March 27, 2000

Market Data as of Close, 3/24/00:

o Dow Jones Industrial Average: 11,112.72 down 7.14, -0.06%

o Nasdaq Composite Index: 4,963.03 up 22.42, 0.45%

o S&P 500: 1,527.46 up 0.11, 0.01%

o TSC Internet: 1,272.53 up 19.26, 1.54%

o Russell 2000: 574.01 up 0.22, 0.04%

o 30-Year Treasury: 103 19/32 down 1 04/32, yield 5.984%

Companies in Today's Bulletin:

Mircosoft (MSFT:Nasdaq)

Procter & Gamble (PG:NYSE)

Kimberly-Clark (KMB:NYSE)

Colgate-Palmolive (CL:NYSE)

In Today's Bulletin:

o Editor's Letter: The Coming Week on TSC
o Software: Microsoft Talks Stall
o The Coming Week: Putting the Best Face on Bad News
o The Coming Week in Europe: The Continent's Central Bankers Go on Tour

Also on

Wrong! Rear Echelon Revelations: State of the Web: Competition Changes Everything

Stocks often become less attractive when other firms successfully enter their territory.

Jim Griffin: Fed Pritikin Possibility

Are the wealthy living in a manner that is against their best long-term interests?

Traveling with Wings: Where Is Dean Martin When We Need Him?

An American Airlines incident was reported without reference to actual facts, or even movie fiction.

The Coming Week in Asia: Japanese Investors Get Tech-Shy

While shares of firms like Softbank have been declining, Oracle Japan could reinvigorate the sector.

Editor's Letter: The Coming Week on



Dave Kansas


3/26/00 3:45 PM ET



rockets up, down and all around. Now it's back above 11,000, giving us a little optimism as we head toward the warmer weather of late spring.

Despite the Dow's recent rally, the gyrations of the


have only fed the angst on Wall Street. This bull market has had an amazing run, and more than a few professionals wonder just how long the good times can truly continue. As ever, we're focused on the latest twists and turns, hustling to decipher whether or not these movements portend horror or good times ahead. It's a very tense time, and we're more focused than ever on making sure that you have all the information you need to make wise investment decisions.

Among the most important investment decisions you'll make is choosing a broker. This week, we unveil the results of our enormous

Online Broker Survey 2000

, which many of you helped complete. We'll not only announce the winner, but we'll tell you which firms you call tops for the various services and features you say matter most.

And with tax day approaching, we'll continue to focus on issues of taxes and trading.

Tracy Byrnes

, our in-house tax expert, is furiously at work writing stories that will help you better handle the pending appointment with the tax collector. If you have questions about taxes, feel free to email Tracy at To take a look at some recent questions, check out Tracy's recent

chat transcript.

I know that many of you, from time-to-time, have contacted our customer service staff. Unlike many outfits, we've hired and trained our own customer service staff, all of whom are focused on providing you with quick, intelligent answers to your questions. These folks are always working very hard to serve you. Though the experience is not always perfect, you should know that this group is extremely dedicated to making sure that your


experience is a good one. We're all lucky to have such a dedicated crew hustling on our behalf.

Finally, if you have any questions or concerns, feel free to ping me an email at I'll make sure your issues get handled promptly. Meantime, get ready for another exciting week at!

L'Etoile du Nord

Dave Kansas


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

Software: Microsoft Talks Stall




3/25/00 6:57 PM ET

Not so fast.

Just one day after


(MSFT) - Get Report

and the government appeared near a settlement in the antitrust suit against the software behemoth, government attorneys deemed Microsoft's proposal inadequate, according to

The New York Times


The newspaper

reported on its

Web site Saturday that Microsoft faxed a proposal to the government and the 19 attorneys general who are suing the company. But after digging through the technical information for hours, the government officials decided "it wasn't nearly enough."

Attempts by


to reach officials from Microsoft and the

TheStreet Recommends

Justice Department

were unsuccessful Saturday.


Friday, several news organizations reported that talks between the two sides were heating up after the judge in the case,

Thomas Jackson

, threatened to make a final ruling on Tuesday if Microsoft and the government didn't show progress toward a settlement. Jackson had issued a scathing description of Microsoft's business activities in his findings of facts in the case, saying the company had used its monopoly power with the


operating system to stifle its competition. The harsh words left little doubt that Jackson would rule against the company if a settlement couldn't be reached.

Under the mounting threat of such a ruling, Microsoft reportedly indicated earlier this week that it would be willing to accept some restrictions on its business to reach a settlement.

Dow Jones Newswires

reported, for instance, that the company offered to separate its Internet browser software from its Windows operating systems software.



reported Saturday, however, that two officials said no new talks had been scheduled.

The Coming Week: Putting the Best Face on Bad News


Justin Lahart

Associate Editor

3/24/00 7:56 PM ET

The last week of the quarter is often a frightening one for investors.

It is the preannouncment season, the time when companies whose earnings are not up to snuff confess. Invariably, it is not their fault. The dollar is too weak or too strong against the


, or there was a problem in the widget pipeline, or some part of the country was too wet and cold while the other part was too hot and dry. No bones about, this problem must have hurt just about everybody in the business. Really. And so a whole sector gets tarred.

