Midday Stocks to Watch: LU, MOT, IBI, T, WAC, MSFT, PFE, TAN
Mergers, acquisitions and joint ventures
Dean Foods
(DF) - Get Report
announced it will buy
Land O'Lakes'
Upper Midwest fluid milk operations. The companies also agreed to form a joint venture to market and license certain value-added fluid and cultured dairy products to further expand and leverage the Land O'Lakes brand name nationwide. Dean Foods slipped 7/16 to 30 5/16.
Both agreements include long-term licensing arrangements for use of the Land O'Lakes brand name. The transaction, which is subject to regulatory review, is expected to close on or about July 1. Terms of the deal were not disclosed.
Lucent
(LU)
said it agreed to acquire privately held fiber optical networking equipment maker
Chromatis Networks
in a stock deal valued at $4.5 billion. According to the deal's terms, Lucent, which already holds about a 7% interest in Chromatis, would pay 78 million of its shares for the company, based on Lucent's closing price yesterday of $58.19. Lucent staggered 5/8 to 57 1/8.
Motorola
(MOT)
said that it has entered a $30 billion outsourcing deal with
Flextronics
(FLEX) - Get Report
. The terms call for Flextronics to make parts for Motorola's wireless phone, two-way pager and wireless infrastructure. Motorola has also agreed to pay $100 million for an equity instrument which is eventually convertible into 11 million shares of Flextronics. Motorola added 1 3/4 to 98 1/4 Flextronics was up 6 1/2, or 13.1%, to 56 9/16.
Royal Dutch Shell
will sell its Australian-based coal business to
Anglo American
(AAUK)
for about $850 million in a deal that puts Anglo back into the Asian coal market.
Shell said the final price for the business could reach $900 million, depending on final adjustments on completion of the deal, but Anglo said these would be minor. The agreement is expected to be completed by the end of June. Shell did not say how it would use the proceeds. Anglo American gained 17/64 to 43 25/64.
Schlumberger
(SLB) - Get Report
signed a Memorandum of Understanding with Baker Hughes under which Schlumberger's surface seismic business Geco-Prakla would join with
Baker Hughes'
(BHI)
Western Geophysical seismic unit to form a new venture called Western GECO.
In connection with the formation of the venture, Schlumberger will pay Baker Hughes $500 million in cash. Schlumberger will own 70% of the joint venture, and Baker Hughes, 30%. The deal, which is expected to close before the end of the year, is subject to completion of a definitive agreement, and to regulatory and board approvals. Schlumberger advanced 2 11/16 to 73 11/16, while Baker Hughes lifted 2, or 5.9%, to 36 1/16.
Sonera
(SNRA)
, a telecom operator, agreed to make a $200 million investment in
Powertel
(PTEL)
and
Eliska Wireless Ventures I
. Its $125 million investment in Powertel boosts its interest in the company to 11.8% from 9.1%, while a $75 million investment gives it a 30.1% stake in Eliska. Sonera gained 3/4 to 50 3/8, while Powertel moved up 2 1/16 to 81 1/16.
Back to top
Earnings/revenue reports and previews
Intimate Brands
(IBI)
said May
same-store sales increased 11%.
Litton Industries
(LIT) - Get Report
reported third-quarter earnings of $1.33 a share, beating the nine-analyst estimate by a penny and up from the year-ago earnings of $1.10 a share. The earnings were excluding a one-time gain on the sale of businesses. Intimate Brands climbed 9/16 to 23 11/16.
Back to top
Analyst actions
This morning,
Pepsico
(PEP) - Get Report
was upgraded to strong buy from buy at
UBS Warburg
and its price target was boosted to 51 from 46. Analyst Caroline Levy said that the company was her top pick in the soft drink space and raved about two recent management changes. Pepsico slipped 1/8 to 40 7/8.
Upgrades
Amerada Hess
(AHC) - Get Report
: UP to strong buy from buy at
Deutsche Banc Alex. Brown
. Amerada Hess rose 2 to 66 3/4.
HotJobs
(HOTJ)
: UP to buy from neutral at
PaineWebber
. HotJobs increased 1 43/64, or 16.6%, to 11 3/4.
National Computer Systems
(NLCS)
: UP to intermediate-term buy from accumulate at
Merrill Lynch
. National Computer Systems slipped 1/8 to 46 3/8.
Seagram
(VO) - Get Report
: UP to strong buy at
SG Cowen
; price target: 70. Seagram improved 15/16 to 48 5/16.
Spectrasite
(SITE) - Get Report
: UP to buy from hold at Warburg. Spectrasite fell 5/8 to 16 1/8.
Smithfield Foods
(SFD)
: UP to strong buy from buy at
Credit Suisse First Boston
. Smithfield Foods boosted 1 11/16, or 7.5%, to 24 3/16.
Wireless Facilities
(WFII)
: UP to strong buy from buy at
Chase Hambrecht & Quist
. Wireless Facilities hopped 7 13/16, or 20.3%, to 46 5/16.
Downgrades
Airgas
(ARG)
lost 3/16 to 5 7/16: DOWN to market performer from outperform at
Goldman Sachs
.
Answerthink Consulting
(ANSR)
slipped 1/4 to 17 1/2: price target DOWN to 35 from 55 at CSFB.
Cintas
(CTAS) - Get Report
stumbled 1/8 to 45 1/16: DOWN to intermediate-term accumulate from buy at Merrill Lynch.
Ethyl
(EY)
jumped 3/16, or 7.3%, to 2 3/4: DOWN to market performer from outperformer at Goldman Sachs.
