Jefferies a Takeover Target?; Windows 95 Ruling Goes Against Microsoft

Donaldson Lufkin & Jenrette (DLJ Quote - Cramer on DLJ - Stock Picks) gets much of the attention in the securities world as a takeover target. But the stock of quiet Jefferies Group (JEF Quote - Cramer on JEF - Stock Picks) keeps rising, too, apparently for the same reasons.

Los Angeles-based Jefferies jumped about 4.5% on Wednesday -- a day when DLJ climbed nearly 5% -- and then held on to its gains despite the overall market's fall Thursday, slipping just 1/16 to close at 83 3/16 a share. DLJ fell 1 7/8 to 85 3/4.

The stock's activity led the New York Stock Exchange to ask Jefferies to comment on the "unusual" action. Jefferies said its policy is to not comment on market activity. (The stock is up about 106% so far this year.)

One fund manager who holds the stock said it acts like someone is accumulating shares because it usually rises on strong volume and falls on weak volume.

Jefferies would make an attractive acquisition. It has a highly regarded junk-bond business and is expanding its investment banking business. Michael Flanagan, an analyst with Fort Washington, Pa.-based Financial Service Analytics, calls Jefferies a "mini-DLJ."

--Erle Norton

In post-close activity (earnings estimates from First Call):

A federal judge ruled that Microsoft (MSFT Quote - Cramer on MSFT - Stock Picks) must license its Windows 95 operating system to computer makers without requiring them to accept its Internet Explorer browser.

Federal Express (FDX Quote - Cramer on FDX - Stock Picks) reported second-quarter earnings of 91 cents per share, 4 cents short of the 10-analyst consensus estimate but up from the year-ago 79 cents. (As originally published, this story incorrectly reported that Federal Express' earnings were 1 cent short of estimates.)

A Food and Drug Administration panel voted 6-2 against approving Sofamor Danek Group's (SDG Quote - Cramer on SDG - Stock Picks) Novus LC intrabody spinal fusion cage. "I'm not convinced of the safety or effectiveness based on the data in the application," one panel member was quoted as saying. Sofamor stock took a dive in Thursday's trading as investors fretted over exactly what ended up happening.

Kent Electronics (KNT Quote - Cramer on KNT - Stock Picks) said it expects to match the nine-analyst third-quarter estimate of 36 cents per share versus the year-earlier 26 cents, but it added that fourth-quarter earnings will be "similar to" those in the current third quarter. The estimate called for fourth-quarter earnings of 40 cents versus the year-ago 28 cents. The company cited lower-than-expected contract manufacturing revenue.

Cyprus Amax Minerals (CYM Quote - Cramer on CYM - Stock Picks) warned that it expects to report a fourth-quarter operating loss, excluding an after-tax charge of $70 million. The nine-analyst expectation called for an operating profit of 23 cents per share versus the year-ago 19 cents. Cyprus cited declining metals and coal prices, disruption caused by the Union Pacific (UNP Quote - Cramer on UNP - Stock Picks) transportation snarls and other factors.

Scholastic (SCHL Quote - Cramer on SCHL - Stock Picks) reported second-quarter earnings of $1.51 per share, 4 cents short of the six-analyst expectation and down from the year-ago $2.21.

Flowers Industries (FLO Quote - Cramer on FLO - Stock Picks) said it expects to increase its stake in Keebler Foods to 51% from 39%, contingent on Keebler's upcoming IPO.

CMG Information Services (CMGI Quote - Cramer on CMGI - Stock Picks) reported first-quarter net earnings of 24 cents per share, or $2.7 million, versus a year-ago operating loss of 81 cents per share. The net figure includes $18.9 million in pretax gains; CMG did not provide a per-share operating figure. The two-analyst view called for an operating loss of $1.37 per share.

Gannett (GCI Quote - Cramer on GCI - Stock Picks) President Douglas McCorkindale reportedly backed 1997 estimates of $2.50 per share and 1998 estimates of $2.75 to $2.80. The 13-analyst estimate for 1998 is $2.77; $2.50 is the 1997 view. The company earned $1.88 in 1996.

Roper Industries (ROP Quote - Cramer on ROP - Stock Picks) reported fourth-quarter earnings of 27 cents per share, 2 cents below the six-analyst outlook but up from the year-ago 23 cents.

Telefonos de Mexico (TMX Quote - Cramer on TMX - Stock Picks) increased the authorized size of its buyback plan to 3 million shares from 1 million shares.

BJ Services (BJS Quote - Cramer on BJS - Stock Picks) set a 2-for-1 stock split.

Oilgear (OLGR Quote - Cramer on OLGR - Stock Picks) set a 3-for-2 stock split.

Atrix International (ATXI Quote - Cramer on ATXI - Stock Picks) set a 1-for-4 reverse stock split.

Amcore Financial (AMFI Quote - Cramer on AMFI - Stock Picks) said it would buy back up to 270,000 shares for the purpose of acquiring privately held Investors Management Group.