Tech Sells Off as Blue-Chips Cling to Meager Gains
On transports! On small-caps! Go cyclicals and airlines! Now where's that road?
The aforementioned rallied nicely, but with Rudolph-esque (and we don't mean Nureyev, Valentino or Giuliani) tech stocks unable to climb out of a deep funk, the Christmas-like atmosphere on Wall Street defrosted like so many turkeys.
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Inflation, Anyone?
With the long bond back above 5.50%, "I think stock prices come into question," Kraft said. "Right now, we're adjusted for disinflation; there's almost a defensive bias. [Fed members] are defending the fact there is no inflation. It's almost absurd." Noting recent gains in prices for commodities such as paper and oil, the hedge fund manager said investors have been lulled into complacency. With the most recent CPI and PPI reports, "they're not seeing the full representation of the move in oil in March," he said. "The tell will be in the next monthly CPI and PPI. I think inflation is there. [Cyclical stock performance] is the tell we're perhaps going into the next phase of the market." Among other indices, the Dow Jones Utility Average shed 6.42, or 2.2%, to 291.59; and the American Stock Exchange Composite Index slid 1.68, or 0.2%, to 736.12. The price of the 30-year Treasury bond fell 8/32 to 96 6/32, its yield rising to 5.51%.Wednesday's Company Report
By Heather MooreStaff Reporter (Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.) As noted above, J.P. Morgan picked up 3 9/16 to 132 7/8 after rising as high as 140 1/16 after posting a first-quarter profit of $3.01 a share, blowing away the 11-analyst estimate of $1.73 and moving up from the year-ago $1.80.
Today's wave of cyclical love kissed few harder than those of the transportation variety. Delta (DAL), ahead of tomorrow's earnings report, flew 2 11/16 to 71 3/16; Northwest Airlines (NWAC) rose 2 5/8, or 9.4%, to 30 9/16; Continental Airlines (CAIB) flew 2 1/4, or 5.5%, to 43 5/16; US Airways added 1 to 55 3/8; and AMR jumped 3 11/16, or 5.7%, to 69.
Also as mentioned earlier, yesterday's Internet winners were today's losers. Florida Banks (FLBK) plunged 14 1/16, or 45.3%, to 17 after Wachovia lowered its recommendation to neutral from buy. Similarly, Net.B@nk (NTBK) sank 63 15/16, or 27.3%, to 172 and Sovereign Bancorp (SVRN) sank 3, or 17.3%, to 14 11/16.
Mergers, acquisitions and joint ventures
Casella Waste Systems (CWST) climbed 3, or 14.6%, to 23 9/16 after announcing it will terminate its merger agreement with KTI (KTIE) unless KIT allays its concerns about a variety of financial and operational issues. KTI slid 1 5/8, or 17.1%, to an annual low of 7 7/8. priceline.com (PCLN) surged 9 1/2, or 11.7%, to an all-time high of 93 1/8 on news of a five-year marketing deal with First USA, a unit of Bank One (ONE), which lost 7/8 to 57 1/4. The companies said the deal could mean $200 million in revenue for priceline.com and millions of new accounts for First USA. The Nihon Keizai Shimbun reported that Sony (SNE) and IBM have agreed to jointly develop and market digital editing systems for TV broadcasting. Their first client will be CNN, which will pay them at least 5 billion yen, the paper said. Sony picked up 9/16 to 99 5/16; IBM fell 5/8 to 179 3/8.Earnings/revenue reports and previews
@Home (ATHM) gave up 22 13/16, or 12.5%, to 159 1/16 even after last night meeting the 14-analyst consensus with a first-quarter operating loss of 7 cents a share vs. the year-ago loss of 10 cents. E-Tek Dynamics (ETEK) swelled 6 3/16, or 14.3%, to an all-time high of 49 1/2 after reporting third-quarter earnings of 14 cents a share vs. the seven-analyst consensus of 11 cents and year-ago earnings of 6 cents. The company also said CEO Michael Fitzpatrick was named to the added post of chairman. U.S. Bancorp Piper Jaffray upped its recommendation to buy from neutral. Identix (IDX) expanded 1/2, or 6.9%, to 7 3/4 after saying it sees third-quarter revenue coming in flat with the year-ago period and that it expects to post a quarterly loss. The three-analyst estimate called for earnings of 2 cents a share vs. the year-ago loss of 3 cents. Inprise (INPR) declined 5/16, or 8.9%, to 3 1/4 after warning it expects a first-quarter loss of 54 cents to 56 cents a share, including charges, vs. the three-analyst view for break-even results. The company hired Hambrecht & Quist to weigh whether it should split into two. Inprise also appointed Dale Fuller interim president and CEO, replacing Delbert Yocam, who -- along with CFO Kathleen Fisher -- was asked to leave March 31. Intel sliced off 3 9/16, or 5.9%, to 57 after last night posting first-quarter earnings of 57 cents a share, 2 cents above the 33-analyst