"The sooner we get out of it," said


strategist Art Hogan of the warning period, "the better off we're going to be."

Think of

Procter & Gamble

(PG) - Get Report

, which cited pulp costs as a core problem. Never mind that pulp prices, though up well off their lows, were severely depressed by the crises of 1997 and 1998.

"The upshot is that the plunge in materials costs during 1997-98 probably helped mask deteriorating results at companies who weren't minding their efficiency," wrote

Morgan Stanley Dean Witter

chief U.S. economist Richard Berner in a recent note. "The jump in such costs over the past year likely revealed their more fundamental problems."

Procter fell 32% on its warning, and its peers got caught in the downdraft. The

Morgan Stanley Consumer Cyclical Index

fell 5.3% on the day, and companies like


(KMB) - Get Report



(CL) - Get Report

were quick to issue statements saying that they were comfortable with analysts' estimates. It took the group two weeks to recover.

The good news is that it looks as if the first quarter has been a good one for U.S. companies, and though there will undoubtedly be high-profile warnings over the next couple of weeks, there will probably be fewer than usual. Joseph Kalinowski, equity strategist at earnings tracker

I/B/E/S International

, notes that fewer than usual of the companies preannouncing results are saying that they will not meet analysts' estimates.

"What we normally see is that 80% of preannouncements are negative," he said. "Going into this season, only 60% are negative. We're also seeing a significantly larger number of analysts increasing their estimates overall." Typically, analysts are trimming numbers heading into reporting season.


mea culpas

aren't the only worry in the coming week.


will meet Monday in Vienna to determine new quota levels. Recent talk in the market is that it will increase production 1 million to 2 million barrels a day over the current quota of about 23 million barrels. Considering that, because of cheating, actual output is around 24 million barrels, that doesn't represent much of an increase. If the increase is not in the upper range of what the market is talking about, oil prices could head higher again. It could well happen -- though there has been heavy pressure from the U.S. and other oil importers for increased production, the OPEC ministers have other concerns.

"I don't think they want to forego the improvement in finances they've seen, and they don't want to look like they're caving in to the


administration," said Bill Sullivan, chief money-market economist at

Morgan Stanley Dean Witter

. "We got as low as $27 a barrel, and I imagine that's the low. This sense that energy prices are rolling back may be over."

The Coming Week in Europe: The Continent's Central Bankers Go on Tour


Marc Young

German Correspondent

3/25/00 12:30 AM ETBERLIN -- Get ready, Europe! The

European Central Bank

is going on tour to bring the exciting world of monetary policy to a central bank near you!

Europe's monetary authorities will leave dreary Frankfurt behind next Thursday to head to sunny Madrid to discuss the current state of the Continent's interest rates, the first meeting of the bank to be held outside of Frankfurt. The bank is attempting to dispel the notion that the ECB's monetary policy is excessively Teutonic and not sufficiently pan-European.

Indeed, prior to the bank's quarter-point rate hike on March 16, many observers thought the ECB would raise rates at the Madrid outing. The increase would send a pan-European message by raising borrowing costs in a country that would most certainly have higher interest rates were it not part of the monetary union. However, now most ECB watchers contend another rate hike in the coming week would be too soon. Instead, the

Banco de Espana

field trip will most likely focus on regional issues that often get lost in the shuffle when the bank's Governing Council meets in Frankfurt.

However, now that the ECB has shown itself to have an activist and incremental penchant in raising interest rates, an outside chance remains ECB President

Wim Duisenberg

and his cohorts could choose to pop another small rate hike surprise on the markets.

The odds of such a move depend heavily on the eurozone February M3 money-supply figures, due to be released at some point next week. Should the data come in stronger than expected, interest-rate-sensitive stocks such as banks and insurers could be hit, since the ECB in the past has justified rate increases on money-supply movements.

"As ever, what matters about the M3 release is not just the number itself, but the way in which the ECB bankers choose to spin that number," says Alison Cottrell, an economist for

PaineWebber International

in London.

Still most eurozone analysts figure the bank won't be that gung-ho and ratchet up its current 3.5% main refinancing rate on Thursday, although in the following weeks all bets are off. According to

Deutsche Bank's

economic weekly: "The ECB should remain on hold at this week's meeting, with the next hike coming by early May at the latest."

The ECB broke tradition on March 16 by raising rates without holding a press conference to explain the move. The next hike could happen any time the Governing Council meets -- possibly as soon as next meeting on April 13. As for having an opportunity to make a monetary policy decision outside of Frankfurt, the ECB's next chance won't come until the autumn, when a Governing Council meeting has been scheduled for Paris. The ECB now plans to hold meetings in other European cities on an informal basis, most likely a couple of times a year.

The ECB sets monetary policy for Germany, France, Italy, Spain, Portugal, the Netherlands, Belgium, Finland, Luxembourg, Ireland and Austria.

Chat with John J. Edwards on AOL's MarketTalk, hosted by Sage Monday, March 27 at 3:30 p.m. ET. (Keyword: AOL Live)

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