Publish date:

TheStreet.com's DAILY BULLETIN

March 20, 2000


Market Data as of Close, 3/17/00:

o Dow Jones Industrial Average: 10,595.23 down 35.37, -0.33%

o Nasdaq Composite Index: 4,798.13 up 80.74, 1.71%

o S&P 500: 1,464.47 up 6.00, 0.41%

o TSC Internet: 1,272.61 up 43.59, 3.55%

o Russell 2000: 574.77 up 0.53, 0.09%

o 30-Year Treasury: 103 09/32 up 14/32, yield 6.000%

In Today's Bulletin:

o Editor's Letter: The Coming Week on TSC
o Weekend Report: Three European Bourses to Form Combined Exchange
o The Coming Week: Focus on the Fed
o The Coming Week in Europe: Bertelsmann Sheds Stake in AOL Europe but Remains in the Net

Also on TheStreet.com:

Wrong! Rear Echelon Revelations: Biting the Value Bait

And it bit back.


Market Features: Taiwan's Election Earthquake May Provide Buying Opportunity

While the market may swoon after a surprise election result, investors should be on the lookout for bargains.


The Coming Week in Asia: Taiwan Girds for Election

Beijing has been saber rattling ahead of Saturday's election. Also, India's highflying market.


Jim Griffin: March Mayhem

The fight between Old and New continues, and expect more volatility in the future.


Editor's Letter: The Coming Week on



Dave Kansas


3/19/00 3:49 PM ET

That was some week! If you didn't grasp the kinetic firepower of last week's trading, you need to check your pulse. The tenacious action, the wild swings, the enormous volume -- it was the combination of thrills and terror that leaves an investor breathless and dreaming of a quiet Saturday at home.

And, as always, we were with you every step of the way. Our markets team, spearheaded by

John J. Edwards


Patrick Fitzgibbons

, looked like beleaguered troops after a week of battle on Friday late. As you grapple for every precious morsel of information, our team of die-hard markets writers is sifting through the noise to help you better see and understand the market turns.

As we open the week, the questions only multiply. Is tech going to get back on the high road? Is the Old Economy now set to take charge once again? What will happen on the international scene as Asia digests the

election result in Taiwan? To find out about all this and more, I strongly recommend you read the Coming Week features on our site.

The Coming Week is Asia,

The Coming Week in Europe and

The Coming Week in the U.S. help set the stage, allowing you to frame all the wackiness that a week like this last one delivered. I find these features extraordinarily useful in getting geared up for what the next batch of trading days might have in store. Have a read, and let me know what you think of them at


What would a week in March be like without wondering about the NCAA basketball tournament? We've got the

scores for you on the site, along with the Major League Baseball, NBA and other action.

And the Tax Man cometh. If you need to know more about how to handle April 15, our tax reporter,

Tracy Byrnes

, along with tax pro

Ted Tesser

, will be participating in a chat about how to address tax issues related to trading and investing. It's on Wednesday, March 22 at 5 p.m. ET. It's free, but you need to register at chat.yahoo.com.

So, having recovered from our recent whipsawing week, get ready for more twists and turns in the week ahead. We'll be in there digging for you.

L'Etoile du Nord

Dave Kansas


Dave Kansas is editor-in-chief of TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at


Weekend Report: Three European Bourses to Form Combined Exchange


David Rheingold

Special to TheStreet.com

3/19/00 8:44 PM ET

First there was the


. Now get ready for the next step in Europe's disappearing financial borders: the



No, Europe has not established a unified stock exchange -- not yet, anyway. But the wave of consolidation sweeping the telecommunications, banking and automobile industries is about to hit the region's financial markets as well.

On Monday, the bourses in Paris, Amsterdam and Brussels will announce they are merging, French newspaper

Le Journal du Dimanche

reported Sunday. They will collectively form an exchange to be known as the Euronext, the newspaper said.

The three bourses will have a combined market capitalization of 2.4 trillion euros, or $2.32 trillion, which will make the Euronext the second-largest exchange in Europe after London's,

The Wall Street Journal


In Other News

Days after


(F) - Get Report

announced it will buy


Land Rover

sport utility line, a German newspaper is reporting that Ford is interested in taking over the entire German automaker.

