Stocks to Watch Friday: Sun Microsystems, Carlton Communications, United News

Author:: TSC Staff
Publish date:: Jul 21, 2000 4:08 PM EDT

Updated from 2:44 p.m. EDT

Dow component

Eastman Kodak

reported second-quarter earnings of $1.65 a share, in line with the

First Call/Thomson Financial

nine-analyst consensus estimate, on revenue of $506 million. Kodak reported earnings of $1.52 a share at this time last year. The company said third-quarter operating earnings should be between $1.56 and $1.66 a share -- the current nine-analyst estimate was for $1.61 a share.

America Online

(AOL)

reported fourth-quarter earnings of 13 cents a share, beating the 31-analyst estimate of 11 cents and up from year-ago earnings of 6 cents a share. The more-than-doubled earnings were attributed to growth in advertising, electronic commerce and subscribers.

TheStreet.com/NYTimes.com

joint newsroom covered the AOL report in a

story this evening.

Sun Microsystems

(SUNW) - Get Report

reported fourth-quarter earnings of 39 cents a share, excluding gains on the sale of equity investments and an acquisition-related charge. The figure was better than the 21-analyst estimate of 33 cents and was up from year-ago earnings of 24 cents. The company said earnings were boosted by continued strong sales of its servers.

TheStreet.com/NYTimes.com

joint newsroom covered the Sun report in a

story this evening.

Mergers, acquisitions and joint ventures

Privately held Internet health care news company

MillenniumHealth Communications

announced that it has offered to merge with embattled Internet healthcare company

Drkoop.com

(KOOP)

for an undisclosed amount. The company said last week that a second-quarter loss would be below Wall Street estimates and that two of its top executive resigned voluntarily.

The proposed merger of

Carlton Communications

(CCTVY)

and

United News

(UNEWY)

was blocked by the boards of both media companies after realizing that the requirement to dispose of

Meridian

, one of the four leading ITV licenses, would undermine the strategy behind the merger.

After Thursday's Close

Canadian National Railway

(CNI) - Get Report

and

Burlington Northern Santa Fe

(BNI)

ended their plans to create North America's largest railway, citing the U.S. Surface Transportation Board's 15-month moratorium on bigrail mergers.

The

Justice Department

cleared

Clear Channel Communications'

(CCU) - Get Report

$15.5 billion acquisition of

AMFM

(AFM)

, after the companies agreed to sell 99 stations in 27 markets.

Toolmaker

Kennametal

(KMT) - Get Report

offered to pay $6.70 a share in cash for the 17% of tool distribution company

JLK Direct Distribution

(JLK)

it does not already own. Kennametal said the aggregate value of the deal would be $28.7 million in return for the minority interest of about 4.3 million JLK shares. In May, Kennametal said it would not sell the JLK unit because of unfavorable market conditions.

Earnings/revenue reports and previews

Beleaguered

Alaska Airlines

(ALK) - Get Report

reported second quarter-earnings of 99 cents per share, excluding charges, besting the 11-analyst estimate of 91 cents. Still, the company fell far short of the $1.59 earned at this time last year.

Archer-Daniels Midland

(ADM) - Get Report

reported fourth-quarter earnings of 10 cents a share, which includes a charge of 12 cents a share for the cost of products sold related to oilseed, cocoa, plant shut-downs and other items. The charge also covers abandonment costs and a separate tax gain of 10 cents a share. The eight-analyst estimate was 19 cents a share, while year-ago earnings were 7 cents a share.

Cytec

(CYT)

reported second-quarter earnings of 81 cents, beating the seven-analyst estimate of 79 cents and up from year-ago earnings of 63 cents. Also, Goldman Sachs added the company to its recommended for purchase list from market outperformer rating. The firm also raised its 2000 EPS estimate to $2.85 from $2.80 and its 2001 EPS estimate to $3.15 from $3.10.

Sears Roebuck

(S) - Get Report

reported second-quarter earnings of $1.11 a share, beating the

First Call/Thomson Financial

14-broker estimate for earnings of $1.05 a share and the year-ago 86-cent profit.

U.S. Steel Group

(X) - Get Report

posted second-quarter earnings of 62 cents a share, below the 11-analyst 70 cent consensus but above the year-ago 59 cent profit.

Verizon Communications

(VZ) - Get Report

issued a statement in response to recent market activity, as the stock has dropped to 44 1/4 from 57 7/16 in a month's time. The company said second quarter earnings, to be announced Aug. 8, will be consistent with prior guidance. The current

First Call/Thomson Financial

four-analyst estimate is for earnings of 77 cents a share for the quarter.

Washington Post

(WPO)

reported second-quarter earnings of $4.33 a share, falling short of the five-analyst estimate of $5.70 and down from year-ago earnings of $6.67 a share. The company said it missed estimates because it was spending more on building up new businesses this quarter.