forecast and well ahead of the year-ago 36 cents. But the chipmaker said second-quarter revenue may be flat to slightly lower than the first quarter's $7.1 billion. Today, Credit Suisse First Boston started coverage with a buy. KLA-Tencor excelled 3 7/16, or 7.5%, to 49 after reporting third-quarter profits of 22 cents a share, including a gain. The 17-analyst forecast called for operating earnings of 14 cents vs. the year-ago 34 cents. Lucent (LU) jumped 2 7/16 to 59 3/8 after saying its second-quarter earnings will meet or exceed the 30-analyst outlook of 15 cents a share, thus quelling rumors to the contrary. Seagate (SEG) advanced 1 9/16, or 5.9%, to 28 3/16 after reporting third-quarter profits of 49 cents a share, reversing a 10-cent loss a year earlier and besting the 10-analyst consensus by 3 cents. However, the disk-drive maker forecast that fourth-quarter revenue will be "flat" sequentially. In other earnings news:| Upside Surprises | |||||||
| Company | Qtr | EPS | First Call View | Yr. Ago EPS | Number of Analysts | Price Change | Close |
| Adtran (ADTN) | 1Q | 24c | 23c | 25c | 12 | +1 5/16 | 21 15/16 |
| Banknorth (BKNG) | 1Q | 53c | 52c | 43c | 4 | +1 1/4 | 27 3/8 |
| Computer Network (CMNT) | 1Q | 11c | 9c | 4c | 2 | +2 1/8 | 16 1/2 |
| Gentex (GNTX) | 1Q | 22c | 21c | 17c | 6 | +2 3/4 | 24 17/32 |
| Hughes Electronics (GMH) | 1Q | 10c | 9c | 13c | 5 | -3/8 | 54 5/8 |
| Huntington Bancshares (HBAN) | 1Q | 46c | 45c | 42c | 12 | +1/4 | 33 3/8 |
| Johnson Controls (JCI) | 2Q | 70c | 69c | 56c | 8 | +2 1/4 | 69 5/8 |
| Pope & Talbot (POP) | 1Q | -17c | -27c | -49c | 5 | +2 | 8 1/2 |
| SouthTrust (SOTR) | 1Q | 62c | 61c | 54c | 17 | +1/16 | 38 1/16 |
| Sysco (SYY) | 1Q | 22c | 21c | 19c | 11 | +5/8 | 27 5/16 |
| Time Warner (TWX) | 1Q | 0c | -4c | -12c | 15 | -3 1/2 | 73 1/2 |
| Downside Surprises | |||||||
| Company | Qtr | EPS | First Call View | Yr. Ago EPS | Number of Analysts | Price Change | Close |
| Rowan Cos. (RDC) | 1Q | -12c | -6c | 48c | 22 | -1 1/8 | 11 15/16 |
| In-Line Reports | |||||||
| Company | Qtr | EPS | First Call View | Yr. Ago EPS | Number of Analysts | Price Change | Close |
| BestFoods (BFO) | 1Q | 49c | 49c | 44c | 14 | -5/8 | 46 3/8 |
| New York Times (NYT) | 1Q | 34c | 34c | 32c | 11 | +1 5/16 | 31 1/4 |
| U.S. Bancorp (USB) | 1Q | 51c | 51c | 47c | 22 | -1 5/16 | 35 13/16 |
| Wachovia (WB) | 1Q | $1.18 | $1.18 | $1.04 | 22 | +3/16 | 85 1/2 |
| Winn-Dixie (WIN) | 3Q | 40c | 40c | 41c | 7 | -5/16 | 36 15/16 |
Offerings and stock actions
Sagent Technology (SGNT:Nasdaq) rocketed 6 9/16, or 72.9%, to 15 9/16 after 5 million shares were offered via an IPO at 9. Oracle (ORCL) tacked on 9/16 to 24 1/8 after its board added 85 million shares to its stock-buyback plan.Analyst actions
Biomatrix (BXM) dropped 9 11/16, or 10.8%, to 80 5/16 after Prudential Securities cut the stock to accumulate from strong buy. TheStreet.com this afternoon reported on Biomatrix's travails. Infoseek dropped 19 11/16, or 24.5%, to 60 3/8 after BT Alex. Brown cut the stock to buy from strong buy. Last night, the company reported a second-quarter loss of 39 cents a share vs. the nine-analyst estimate for a loss of 41 cents. Sprint PCS Group (PCS) sloughed off 8, or 14.4%, to 47 1/2 after Morgan Stanley Dean Witter lowered its recommendation to neutral from strong buy. Xoom.com (XMCM) gave back 11 3/8, or 12.1%, to 83 after spiking yesterday on news the company was in a deal to sell a large stake to a suitor but that the deal fell through. Today, BancBoston Robertson Stephens started coverage with a buy. Ziff-Davis (ZD) slipped 3/8 to 18 5/8 Merrill Lynch upped its recommendation to accumulate from neutral.Miscellany
Dow Chemical (DOW) hopped 8, or 7.9%, to an all-time high of 109 1/2 after unveiling its Liquid Armor corrosion-inhibited deicer. First Sierra Financial Services (FSFH) dropped 1 1/4, or 6.8%, to 19 3/4 after announcing plans to set up a business-to-business Internet bank. Harris (HRS) added 5 5/8, or 20.1%, to 33 5/8 after saying it will spin off its Lanier Worldwide office equipment unit to shareholders to focus on its communications equipment business. As part of the reorganization, the company will cut 300 to 400 jobs, resulting in annual savings of $20 million to $30 million. Indymac Mortgage (NDE) shot up 2 1/16, or 17.5%, to 13 7/8 on news the company plans to do more business online rather than through brokers. Raytheon (RTN) rose 4 3/4, or 7.4%, to an all-time high of 68 13/16 on expectations that recent developments in Kosovo will raise demand for the company's missiles.>To order reprints of this article, click here: ReprintsTheStreet Premium Services For Personal Service: 877-471-2967
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