Welt am Sonntag

reported Sunday that the two companies have discussed the possibility of a takeover through a third party over the past three months.

The newspaper also reported that



is looking at buying


, even after the Italian automaker announced a stock-swapping alliance with


(GM) - Get Report

last week.

Qwest Communications


is determined to see its planned merger with

U S West


go through, Qwest Chief Executive

Joseph Nacchio

told the

Denver Rocky Mountain News

in an article published Sunday. While he didn't identify

Deutsche Telekom

(DT) - Get Report

as the third-party suitor that had looked at buying both companies, he said talk of a three-way deal likely would not be resurrected.



is conducting a criminal investigation into the crash of

Alaska Airlines

(ALK) - Get Report

Flight 261,

The Seattle Times

reported Saturday. The newspaper said the agency was examining the airline's maintenance practices.


(NSRGY) - Get Report

announced a voluntary recall of Carnation Good Start, Carnation Follow-Up and Carnation Alsoy 13-fluid-ounce concentrate on Sunday,


reports. The company said it fears these products may not have been fully sterilized, although it said it has not found proof of any bad samples.

A pair of new films this weekend demonstrated that moviegoers have not yet tired of legal dramas about contaminated water or thrillers featuring a boy with supernatural premonitions.

Julia Roberts'

Erin Brockovich

topped the box office with $28.2 million, knocking

Mission to Mars

to second place with $10.9 million.

Final Destination

debuted at No. 3 with $10.2 million.

And the


men's hoops winners Sunday were:




, 69-64;




, 93-76;

Seton Hall



, 67-65;

Oklahoma State



, 75-67;

North Carolina



, 60-53;




, 69-61;




, 65-51; and


(Florida) over

Ohio State

, 75-62.

In the Papers

How soon will today's hottest Internet companies burn out? That's the question


poses in this week's cover story. The magazine examined 207 companies' 1999 year-end cash reserves, and found that 51 wouldn't be able to last for more than a year without making a profit or finding additional funding. The five rated most critical were

Pilot Network Services






Secure Computing








. (



ranked 110 on the list, with cash to last 27.55 months under



Billions of dollars in revenues will be at stake when


(AMGN) - Get Report


Transkaryotic Therapies


square off in a Boston federal courtroom next month over


, a drug that treats anemia.


previews the patent-infringement case against TKT, which wants to produce Epogen through a different process.

Also in biotech,



Alan Carr

, a biotech money manager for

Chase Hambrecht & Quist

. His largest holdings as of Dec. 31 were

Cubist Pharmaceuticals







(CELG) - Get Report


Gilead Sciences

(GILD) - Get Report














CV Therapeutics



Lynx Therapeutics



The Sunday

New York Times

recounts the downfall of

Fruit of the Loom


, which is now mired in bankruptcy court. Its former CEO

William F. Farley

, whose fortunes rose as the company's fell, told the newspaper his personal finances are "ugly as sin" because of the company's now-depressed stock.

David Rheingold is a New York-based freelance writer. At the time of publication he had no positions in any of the securities mentioned, although holdings can change at any time.

The Coming Week: Focus on the Fed


Justin Lahart

Associate Editor

3/17/00 7:52 PM ET


Federal Open Market Committee

will meet Tuesday, and it is pretty much a sure thing that it will raise the

fed funds target rate

by a quarter-point to 6% -- its highest level since 1995. Nor is anyone saying that the Fed will stop hiking until the economy starts to cool.

Most economists foresee at least one more rate hike, and a number believe there will be a good deal more than that. Before



Alan Greenspan

is done, the funds rate could easily be as high as it's been in more than a decade.

Given that kind of backdrop, it is difficult to imagine the coming week will be about anything but the Fed. But given the incredible action in the market recently, many investors will be far more interested in what's going on at the corner of Wall and Broad than at the Fed's offices in Washington, D.C.

The rotation into Old Economy stocks that sent the

Dow Jones Industrial Average

6.7% higher over the last week still has investors scratching their heads.

Though value investors had long bemoaned the action in nontech stocks, and some observers had

noted that the time seemed ripe for a move into beaten-down sectors, the power and speed of the move caught everybody off guard.

There are a lot of pretty theories about how this happened. A correction in biotechs forced momentum investors to reassess. Hedge funds, which were heavily invested in tech, but didn't really believe in it, redeployed capital. It was a surfeit of tech bulls and Old Economy bears. It was expiration.