After Thursday's Close

Agilent Technologies

(A) - Get Report

warned investors that it would post third-quarter earnings of 18 cents to 22 cents a share, greatly missing the 11-analyst estimate of a 35-cent profit. The company blamed capacity constraints and part shortages for lagging orders. The test and measurement equipment maker also said softness in its health-care solutions and chemical analysis units helped to put a dent in earnings.

TheStreet.com/NYTimes.com

joint newsroom covered the Agilent warning in a

story this evening.

Offerings and stock actions

Affymetrix

(AFFX)

set a 2-for-1 stock split, scheduled to be paid to shareholders Aug. 21.

Chip maker

Atmel

(ATML)

said it had approved a two-for one split, to be distributed Aug. 25. Maker of electronic and communications products

Teledyne Technologies

(TDY) - Get Report

filed to sell 4.1 million common shares, valued at $77.1 million, based on yesterday's closing price of 18 13/16.

After Thursday's Close

Corio

(CRIO)

was up about 30%, after its 10 million-share IPO was priced at $14 a share, which was above its price range, according to lead underwriters

Goldman Sachs

. The stock was lately 4 1/8 higher to 18 1/8.

Honeywell International

(HON) - Get Report

announced that it would buy back up to 40 million of its common shares, worth about $1.5 billion.

SMTC

(SMTX) - Get Report

jumped 45%, or 7 1/4 to 23 1/4 after its 11 million-share IPO was priced at $16 a share, which was at the top of its price range, said lead underwriters Lehman Brothers.

Talarian

(TALR)

rose more than 30% in its debut. Shares for its IPO were priced at $16 a share, above the estimated $12-to-$14 range, according to lead underwriters Lehman Brothers.

TranSwitch

(TXCC)

set a 2-for-1 stock split.

Variagenics

(VGNX)

shot up more than 70% on its first day. The 5 million-share IPO, priced at $14 a share, was up $10 to $24.

Analyst actions

Donaldson, Lufkin & Jenrette

cut its fiscal 2001 earnings estimates on

America Online

(AOL)

to 61 cents a share from 71 cents a share, after AOL reported fiscal fourth-quarter 2000 earnings of 13 cents a share last night. But DLJ's estimates are on the high side -- the current 2001 consensus is 55 cents, according to

First Call/Thomson Financial

Merrill Lynch

responded by raising its fiscal 2001 estimates to 58 cents per share from 53 cents per share.

DLJ maintained its price target of $120 a share, and a number of other analysts reiterated strong recommendations on the Internet company.

Donaldson, Lufkin & Jenrette raised its price target on

Sun Microsystems

(SUNW) - Get Report

to $120 from $100 after the company's quarterly earnings call last night.

Ventro

(VNTR) - Get Report

was cut by several analysts after its earnings report yesterday. The B2B company has been downgraded to hold from buyat

Credit Suisse First Boston

and down to buy from strong buy at Deutsche Banc Alex. Brown.

Upgrades

Apache

(APA) - Get Report

: UP to buy from outperform at Deutsche Banc Alex. Brown.

Bank of New York

(BK) - Get Report

: UP to buy from hold at Credit Suisse First Boston.

Broadvision

(BVSN) - Get Report

: UP to strong buy from buy at

SG Cowen

Disney

(DIS) - Get Report

: Merrill Lynch raised Q4 earnings per share estimates to 19 cents from 16 cents, and increased 2000 estimates to 86 cents from 83 cents.

Equitable Resources

(EQT) - Get Report

: UP to buy from market perform at Donaldson, Lufkin & Jenrette.

Host Marriot

(HMT)

: UP to accumulate from buy at Merrill Lynch; price target: $12.

Level 3 Communications

(LVLT)

: UP to buy from long-term buy at

J.P. Morgan

Macromedia

(MACR)

: DOWN to buy from strong buy at U.S. Bancorp Piper Jaffray.

Mellon Financial

(MEL)

: UP to buy from hold at Credit Suisse First Boston.

Precision Castparts

(PCP)

: UP to buy from hold at Credit Suisse First Boston; 2001 earnings per share estimate raised to $4.70 from $4.25; 2002 estimates raised to $5.40 from $4.90.

Smith International

(SII)

: UP to short-term buy from short-term accumulate at Merrill Lynch.

Station Casinos

(STN) - Get Report

: UP to buy from outperform at Lehman Brothers.

Sun Microsystems

(SUNW) - Get Report

: UP to buy from outperform.

THQ

(THQ) - Get Report

: UP to buy from market performer at

Banc of America Securities

Xilinx

(XLNX) - Get Report

: 12-month price target UP to 120 from 100 at

ABN Amro

. DOWN to buy from strong buy at

WR Hambrecht

, after the company reported earnings of 27 cents a share for the second quarter, ahead of the 25-cent consensus. WR Hambrecht raised earnings estimates on Xilinx, despite downgrading the stock.