MGM Grand
(MGG)
was off 1/2 to 28 3/16: DOWN to neutral from outperform at
Lehman Brothers
.
Oxford Health Plans
(OXHP)
shot down 3 3/16, or 13.6%, to 20 1/4: DOWN to neutral from buy at
Salomon Smith Barney
.
Initiations
Avigen
(AVGN)
rose 1 5/16 to 29 7/8: NEW strong buy at
ING Barings
; price target: 56.
Clear Channel Communications
(CCU) - Get Report
edged up 7/16 to 75: NEW buy at
SG Cowen
; price target: 90.
Gap
(GPS) - Get Report
grew 1 3/8 to 35 13/16: NEW buy at
Thomas Weisel
; price target: 45.
MGI Pharma
(MOGN)
bumped up 1 3/4, or 8.8%, to 21 5/8: NEW strong buy at
US Bancorp
; price target: 50.
Paradigm Genetics
(PDGM)
shares jumped 1/4 to 9 7/8: NEW strong buy at
Chase H&Q
.
Sierra Wireless
(SWIR) - Get Report
shed 1 9/16, or 5.6%, to 29 3/8: NEW intermediate, long-term buy at
Merrill Lynch
.
SPX
(SPW)
climbed 3 5/16 to 105 5/16: NEW strong buy at
Warburg
; price target: 190.
StarMedia Network
(STRM) - Get Report
soared 1 11/16, or 10.4%, to 17 15/16: NEW buy at
CS First Boston
; price target: 29.
Back to top
Offerings and stock actions
Barr Laboratories
(BRL)
set a 3-for-2 stock split. Barr Laboratories lifted 1 1/4 to 53 1/4.
Salomon Smith Barney
priced 28.17 million shares of
NRG Energy
(NRG) - Get Report
at $15 a share, below the estimated $16-$18 range. The company is a wholly owned unit of
Northern States Power
(NSP) - Get Report
, one of the largest independent power generators in the U.S. NRG Energy moved up 1, or 6.7%, to 16.
Back to top
Miscellany
AT&T's
(T) - Get Report
cable unit's programming will include a hard-core adult-movie channel as part of a agreement that could leave the telecom company with a hefty portion of the movies' profits, reported in
The Wall Street Journal
. According to the
Journal
, AT&T's cable division is facing pressure to produce results after using billions to upgrade its networks for new digital fare. The company's shares were off 5/16 to 35 1/16.
Warnaco
(WAC)
shares tumbled 1, or 12%, to 7 5/16, after
Calvin Klein
said it would bring a lawsuit against the company for alleged trademark infringement. Calvin Klein also plans to terminate its jeans and underwear agreement with the clothing maker.
ECI Telecom's
(ECIL)
shares hopped up 1 5/8, or 6.4%, to 26 15/16, after its fully owned subsidiary, InnoWave ECI Wireless Systems, was chosen by
Global Village Telecom
in Brazil to supply fixed wireless access systems. Under the deal, GVT will deliver advanced Internet, data and telephony services to residences and businesses in south and central Brazil.
Reuters
said the deal is valued at up to $165 million.
ECI Telecom is offering GVT long-term financing. In conjunction, ECI Telecom has decided to invest up to $35 million in GVT's parent company, GVT Holding NV, in convertible subordinated notes.
Kmart
(KM)
signed Charles Conaway, former president of
CVS
(CVS) - Get Report
to a five-year contract as its chairman and CEO.
Conaway succeeds the retiring Floyd Hall. CVS' current chairman and chief executive, Thomas Ryan, will take on the additional duties of president. Kmart's shares were up 1 1/16, or 13.9%, to 8 11/16. CVS shares were just 5/16 higher to 42.
LifePoint Hospitals
(LPNT)
was 1 5/8 lower, or 7.1%, to 21 1/8 after it announced that its chairman and CEO, Scott Mercy, died in an airplane accident yesterday. The company named DeWitt Ezell its interim chairman. Day-to-day operations of the company will continue to be led by Jim Fleetwood, the company's president and COO.
Microsoft
(MSFT) - Get Report
shares lost 11/16 to 62 11/16. The company is set to respond today to a plan modified by the government to divide the software giant into two companies. The response could be the last before a federal judge makes a final decision on the matter. The
Justice Department
and 17 states on Friday brought the revised plan, which included comments from District Court Judge Thomas Penfield Jackson, who has been presiding over the antitrust case. The proposed split would create two companies: One company would offer the Microsoft Windows applications and another would focus on Microsoft Internet Explorer and Office products. A decision could come later this week.
Pfizer
(PFE) - Get Report
was 5/16 higher to 44 1/2. The company was sued by a Florida man who was prescribed a Pfizer drug called Cardura for hypertension. The man claimed the pharmaceutical company failed to warn users about serious risks related to the drug.
The purported class-action suit seeks emergency notification to all Cardura users about scientific research in March that found the drug was less effective than a standard diuretic pill in preventing certain consequences of heart disease. Pfizer currently markets Cardura as an alpha blocker. The study found that while Cardura was as effective as a diuretic in preventing heart attacks and mortality, patients who took Cardura during a trial had a greater chance of suffering congestive heart failure or stroke than those who took a diuretic.
Tandy's
(TAN) - Get Report
shareholders gave their stamp of approval to change the company's 40-year-old family name to
RadioShack Corp.
. The name change is part of Tandy's plan to gain investor recognition by focusing on the RadioShack brand name. Shares of RadioShack will begin trading on the
New York Stock Exchange
under the ticker symbol "RSH" today. RadioShack shares were 7/8 higher to 43 11/16.
Back to top