Monday's Company Report: CTXS, BPUR, ENGA, CTK, AET, OMI, More

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M&A Earnings/revenue Analyst actions Offerings/stock actions Miscellany

Disappointed with thin volume and the overall lack of direction in the market, investors responded harshly today to earnings warnings. Software manufacturer Citrix Systems (CTXS) got slammed 19 3/16, or 46.3%, to 22 1/4 after it announced this morning that it expects second-quarter earnings to be below analysts' expectations. The company foresees earnings per share to come in between 9 cents and 11 cents, which is below the consensus estimate of 21 cents.

As a result, Citrix Systems was removed from PaineWebber's "highlighted stocks" list. Additionally, the company was downgraded to market performer from strong buy at Banc of America.

Biopure (BPUR) also fell, tumbling 7 3/8, or 31.5% to 16 1/16 after the oxygen therapeutics company said it could be profitable by 2004 and hit break-even sooner than that. J.P. Morgan downgraded the stock to market performer from buy.

Corning(GLW) jumped 18, or 8.5%, to 230 after it said it expects second-quarter earnings before special items to be 78 cents to 80 cents a share, "well above" the First Call/Thomson Financial 10-analyst estimate of 69 cents a share.

The company, which expects revenue growth of about 80% for its Photonic Technology unit, said it continues to have "strong" demand for its optical fiber and cable, photonic modules and components and flat-panel glass products. Corning also said it is focusing on capacity expansions and integrating acquisitions.

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Mergers, acquisitions and joint ventures

British Telecommunications(BTY) lost 1 1/8 to 149 7/8 and Vodafone Airtouch(VOD) added 1/2 to 48 7/16 after the companies confirmed they are working together to acquire additional shares in Spain's second-biggest cell phone firm Airtel Movil.

Under the agreement, Vodafone, which currently has a 21.7% stake in Airtel, has the option to buy up to 55%. If its holding exceeds this amount, British Telecom, which has a 17.8% stake in Airtel, has the option to acquire the excess.

Online marketing firm Engage(ENGA), a majority-owned unit of Internet incubator CMGI(CMGI), announced that it will buy marketing systems provider MediaBridge Technologies in a stock swap worth $268.25 million. Engage dropped 1 9/16, or 8.5%, to 16 15/16.

Bankrupt local exchange communications carrier GST Telecommunications (GSTX) announced that it will go ahead with an open auction for all its assets instead of a sale to Time Warner Telecom (TWTC) after the two companies failed to reach an agreement. Time Warner dropped 2 13/16 to 78.

Maverick Tube(MAVK) dropped 2 9/16, or 8.3%, to 28 3/16 after it said it will buy Canada's Prudential Steel for about $483 million in an all-stock deal that will make it North America's largest producer of welded tubular goods and line pipe for the energy industry.

Based on Friday's closing prices, Prudential shareholders will receive the equivalent of 0.52 of a Maverick share for each share held or $15.99 a share. The shares will be exchangeable, at each holder's option, for Maverick common shares on a one-for-one basis. When the takeover is completed, Chesterfield, Mo.-based Maverick will own about 34.6 million diluted shares outstanding, with a market capitalization of about $1.1 billion based on the June 9 closing price of 30 3/4. Maverick shareholders will hold about 53% of the new company and Prudential shareholders, about 47%.

Microsoft (MSFT) fell 1 15/16 to 66 7/8 after it said it formed a product alliance with Thomson (TMS) and DirectTV to market a system that will integrate digital programming, Internet access, interactive TV and digital video recording in one package. Thomson tacked on 3/4 to 112 1/4.

In a contract valued at $900 million, Nokia(NOK) will supply a full GSM network expansion to Turkish mobile operator Telsim. Nokia added 3/8 to 58 5/8.

Nokia said the order, in which it will upgrade Telsim's GSM900 network with base stations, switching equipment and related technology, is the largest ever for its network unit. In a release, Nokia said the deal will enable Telsim to expand from its current 3 million subscribers to a further 1.5 million prepaid customers.

Northrop Grumman(NOC) dropped 4 1/4, or 5.3%, to 75 3/8 after it agreed to sell its commercial jet aircraft parts unit to private investment house Carlyle Group for $843 million in cash and securities, plus the assumption of $400 million in unfunded benefits, according to the Journal, citing people familiar with the situation.

The newspaper also reported that Northrop and BAE Systems are considered finalists in an auction to buy Lockheed Martin's(LMT) defense-electronics assets, expected to bring about $1.5 billion, according to people familiar with the bidding. Lockheed edged up 1/4 to 25 9/16.

Additionally, Northrop has agreed to buy military systems manufacturer Comptek Research (CTK) for $155.6 million in stock. Comptek climbed 1 7/16, or 8.4%, to 18 5/8.

The Journal reported Sempra Energy(SRE) and PG&E(PCG) are forming a partnership with Mexico's Proxima Gas to build a $230 million 212-mile natural-gas pipeline from Arizona through southeastern California to the Baja California region of northwestern Mexico. The pipeline will boost pipeline capacity between the U.S. and Mexico by about 20%. Sempra edged up 3/8 to 26 5/16, while PG&E added 3/8 to 26 5/16.