It was probably a bit of all these things, but trying to figure it out is really a matter of conjecture. There's always something mythic about how these rotations happen. They change the market's firmament.

"The structure of the market has changed," said Scott Bleier, chief investment strategist at

Prime Charter

. And in the weeks to come, the debate in the market will be over what that structural change will be, exactly.

Some reckon that the shift into the Old Economy names will stick, and that some groups will outperform tech in the coming months.

"I don't want to say we're going to go straight up from here in value investments, but I do think there will be some profit surprises in Old Economy companies," said Christine Callies, U.S. investment strategist at

Credit Suisse First Boston


Analysts forecast a 174% jump in energy company earnings in the first quarter, according to

First Call

. Basic materials will hop 55%, while tech comes in third with growth of 25%. Those energy and basic materials are less impressive than they seem -- especially in comparison to last year, which was God-awful. But First Call notes that there has been a strong trend in upward revisions for the energy companies, and that is noteworthy. Analysts usually cut estimates as earnings season approaches.

Bleier says the

Nasdaq Composite Index

will continue to outperform, but reckons there will be a change of tone.

"The Nasdaq frenzy is not over," he said. "It's just going to take a different shape. It's going to be more selective, which is healthy. Maybe it's a process of digestion. Maybe the gains won't be so fast and furious for the rest of the year."

It was fun, at least, while it lasted.

The Coming Week in Europe: Bertelsmann Sheds Stake in AOL Europe but Remains in the Net


Marc Young

German Correspondent

3/18/00 12:30 AM ET

BERLIN -- This week will mark the beginning of the rest of


Internet-based life.

The German media giant's decision to sell its 50% stake in

AOL Europe


America Online


doesn't signal Bertelsmann is abandoning the Internet, but shifting its strategy. Indeed, while investors digest what the sale means for Bertelsmann's Internet strategy this week, they will also be able to buy shares in the IPO of one of the company's other Internet joint ventures,

Lycos Europe


Bertelsmann's sale of its stake in AOL Europe had been widely expected since America Online announced plans to acquire Bertelsmann rival

Time Warner


. The deal will bring Bertelsmann between $6.75 billion and $8.25 billion in stock or cash after Jan. 31, 2002, providing it desperately needed funds to build its publishing, television and music businesses.

All in all, Bertelsmann is making the best of a bad situation. AOL's linkup with Time Warner earlier this year made it pretty clear the importance of Bertelsmann's content would decline over time, but part of the deal calls for Bertelsmann to pay America Online $250 million to remain a preferred content provider. That should allow the company to retain the best possible position regarding AOL's 23 million customers given the circumstances.

Leaving AOL Europe means Bertelsmann will now concentrate its online ambitions on pushing the company's considerable content rather than becoming a major


player. It doesn't change the company's desire to become a leader in e-commerce and Internet-related media.

"Bertelsmann retains a strong strategic interest in expanding its online presence," says Lanny Baker of

Salomon Smith Barney

. The decision to quit AOL Europe wasn't caused "by a change of heart regarding the Internet or online media," he believes. Salomon Smith Barney has an investment banking relationship with AOL and has a 100 price target on its shares. AOL closed at 64 3/8 on Friday, up 3.8%.

The deal will likely increase Bertelsmann's interest in developing Lycos Europe, which will debut on Frankfurt's

Neuer Markt

on Wednesday in an initial public offering expected to bring in roughly $700 million. The joint venture, which Bertelsmann started with



back in 1997, includes an Internet portal, a small free ISP and a German language search engine. To bring in even more cash, Bertelsmann is also considering floating its online books-and-media retailer


later this year as well.

The privately held Bertelsmann also has stakes in online bookseller



and the highly successful Berlin-based multimedia firm


. Last week Pixelpark announced an alliance with

Banco Bilbao Vizcaya Argentaria

to establish a joint venture to provide Internet and multimedia solutions in Spain and Latin America. Bertelsmann is also in the process of developing broadband Internet services for Europe.

Such deals may not provide the huge-scale Internet operations that AOL Europe did, but along with a strengthened focus on its core content businesses they show that Bertelsmann still very much sees its future online.

Copyright 2000, TheStreet.com