TheStreet.com's DAILY BULLETIN
October 18, 1999
Market Data as of Close, 10/15/99:
o Dow Jones Industrial Average: 10,019.71 down 266.90, -2.59%
o Nasdaq Composite Index: 2,731.83 down 75.01, -2.67%
o S&P 500: 1,247.41 down 36.01, -2.81%
o TSC Internet: 685.10 down 10.99, -1.58%
o Russell 2000: 414.70 down 4.61, -1.10%
o 30-Year Treasury: 98 02/32 up 23/32, yield 6.261%
Companies in Today's Bulletin:
Columbia Energy Group (CG:NYSE)
Philip Morris (MO:NYSE)
Tyco International (TYC:NYSE)
In Today's Bulletin:
o Editor's Letter: The Coming Week on TSC
o Wrong! Rear Echelon Revelations: Philip Morris' Legal Cancer Has Metastasized
o Market Update: Weekend Report: NiSource Hikes Its Bid for Columbia Energy
Amazing accounting, astounding number stunts and gravity-defying numbers juggling. You may be surprised at some of the otherwise blue-chip companies who perform fascinating feats with their books. TSC updates our popular Cracking the Books series this week, and examines a host of new companies whose numbers don't necessarily add up.
Watch for our five-day series beginning Monday.
Also on TheStreet.com:
Wrong! Rear Echelon Revelations: State of the Web: How the Dot-Com Mania Began -- and How It Could All End
Almost a year ago theglobe.com's soaring ride started it all. Today, the landscape is looking much different.
Jim Griffin: 'As I Was Saying... '
A little (more) repetition goes a long way, especially when it comes from the Fed chairman and includes key words like 'panic.'
This Week in IPOs: A Few Fundamentals, Part 2
Take a few simple precautions to help reduce risk. Also, Martha Stewart joins the WWF among this week's anticipated offerings.
Technical Forum: Big 10 Schools Need to Step Up Recruiting Efforts for Smith Kids
More than 500 readers sent in college suggestions, though few were from the Midwest. Meanwhile, Gary gives some charts the old college try.
You Said It: A
Weekly Poll: Where Will the Dow Finish the Week?
It's hanging around 10,000 now -- can the Dow put on a big spurt, or will it sputter? Let us know.
Editor's Letter: The Coming Week on
10/17/99 4:00 PM ET
As our longtime readers know, we like to dig deeply into certain subjects. And we're doing that this week with a special series. On Monday, we kick off the second installment of our popular accounting series,
Cracking the Books, Part II
. What an auspicious time, as last week the markets were riveted by the
and accounting watchdog David Tice's
Behind the Numbers
newsletter over whether Tyco is using acquisitions and restructuring reserves to enhance its bottom line.
As some of you may recall, last year's series profiled the very same whistleblower, accounting sleuth
Albert Meyer, for his role in questioning why
was burying expenses in
, and who authored the latest series of charges against Tyco International.
In last year's series we correctly identified a number of problems among companies in the investing firmament, and we're aiming to do the same again this week. For those looking to avoid the next pothole, this series is invaluable. Cracking the Books will run all week on
, and it promises to be a riveting read.
For those of you dialed in to Wall Street, it's likely you've heard about the recently released
analyst rankings. Well, at the very same time, we've gotten our own analyst ranking survey underway: TheStreet.com Analyst Awards -- Equity 2000. Our survey's being run by the folks who, until this year, managed the
. We hired these editors to produce a new survey, which we believe will be the most compelling, spot-on analyst ranking around. Last week, as part of the process, we asked research directors at more than 100 Wall Street firms to start nominating a slate of their analysts for our upcoming vote. Soon enough, we'll get the actual voting under way.
This week on the site we will also introduce a new feature: the Briefing Room. This expanded, easier-to-use section will give you all the latest skinny on the financial markets. When you have a chance to check it out, please send your suggestions on how the Briefing Room can get even better to Markets Editor
John J. Edwards III
Briefing Room is just one of the changes you'll be seeing on the site in the coming weeks. We're planning a design "facelift" that will update our look and, hopefully, make it even easier to find what you're looking for. More details will follow in the days ahead.
Finally, what would a week be without Canada? OK, maybe I've got a soft spot for our northern neighbor. This week we will have a feature on a company that has become the most important stock, by far, in the Canadian market:
Lots happening, and much more to do. From series like Cracking the Books to the Briefing Room, we're focused on making you a wiser, more-informed investor. Any questions, please send me an email at
email@example.com and I'll get on the case for you.
L'Etoile du Nord
Wrong! Rear Echelon Revelations: Philip Morris' Legal Cancer Has Metastasized
James J. Cramer
10/17/99 5:00 PM ET
Anyone notice the elephant in the
Dow Jones Industrial Average
? No, I am not talking about
, which reports Wednesday and may decide whether we continue to flirt with or leave the 10,000 level -- in either direction.
Cramer's Latest: Join the discussion on
I'm talking about
. Holy cow, what the heck is happening there? This stock, which now yields north of 5%, is showing all of the signs of a company in the throes of a near-death experience. Tell me that people aren't worried about that yield. If you do an
search of the other high-yielding dividend plays, you will discover that in every case investors have doubts about whether such a dividend can be sustained.
