15.25. Initiations Elbit Systems (ESLT Quote): NEW buy at Credit Suisse First Boston; price target: $18. Elbit closed up 19 cents, or 1.4%, to $13.81. Back to top Offerings and stock actions
Lucent Technologies (LU Quote) said Morgan Stanley has exercised its option to buy Class A common shares in Agere Systems in exchange for $519 million of Lucent's commercial paper, or short-term debt. That commercial paper will be retired, reducing Lucent's outstanding debt, the telecom equipment giant said. Agere, which debuted last week at $6 a share on the New York Stock Exchange , was formed as a result of Lucent's spinoff of its microlectronics business. Lucent has been repaying its short-term debt, held by Morgan Stanley, which underwrote Agere's IPO. Lucent closed down $1.14, or 11.4%, to $8.83; Agere was down 80 cents, or 12.9%, to $5.38. Back to top Miscellany
CommScope (CTV Quote) said it had cut about 500 jobs, or 13% of its workforce, as well as temporary workers, in response to the slowing economy. The maker of broadband communication cables also said it would take a charge of 2 cents a share as a result of the layoffs. The company, however, maintained the first-quarter earnings expectations of 27 cents to 30 cents a share it forecast on March 7, excluding the charge. According to Thomson Financial/First Call, analysts on average see first-quarter earnings of 28 cents a share, compared with 32 cents a share in the same period last year. CommScope closed down 88 cents, or 5.3%, to $15.80. DuPont (DD Quote) said it would cut its workforce by 4,000 jobs, or 4%, eliminate 1,300 contract workers and close some plants due to weakening apparel and textile markets. Of the full-time jobs being cut, 2,000 will come from the chemical company's polyester and nylon fiber businesses. Both units will shut down older and less competitive production lines. DuPont's lycra operations in the U.S. and Europe will also suffer job cuts. About 75% of the affected employees and contractors are in the U.S. The company, which is based in Wilmington, Del., like so many of them are, expects pretax payroll savings of $400 million with the cuts, with a third to be realized in 2001 and the rest in 2002. DuPont will take a one-time charge in the second quarter of 40 cents to 45 cents a share. The exact amount of the charge will not be determined until the end of the second quarter. DuPont closed up 26 cents, or 0.6%, to $40.96. Shares of Southern (SO Quote) climbed to a new 52-week high of $35.72 on the Big Board after the electric power company said it named president and chief executive officer Allen Franklin to the added post of chairman. The company said Franklin replaced retiring chairman A.W. "Bill" Dahlberg. Southern closed up 20 cents, or 0.6%, to $35.29. WebMD(HLTH Quote) said CEO Martin Wygod would replace W. Michael Long, who resigned, as chairman of the board. The company offered no explanation for Long's resignation. WebMD closed down 72 cents, or 12.9%, to $4.84. Back to top By the Numbers
| 5 Biggest NYSE Percent Winners |
| Name | Price | Change | % |
| Ceridian (CEN Quote) | 16.30 |  
2.25 |
16% |
| Aracruz (ARA Quote) | 13.55 |
.99 |
7.9% |
| Enerplus (ERF Quote) | 16.62 |
1.08 |
6.9% |
| Ocwen Financial (OCN Quote) | 9.05 |
.56 |
6.6% |
| William Lyon Homes (WLS Quote) | 9.70 |
.60 |
6.6% |
| 5 Biggest NYSE Percent Losers |
| Name | Price | Change | % |
| Beverly Enterprises (BEV Quote) | 6.40 | 
1.60 |
20% |
| USG (USG Quote) | 13.11 |
2.17 |
14.2% |
| Owens-Illinois (OI Quote) | 7.35 |
1.15 |
13.5% |
| Keithley Instruments (KEI Quote) | 14.05 |
2.15 |
13.3% |
| Penn TreatyAmerican (PTA Quote) | 8.85 |
1.32 |
13% |
| 5 Biggest Nasdaq Percent Winners |
| Name | Price | Change | % |
| Apogee (APOG Quote) | 8.5625 |
1.4375 |
20.2% |
| Interdigital (IDCC Quote) | 8.875 |
1.40625 |
18.8% |
| U.S.A. Detergents (USAD Quote) | 6.84375 |
1.03125 |
17.7% |
| Allos Therapeutics (ALTH Quote) | 6.75 |
.9375 |
16.1% |
| Bonso Electronics (BNSO Quote) | 7.625 |
1 |
15.1% |
 |
| 5 Biggest Nasdaq Percent Losers |
| Name | Price | Change | % |
| Art Technology (ARTG Quote) | 5.96875 |
6.03125 |
50.3% |
| Acxiom (ACXM Quote) | 11.5 |
9.375 |
44.9% |
| Noven (NOVN Quote) | 19.125 |
9.1875 |
32.5% |
| HEI (HEII Quote) | 5.125 |
2.0625 |
28.7% |
| Microtune (TUNE Quote) | 5.625 |
2.1875 |
28% |
|
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 | % |
| Microsoft (MSFT Quote) | 55.8125 |
.6875 |
1.26% |
| Citigroup (C Quote) | 45.70 |
0.72 |
1.60% |
| Coca-Cola (KO Quote) | 45.85 |
0.69 |
1.53% |
| DuPont (DD Quote) | 40.96 |
0.26 |
0.64% |
| Wal-Mart (WMT Quote) | 50.64 |
0.14 |
0.28% |
|
| 5 Biggest Dow Point Losers |
| Name | Price | Change | % |
| Hewlett-Packard (HWP Quote) | 28.92 |
2.35 |
7.52% |
| 3M (MMM Quote) | 102.05 |
1.85 |
1.78% |
| Merck (MRK Quote) | 74.25 |
1.65 |
2.17% |
| American Express (AXP Quote) | 39.71 |
1.59 |
3.85% |
| IBM (IBM Quote) | 94.66 |
1.52 |
1.58% |
|
Dow point gain and loss data are based on New York closing prices and do not reflect late composite trading. Back to top