United Parcel Service(UPS) is in talks to buy two logistics companies in Asia and Latin America, The Wall Street Journal reported people familiar with the situation as saying. Financial terms of the deal were not disclosed. UPS edged up 1/16 to 59 3/8.

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Analyst actions

This morning, Donaldson Lufkin & Jenrette upgraded UAL(UAL), the parent company of United Airlines, to market performance from underperformance. UAL lifted 9/16 to 56 3/8.

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McDonald's (MCD) was downgraded to neutral from buy at Bear Stearns. McDonald's slipped 1 1/4 to 32 5/8.

Upgrades

Aetna (AET): price target UP to 87 at Salomon Smith Barney. Aetna advanced 6 3/16, or 9.2%, to 73 9/16.

Crescent Real Estate (CEI): intermediate-term rating UP to accumulate from neutral at Merrill Lynch, price target: 22. Crescent Real Estate popped 6 3/16, or 9.2%, to 73 9/16.

ExxonMobil (XOM): UP to buy from attractive at PaineWebber. ExxonMobil climbed 1 9/16 to 80 3/4.

Micron Technologies (MU): UP to strong buy from hold at ING Barings, price target: 150-160. Micron Technology fell 1 to 79.

M.S. Carriers (MSCA): UP to buy from hold at ING Barings. M.S. Carriers added 9/16, or 3.3%, to 17 5/8.

Owens & Minor (OMI): UP to buy from outperform at Lehman Brothers, price target: 18. Owens & Manor rose 1 3/4, or 14.6%, to 13 3/4.

Restoration Hardware (RSTO): UP to buy at Chase Hambrecht & Quist, price target at 12. Restoration Hardware boosted 1 3/8, or 27.9%, to 6 5/16.

Torch Energy Royalty Trust (TRU): UP to buy from neutral at Salomon Smith Barney. Torch Energy Royalty Trust increased 5/16, or 6.7%, to 5.

Downgrades

America Online (AOL): DOWN to buy from strong buy at Wit Soundview. America Online missed 2 3/16 to 52 9/16.

Compuware (CPWR): DOWN to neutral from buy at SG Cowen. Compuware decreased 3/4, or 5.4%, to 13 1/16.

Guidant (GDT): 2000 earnings DOWN to $1.57 per share from $1.62; 2001 earnings DOWN to $1.87 from $1.92, price target to 65 from 75 at CSFB. Guidant gained 3/8 to 47 3/4.

Sepracor (SEPR): DOWN to market performer from buy at Bank of America. Sepracor fell 16 9/16, or 14.2%, to 99 15/16.

Solutia (SOI): 2000 earnings estimate DOWN to $1.40 from $1.90. 2001 earnings estimate DOWN to $1.70 from $2.10 at Goldman Sachs. Solutia lowered 5/16 to 12 9/16.

Waddell & Reed (WDR): DOWN to accumulate from buy at Merrill Lynch. Waddell & Reed slid 13/16 to 32 3/4.

Initiations

iBeam Broadcasting (IBEM): NEW buy at Bear Stearns, price target: 39. iBeam dropped 13/16 to 32 3/4.

New Focus (NUFO): NEW buy at CSFB, price target: 105. New Focus tacked on 1 1/8 to 76 1/8.

NRG Energy (NRG): INITIATED outperform at Morgan Stanley Dean Witter. Price target: 22. NRG Energy improved 1/4 to 18 1/8.

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Offerings and stock actions

Weyerhaeuser(WY) lost 1 1/16 to 46 1/4 after it announced it has completed the previously announced plan to repurchase 12 million shares of common stock and that its board authorized the repurchase of an additional 10 million shares. The company expects to complete the repurchase program within a year.

Steven Rogel, the company's chairman, president and CEO, said, "Given the performance of the company, we continue to feel that our stock is undervalued."

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Miscellany

This summer, FedEx(FDX) plans to launch a service that will let companies build online stores through the express-delivery company. The move is an effort to strengthen FedEx's ties to small and medium-size businesses, according to The Wall Street Journal. FedEx moved down 1/16 to 36 1/4.

The newspaper also said FedEx plans to link its delivery and tracking services to each new online store. FedEx will use Web-based applications from Chicago-based Orbit Commerce. Orbit's chief executive, Paul Reilly, said customers will be able to build a site from scratch in less than 10 minutes.

News Corp.(NWS) is expected this week to announce the appointment of Chase Carey, co-chief operating officer at the company and chief executive of Fox Television as well as aide to chairman Rupert Murdoch, to head the satellite-television venture it is forming called Platco, the Journal reported on Monday. News Corp slid 1/16 to 50 11/16.

Citing people familiar with the situation, the newspaper said News Corp. is in the process of consolidating its various global satellite-TV assets into a newly created company, which it plans to take public.

The North Face's (TNFI) CEO Geoffrey Lurie is stepping down, the sporting-goods maker's new owner VF (VF) said . VF, which acquired the company last month, said president Karl Heinz Sulzburger will be responsible for running all operations effective immediately. The North Face traded up 1/32 to 2.

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