Thursday's Company Report: WB, STI, DRIV, IMC, IDTC, VISX, More

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

Wachovia(WB) shed 13 1/8, or 18.7%, to 57 1/16 after it warned investors that it would miss second-quarter and fiscal 2000 consensus estimates. The second-quarter, 18-analyst estimate expects the company to post a $1.34 profit, while the fiscal 2000 20-analyst estimate forecasts a $5.46 profit. The regional bank blamed the shortfall on rising interest rates. Salomon Smith Barney cut its rating on Wachovia to neutral from outperform.

Other regional banks were under pressure from the news, with Suntrust (STI) down 4 5/16, or 7.4%, to 53 7/8, and National City (NCC) dropped 1 3/16, or 6.2%, to 18.

Mergers, acquisitions and joint ventures

America Online(AOL) added 2 1/16 to 54 1/2 after it said it will give users mobile Internet access through Internet-ready phones from Sprint PCS(PCS). Sprint PCS climbed 1 5/16 to 62 7/16.

Bellsouth(BLS) dropped 13/16 to 46 5/8 after its Mobility DCS unit said it had awarded Nortel (NT) a three-year $200 million contract to build a next- generation wireless network in the southeastern U.S. Nortel climbed 1 7/16 to 65 13/16. The network will be supplied with Nortel's S8000 GSM base transceiver stations, DMS-MSC digital mobile switching and network management equipment.

Brown-Forman(BF.B) climbed 9/16 to 57 3/4 after it said it will form a joint venture with Finnish state-owned alcohol group Altia to market its Finlandia Vodka brand worldwide, according to Reuters.

Altia said Brown-Forman paid $83 million for a 45% stake in the newly formed group Finlandia Vodka Worldwide. Altia will own the other 55%.

Gallaher Group, a London tobacco company, said it has entered a $390.5 million cash deal to buy the Russian cigarette company Liggett-Ducat. The terms call for Gallaher to purchase Liggett-Ducat from the Vector Group(VGR), a U.S. holding company, and take on $56.4 million of Liggett-Ducat's debt as of March 31, 2001. Vector gained 1 5/8, or 10.1%, to 17 11/16.

Verizon Wireless named Lucent(LU) its primary supplier of network infrastructure in a deal expected to be worth up to $1.5 billion. The proposed deal will allow the largest U.S. wireless carrier to increase its coverage and capacity in key markets. Lucent lifted 3 1/16, or 5.4%, to 59 11/6.

The parties expect to enter into a purchase agreement, which will develop the existing relationships between Lucent and Verizon Wireless. Verizon is the venture that resulted from the merged U.S. wireless businesses of Bell Atlantic(BEL) and Vodafone AirTouch(VOD).

Separately, Lucent is reviewing a possible spinoff for its microelectronics division, which according to analysts, could be valued at more than $50 billion, The Wall Street Journal reported.

Motorola(MOT), Symbol Technologies(SBL) and Connect Things, an Ericsson(ERICY) affiliate, agreed to invest $500 million in a new company that would add scanning technology to Web shopping over wireless and Internet-enabled products. The technology will allow Motorola and other mobile phone companies to make cable TV set-top terminals to access the Web through Symbol bar code scanning technology. Motorola moved up 1 13/16, or 5.6%, to 34 3/8, Symbol sailed up 6 3/8, or 11.7%, to 59 and Ericsson slipped 5/8 to 21 5/8.

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Earnings/revenue reports and previews

Corel(CORL) slipped 1/4, or 6.2%, to 3 25/32 after it warned investors it would report soft second-quarter revenue as well as a loss for the quarter. The floundering Canadian software maker said it expects revenues between $37 million and $38 million and a loss between $22 million and $24 million. The two-analyst estimate forecasted the Corel to post a second-quarter loss of 32 cents.

Digital River(DRIV), an e-commerce services provider, dropped 2 1/2, or 24.4%, to 7 3/4 after it said it saw second-quarter sales in the range of $30 million to $30.5 million, below Wall Street's forecast due to an especially slow period for its software services unit.

However, the company said it should "meet or better" the First Call/Thomson Financial consensus loss per share estimate of 40 cents a share for the quarter, compared to a loss of 27 cents a share in the same year-ago period.

H.J. Heinz(HNZ) added 13/16 to 40 7/16 after it posted fourth-quarter earnings of 63 cents a share, in line with the 12-analyst estimate and up from the year-ago 60-cent profit.

International Flavors & Fragrances(IFF) dropped 2 1/4, or 6.6%, to 32 after it said it expects its earnings for the second quarter and the year to be lower than expected.

The company said it anticipates sales to decline about 1% and to be comparable to 1999's sales levels. It's now expecting second-quarter earnings of the same as the year-ago 48 cents a share, which would miss the four-analyst estimate of 53 cents.

International Multifoods(IMC) climbed 2 11/16, or 20.4%, to 15 7/8 after it reported first-quarter earnings of 25 cents a share, in line with the four-analyst estimate and a penny better than the year-ago report.

Telecommunications company IDT (IDTC) popped 3 5/8, or 12.9%, to 31 13/16 after it posted a third-quarter operating loss of 12 cents a share, well below the two-analyst estimated profit of 8 cents and the year-ago earnings of 7 cents. The loss came despite a year-over-year jump in revenue (revenue did decline sequentially), while net income benefited from an investment gain.

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Analyst actions

LTV (LTV) was unchanged at 2 7/8: second-quarter loss estimate WIDENED to 38 cents from a loss of 15 cents on lost sales at Salomon Smith Barney.

Dow component Coca-Cola(KO) was upgraded this morning to buy from outperform at Salomon Smith Barney. Coca-Cola popped 2 11/16, or 5%, to 55 11/16.

