The news that @Home
will buy Excite
in a stock transaction valued at about 6.7 billion should light a fire under the Internet sector today.
"The story, as always, is the Internet," said Dan Mathisson, head stock trader at
D.E. Shaw Securities
. "This deal has really gotten these things going again. Last week, we had really the first week in a long time where we saw these things down. Anytime these stocks get beaten down, some news event will come out that rescues the group."
Though Excite has been considered something of an also-ran in the Internet portal race, the deal places a substantial premium on Excite's stock. Under the deal, Excite shareholders will receive 1.041902 shares of @Home for each share of Excite. Based on @Home's closing price on Friday, that would put Excite at about 106 1/4 -- up 38 3/4. This will no doubt spark some talk of how, despite complaints about high valuations, companies themselves see value in the Internet -- ignoring that this is a stock deal.
"They're paying for paper with paper," said Mathisson. "It would be interesting to see a company that was not an Internet player take over one of these."
Among more run-of-the-mill issues, the financial sector should shine. A number of banks have reported good earnings again, and with Brazil's stock market moving higher for a third day, those Sao Paulo jitters that hit these stocks last week are fading.
At 9 a.m. EST, the
futures were up 7, about 3.5 above fair value, indicating strength at the open.
With stocks set to run higher, the Treasury market was under pressure. The 30-year was down 17/32 to 101 19/32, lifting the yield to 5.14%.
A selloff in the Japanese government bond market put pressure on Tokyo stocks. The yield on the benchmark 10-year bond skipped to 1.86% after the government's auction of 600 billion yen in 20-year bonds went off poorly. The
dropped 34.62 to 13,770.44. With the U.S. closed yesterday, turnover was light.
Hong Kong stocks gave back about half of yesterday's gains in future-related selling. Lingering fears over the Hong Kong dollar, sparked by Brazil's decision to let the real float, continue to plague the market. The
dropped 112.43 to 10,290.11.
European stocks, down earlier on the back of yesterday's big rally, improved in anticipation of a good U.S. open. In Frankfurt, the
was up 11.5 to 5061.95. In Paris, the
was up 14.19 to 4165.87. In London, the
was down 13.2 to 6110.7.
Tuesday's Wake-Up Watchlist
@Home is buying Excite in a stock swap valued at approximately $6.7 billion. Under the deal, @Home will issue 1.041902 Series A shares for each share of Excite.
posted fourth-quarter earnings of $1.31 a share, beating the
20-analyst estimate of $1.19, and up from the year-earlier 94 cents.
posted fourth-quarter operating earnings of 86 cents a share, which excludes an $86 million after-tax charge, down from the year-earlier $1.33.
posted fourth-quarter earnings of 86 cents a share, crushing the 12-analyst estimate of 64 cents, but down from the year-earlier $1.15.
In other news (earnings estimates from First Call):
reported fourth-quarter operating earnings of 91 cents a share, two cents short of the 28-analyst consensus and down from the year-ago 94 cents.
reported fourth-quarter operating earnings of 88 cents a share, in line with the 24-analyst estimate and up from the year-ago 75 cents.
posted second-quarter earnings of 55 cents, beating the 12-analyst consensus estimate by a penny and up from the year-ago 47 cents.
Delta Air Lines
reported fourth-quarter earnings of $1.29 a share, beating the 11-analyst estimate of $1.26 and up from the year-ago $1.20.
reported fourth-quarter earnings of 48 cents a share, beating the 15-analyst estimate by a penny, but down from the year-ago 53 cents.
posted fourth-quarter earnings of 62 cents a share, beating the 18-analyst estimate by two cents and up from the year-earlier 51 cents.
is in discussions with
to run freight trains on Amtrak's high-speed New York-to-Washington passenger route,
The Wall Street Journal
posted a fourth-quarter loss of $1.49 a share, beating the 11-analyst estimate of a loss of $1.51, but down from the year-ago 97 cents.
is expected to start selling new personal computers and accessories at wholesale prices today, the
posted fourth-quarter earnings of 63 cents a share, beating the eight-analyst consensus of 55 cents, but down from the year-ago 68 cents.
posted first-quarter earnings from continuing operations of 70 cents a share, beating the 10 analyst consensus of 63 cents and up from the year-ago 59 cents.
reported fourth-quarter operating earnings of 25 cents a share, falling short of the 12-analyst consensus and down from the year-ago 32 cents.
reported fourth-quarter operating earnings of 46 cents a share, in line with the 25-analyst estimate.