If you look at the chart, you can see that MO is all the way back to where it was before the big payoff talks began with the states for Medicare. I can't believe that the market -- and I, for that matter -- was so stupid as to take these stocks up in advance of the settlement talks.
Philip Morris Gets Smoked
What the stock is saying now, of course, is that Morris and the tobacco industry writ large made a classic misjudgment. (
actually started this rolling stone, MO just played along.) It would have been better simply to keep fighting and denying and lying or whatever the heck else was necessary to keep the forces of good -- public health advocates -- from combining with the forces of evil -- the mass tort bar -- to bankrupt big tobacco.
I and many others genuinely believed that after these Medicare suits were paid out, tobacco might be home free. But in retrospect not only did they
get immunity, they are now in a free-fire zone for just about anybody with a law degree.
The stock is saying that MO will never get out of this morass. That whatever happens, it has lost its friends in
and in the courts. The congressional allies turned out to be more receptive to the pleas of the plaintiff's bar. And even the court system decided to see through the lies.
Maybe it would not have mattered if they had stonewalled. A popular president took aim at these guys at a time when they were plenty vulnerable anyway. I mean, by this time, did anybody not have a relative who had been killed by these guys? I don't know of anybody. Morris now has that same feel that
had after the IUD problems. It looks a lot like
did from the asbestos run. I am sure that these guys will shudder at someone saying this out loud, but I wonder whether they shouldn't just declare bankruptcy. Get all of these claims paid and then come out as a series of brands with that miserable tobacco unit left to be run by some sort of drug consortium that would be paid dividends depending upon how many people would be encouraged to quit each year.
Sound far-fetched? Let me ask you, in an era where
just paid $4 billion to some people who used a drug of theirs in combination with another drug -- EVEN THOUGH AHP DIDN'T TELL THEM TO DO IT!!! -- what standing does some company that knowingly produces cancer have to argue why it should stay in business?
These guys are history. They should face it, declare bankruptcy and figure out a structure like the one I am suggesting. They may not like it. But it won't hurt so much to look in the mirror in the morning anymore if they do. And if they don't have any pangs when they look in the mirror, they deserve to have the bankruptcy foisted on them.
Oh yeah, if you are asking me what you should do with your Philip Morris stock, while I am not short it -- I don't want to pay that dividend and I don't know a put contract long-lived enough to play this out with -- I think you can guess what I would do with it if I were you.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at
Weekend Report: NiSource Hikes Its Bid for Columbia Energy
Special to TheStreet.com
10/17/99 7:23 PM ET
Those of you glued to the baseball playoffs all weekend may have missed the news of a utility bid, a wireless startup and a few Asian Internet ventures. Take your pick, but we think we had a more exciting time.
Of course, as this goes to press, we have no idea how the
actually fared, so please excuse us while we catch up on the weekend's sporting news. Here's what happened back in the business world.
Utility holding company
is raising the stakes in its attempted hostile takeover of
Columbia Energy Group
. On Sunday, NiSource offered an all-cash bid of $6.1 billion, a 7% increase over its earlier offer, rejected by Columbia. If shareholders approve the deal, Indiana-based NiSource would become the largest distributor of natural gas east of the Rocky Mountains.
Instant messaging, one of the Internet's hottest features, could soon be coming to a cell phone or pager near you.
, a startup based in Santa Clara, Calif., has received more than $8 million in funding to bring the technology to wireless devices,
reports. Investors include
and software entrepreneur
will shut down assembly lines at its four main auto plants Monday, Japanese news media reported. The move is part of an internal overhaul.
in Japan is signing onto an Internet investment firm.
reported Sunday that the bank plans to buy a 10% stake in
Wit Capital Japan
, a joint venture between U.S. online investment firm
Wit Capital Group
announced Sunday it had joined with Seattle's
Madrona Investment Group
to explore Internet investments in Asia.
In the Papers
Kohlberg Kravis Roberts'
next target could be in the ATM industry. The
in London reports the New York-based leveraged buyout group is on the verge of buying
retail and banking systems division. The deal would be worth 460 million pounds, or $767 million.
Massive conglomerates that offer many different product lines might seem outdated, but
reports that beleaguered
could be poised for a stock-price rebound. Analysts call the Connecticut-based company undervalued, citing its popular products that include Titleist golf balls, Moen faucets and Jim Beam bourbon.
Harman International Industries
is taking the focus off the price of its products -- hi-fi audio and video equipment -- to concentrate on improving its stock price. After three years of stagnant earnings, the company is streamlining its product lines and changing its distribution tactics.
performance last week for a moment. In an interview with
, Tom Galvin, chief investment officer at brokerage
Donaldson Lufkin & Jenrette
, predicts the
Dow Jones Industrial Average
will reach 13,000 by year's end. He believes excess global capacity, the euro and the deflationary impact of the Internet will keep inflation in check. Galvin sees growth potential in technology, financial and advertising stocks.
Another promoter of the euro is Nick Scheele, who heads
European operations. He told the
newspaper in London that the U.K. should adopt the currency.
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.
Chat with John J. Edwards III on AOL's MarketTalk Monday, Oct. 18 at 3:30 p.m. EDT. MarketTalk is hosted by Sage Online. (Keyword: PF Live)
James J. Cramer will be chatting on Yahoo! Monday, Oct. 18 at 5 p.m. EDT. Register for Yahoo! Chat at: chat.yahoo.com. It's free!
Copyright 1999, TheStreet.com