Upgrades

U.S. Bancorp (USB): DOWN to maintain from buy at A.G. Edwards; 2000 EPS estimate down to $2.20 from $2.30; 2001 EPS view DOWN to $2.40 from $2.54. U.S. Bancorp declined 1 3/8, or 5.9%, to 21 5/8.

Business Objects (BOBJ): UP to strong buy from accumulate at Prudential. Business Objects declined 5/16 to 91 1/2.

Conexant (CNXT): UP to strong buy from outperform at Morgan Stanley Dean Witter; price target: 100. Conexant jumped 6 1/2, or 15.6%, to 48.

Corning (GLW): price target UP to 270 from 230 at Donaldson Lufkin & Jenrette. Corning leaped 11 1/4 to 248 1/4.

Payless Shoesource (PSS): target price UP to 68 from 60 at Prudential. Payless Shoesource edged up 1 13/16 to 54 13/16.

St. Jude Medical (STJ): UP to outperform from hold at ABN Amro; price target: 50. St. Jude Medical bounced 1 1/2 to 42 1/2.

Visx (VISX): UP to market outperformer from market performer at Goldman Sachs. Visx climbed 2 7/8, or 11%, to 29.

Downgrades

Flow International (FLOW): DOWN to hold from buy at ING Barings. Flow International slipped 1/8 to 10 15/16.

Wrigley (WWY): DOWN to hold from accumulate at Prudential. Wrigley slid 2 1/8 to 81.

Initiations

Breakaway Solutions (BWAY): NEW buy at DLJ; price target: 50. Breakaway Solutions shed 1 3/8 to 34.

HCA-Healthcare (HCA): NEW strong buy at Deutsche Banc Alex. Brown; price target: 40. HCA-Healthcare edged up 5/8 to 28 3/4.

IDX Systems (IDXC): RESTARTED as buy at SG Cowen. IDX Systems stumbled 5/32 to 14 21/32.

Infocure (INCX): RESTARTED as strong buy at SG Cowen. Infocure bounced 1 3/16, or 19%, to 7 7/16.

Pactiv (PTV): NEW market outperformer at Goldman Sachs. Pactiv lost 1/2, or 5.3%, to 8 13/16.

Symyx (SMMX): NEW buy at CSFB; price target: 80. Symyx bounced 1 7/8, or 5.6%, to 35 1/4.

Group Moves

Banc of America initiated coverage of several biotech companies:

• Amgen (AMGN) at buy; price target: 82. Amgen climbed 2 1/8 to 66 7/16.

• Biogen (BGEN) at market performer. Biogen added 1/16 to 57.

• Genentech (DNA) at buy; price target: 167. Genentech tumbled 3 7/8 to 137 1/2.

• Gilead Sciences (GILD) at buy; price target: 84. Gilead Sciences tacked on 1 11/16 to 64 3/8.

• Idec Pharmaceuticals (IDPH) at strong buy; price target: 139. Idec Pharmaceuticals moved up 5/16 to 97 7/8.

• Immunex (IMNX) at strong buy; price target: 51. Immunex mounted 3 1/16, or 8.9%, to 37 7/16.

• MedImmune (MEDI) at buy; price target: 77. MedImmune bounced 1 3/16 to 65 13/16.

Prudential Securities initiated coverage of several Web hosting firms, Internet service providers and application service providers:

• PSINet (PSIX) at accumulate; price target: 45. PSINet was unchanged 30 1/8.

• Navisite (NAVI) at accumulate; price target: 66. Navisite edged up 5/8 to 45 9/16.

• USInternetworking (USIX) at strong buy; price target: 42. USInternetworking added 1 13/16, or 9.8%, to 20 5/16.

• Digex (DIGX) at strong buy; price target: 102. Digex advanced 3 3/8, or 5.1%, to 69 3/8.

• Exodus Communications (EXDS) at strong buy; price target: 149. Exodus Communications lifted 4 3/4, or 5.3%, to 93 1/8.

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Offerings and stock actions

ICN Pharmaceuticals (ICN) dropped 6 13/16, or 19.9%, to 27 1/2 after it said its board approved a plan to divide the drugmaker into three publicly traded companies, one to be based in Moscow and not traded in the U.S. The firm said ICN would be the parent company and that Chairman and CEO Milan Panic will also be the chairman of the other two companies. Another company will be named Ribapharm and will encompass ICN's research and development activities, while the Moscow company will be called ICN International and will include ICN's operations in Eastern and Western Europe and the Pacific Basin.

Kansas City Southern Industries(KSU), a railroad and financial services company, popped 7 3/8, or 9.6%, to 84 1/16 after it said its board favored the spinoff of its financial services arm, which includes the Janus mutual fund group. According to the terms, Kansas City Southern shareholders would receive two shares of the spinoff, Stilwell Financial, for every Kansas City Southern share they owned as of June 28. Kansas City Southern will distribute about 222.8 million shares of the spinoff. Stilwell will trade on the New York Stock Exchange, under the symbol "SV".

Target(TGT) tacked on 1 13/16 to 59 13/16 after it set a 2-for-1 stock split.

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Miscellany

Meritor Automotive (MRA) added 1/8 to 12 3/4 after it said it will lay off nearly 3% of its workforce and take a third-quarter, after-tax charge of about $16 million, or 26 cents a share, as part of a worldwide restructuring. The government requested that a federal appeals court disregard Microsoft's(MSFT) argument to suspend last week's decision to split the company, reported The Wall Street Journal. Microsoft moved up 1 7/8 to 72 3/8.

The British energy regulator Ofgem launched a formal investigation to see whether a decision by Edison International's(EIX) Edison Mission Energy unit to withdraw 500 megawatts of generating capacity from a power station in northwest England was actually market abuse. Edison was unchanged at 21 3/4.

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