Downgrades

Adaptec

(ADPT) - Get Report

: DOWN to neutral from attractive at

Bear Stearns

Agilent

(A) - Get Report

: DOWN to neutral from attractive at

Bear Stearns

Burlington Resources

(BR) - Get Report

: DOWN to buy from strong buy at Deutsche Banc. Alex Brown.

Complete Business Solutions

(CBSI)

: DOWN to hold at Credit Suisse First Boston.

Com21

(CMTO)

: DOWN to near-term neutral from accumulate at

Merrill Lynch

Computer Associates

(CA) - Get Report

: DOWN to neutral from attractive after the software company reported sharply lower earnings at

Bear Stearns

Cooper Tire and Rubber

(CTB) - Get Report

: DOWN to market perform from buy at Deutsche Banc Alex. Brown.

Gentex

(GNTX) - Get Report

: DOWN to buy from strong buy at Credit Suisse First Boston.

Gillette

(G) - Get Report

: DOWN to buy from strong buy at Deutsche Banc Alex. Brown after the company's earnings report yesterday.

Salomon Smith Barney

lowered its price target on the company to $45 from $50.

Hasbro

(HAS) - Get Report

: DOWN to attractive from buy at Bear Stearns.

Mexican industrial conglomerate

IMSA

(IMY)

: DOWN to outperform from strong buy ahead of valuations at

Morgan Stanley Dean Witter

Interspeed

(ISPD)

: DOWN to neutral from strong buy at

U.S. Bancorp Piper Jaffray

Lexmark

(LXK)

: DOWN to near-term accumulate from buy at

Merrill Lynch

Lucent

(LU)

: 12-month price target DOWN to 75 from 90 at PaineWebber, cut its 2000 EPS outlook to $1.11 from $1.13 and its 2001 EPS outlook to $1.31 from $1.53. Also, CSFB cut its 12-month price target to 70 from 80.

Northwest Airlines

(NWAC)

: DOWN to buy from strong buy at Deutsche Banc Alex. Brown.

Sprint PCS

(PCS)

: DOWN to hold from outperform at ABN Amro.

Tower Automotive

(TWR)

: DOWN to long-term buy from buy at

J.P. Morgan

Initiations

Cytec Industries

(CYT)

: INITIATED recommended for purchase at Goldman Sachs.

Danaher

(DHR) - Get Report

: New buy at

Credit Suisse First Boston

Group Moves

Credit Suisse First Boston initiated coverage on a number of advertising/communications companies:

Acxiom Corporation

(ACXM)

Omnicom Group

(OMC) - Get Report

Interpublic Group of Companies

(IPG) - Get Report

Harte-Hanks

(HHS) - Get Report

True North Communications

(TNO)

Catalina Marketing

(POS)

Miscellany

Financial services giant

Citigroup

named Robert Lipp, head of its consumer arm, to join Chairman and Chief Executive Sanford Weill and former U.S. Treasury Secretary Robert Rubin in its office of the chairman. Lipp fills a spot vacated by retired Co-Chairman John Reed.

After Thursday's Close

Boeing

(BA) - Get Report

said it received orders for eight widebody 777 jetliners from unidentified buyers, but announced cancellations of four earlier 777 orders.

Reuters

said eight 777s at list prices would cost about $1.4 billion, but said customers usually get a discount of 25% or more.

Celera Genomics

(CRA)

President Craig Venter told

Reuters

it's considering developing vaccines that coax the immune system to step up its attack on tumors. The company currently sells genetic information to drug companies and universities.

Constellation Energy

(CEG)

said the

Maryland Court of Appeals

lifted the stay blocking the restructuring of its utility subsidiary,

Baltimore Gas & Electric

, according to

Reuters

. The ruling allowed the company to cut electric rates 6.5% retroactive to July 1, when other Maryland utilities cut their rates.

Interstate Bakeries

(IBC)

said rumors are untrue that it's being acquired by

Grupo Bimbo

Palm

(PALM)

will replace

3Com

(COMS)

in the

S&P 500 after the close of trading July 27. 3Com is spinning of its 94.3% interest in Palm to its shareholders. 3Com will replace

Burlington Industries

(BUR)

in the

S&P MidCap 400 Index

. Burlington is being taken off the list because of lack of representation.

Salton

(SFP)

said it will lay off 470 employees between October and December at its Toastmaster manufacturing facility in Macon, Mo. The facility, which makes toasters and toaster oven broilers, will be converted into a distribution center, with about 70 employees retained for the transition.

Also, the company agreed to give

QVC

the rights to sell

George Foreman's

endorsement of seasoned steakburgers. Terms allow for George Foreman to appear on QVC to promote sales of the steakburgers, the George Foreman Grill and other George Foreman-branded products.

TelCom Semiconductor

(TLCM)

said its current president Bob Gargus was appointed chief executive. Gargus replaces Phillip Drayer, who will continue as chairman of the company.