Stocks Get Out of Bed on the Right Side as AT&T, eBay Blitz Estimates

Net plays and telecom stocks prepare to lead an early rally.
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It's hard to dig pessimism out of this morning's news.

AT&T

(T) - Get Report

beat analysts' earnings estimates by 4 cents;

eBay

(EBAY) - Get Report

is up almost 15 points in premarket trading; and European shares rallied sharply, led by the telecommunications and technology names.

Lately the

S&P

futures were about 11 points above fair value, indicating a strong opening for stocks.

AT&T reported first-quarter operating earnings of 61 cents a postsplit share, beating Wall Street estimates of 57 cents. This figure doesn't include one-time items, though it does account for Ma Bell's 1998 acquisition of

TCI

. AT&T was reportedly trading about 2 points higher ahead of the open.

The Wall Street Journal

reported this morning that

Comcast

(CMCSA) - Get Report

is in preliminary discussions to align itself with either

Microsoft

(MSFT) - Get Report

or

AOL

(AOL)

to counter AT&T's $54 billion cash-and-stock bid for

MediaOne

(UMG)

. Comcast previously offered $48 billion in stock.

Internet stocks were looking stronger as well on

Instinet

. Online auctioneer eBay, which reported earnings of 5 cents a share last night vs. expectations for 2 cents a share, was trading at 230 after closing at 209 1/8 yesterday. AOL, which is expected to report earnings of 9 cents a share later today, was also higher.

"Everything looks strong now, particularly the

Nasdaq

stocks," said Dan Mathisson, head stock trader at

D.E. Shaw

. eBay has "become one of the new bellwether stocks. When a stock like eBay releases, it can actually affect the broader market, which is definitely the case this morning."

Major European bourses were all higher, led by France's

CAC

, up 108.01, or 2.5%, to 4392.41. The German markets moved sideways for the early part of the session but have lately rallied. The

Dax

was up 101.63, or 1.9%, to 5351.85. In London, the

FTSE

was up 122.8, or 1.9%, to 6626.4.

Japanese stocks traded a bit tentatively in anticipation of the beginning of the Golden Week holiday this Thursday. The blue-chip

Nikkei

once again flirted with but failed to attain 17,000, closing up 38.76 to 16,957.27. The

Hang Seng

closed up 237.77, or 1.8%, to 13,364.79.

Treasuries, which eked out a rally in late trading yesterday, were flat this morning. Lately the 30-year bond was up 3/32 to trade at 95 11/32, yielding 5.57%.

There are two monthly economic releases today, but neither is likely to move the stock market. The

Conference Board

releases its monthly index of

consumer confidence

at 10 a.m., and the

National Association of Realtors

will weigh in on March

sales of existing homes

at the same time.

Tuesday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

  • Comcast is considering the idea of linking up with Microsoft or America Online in an arrangement that could advance those companies' ambitions in digital television and high-speed Internet access, while buoying Comcast's position in the bidding war for MediaOne, The Wall Street Journal reported. The newspaper said the talks are very preliminary and are among a number of possibilities being considered by Comcast, which is trying to beat AT&T's unsolicited bid to buy MediaOne.
  • AT&T posted first-quarter operating earnings of 61 cents a share, including the impact of the March 9 TCI acquisition. The First Call 18-analyst estimate predicted earnings of 57 cents. Meanwhile, AT&T and Japan's Nippon Telegraph & Telephone (NTT) agreed to team up in the global network solutions business.
  • Park Place Entertainment (PPE) is buying Caesars World and other gaming assets from Starwood Hotels & Resorts Worldwide (HOT) for a total of $3 billion in cash. The sale excludes the Desert Inn in Las Vegas. The deal was first reported by CNBC. In other news (earnings estimates from First Call):
  • Goldman Sachs upgraded Apple (AAPL) - Get Report to its recommended list from market perform.
  • Amazon.com (AMZN) - Get Report said yesterday it was acquiring three e-commerce companies for about $645 million in stock.
  • Chubb (CB) - Get Report reported first-quarter operating earnings of $1.02 a share, beating the 13-analyst estimate, but down from the year-ago $1.10.
  • Disney (DIS) - Get Report said second-quarter net income was 13 cents a share, which excludes its acquisition of a 43% stake in Infoseek (SEEK) , in line with the 19-analyst estimate, but down from the year-ago 18 cents.
  • Dollar General (DG) - Get Report set a 5-for-4 stock split.
  • HealthSouth (HRC) - Get Report posted first-quarter earnings of 26 cents a share, a penny ahead of the nine-analyst estimate and unchanged from the year-ago period.
  • Louisiana Pacific (LPX) - Get Report reported first-quarter earnings of 26 cents a share, beating the 10-analyst estimate of 19 cents and up from the year-ago loss of 23 cents.
  • Northern Telecom (NT) posted first-quarter operating earnings of 33 cents a share, in line with the 22-analyst estimate and up from the year-ago 27 cents.
  • Phillips Petroleum (P) reported first-quarter operating earnings of 7 cents a share, beating the 23-analyst estimate of a penny a share, but down from the year-ago operating net of 65 cents.
  • Texaco (TX) - Get Report reported first-quarter operating earnings of 18 cents a share, beating the 21-analyst estimate by a penny, but down from the year-ago operating earnings of 46 cents.
  • Toys R Us (TOY) said it was establishing a separate toysrus.com unit in a strategic partnership with Benchmark Capital, a Silicon Valley venture-capital firm. The company also said it was acquiring a 500,000 square-foot, fully automated distribution center in Memphis, Tenn.
  • United Rentals (URI) - Get Report reported first-quarter earnings of 18 cents a share, beating the 13-analyst estimate of 16 cents and up from the year-ago 11 cents.

eBay yesterday posted first-quarter earnings of 5 cents a share, 3 cents ahead of the 10-analyst forecast and above the year-ago penny. eBay said quarterly revenue jumped to $34 million from $6 million.