Stocks to Watch: MER, SCMR, FATB, LU, MSFT - TheStreet

Mergers, acquisitions and joint ventures

Merrill Lynch

(MER)

confirmed it will buy

Herzog Heine Geduld

, one of the

Nasdaq Stock Market's largest market makers in a stock deal valued at about $913.8 million. Merrill said it will issue about 8.5 million shares to Herzog shareholders and said the deal would be immediately accretive to earnings. Merrill Lynch slipped 1 7/16 to 106 1/16.

A

European Union Commission

spokeswoman said the deadline to rule on whether to clear or begin a full-scale probe into the planned merger of

America Online

(AOL)

and

Time Warner

(TWX)

was extended to June 19 because the companies submitted undertakings in order to be granted EU regulatory approval of their proposed merger. America Online advanced 1 1/4 to 56 1/4, while Time Warner climbed 1 3/16 to 82 11/16.

Also, she said the decision to launch a full-scale inquiry into the proposed joint venture between

Warner Music

, a unit of Time Warner, and the

EMI Group

will be taken June 14.

The spokeswoman said that both cases had generated "a great deal of interest" given their size, but she refrained from commenting further.

Deutsche Telekom's

(DT) - Get Report

Internet unit,

T-Online

, looks like the leader to buy all or a majority stake in

Freeserve

(FREE)

,

The Wall Street Journal

reported. Freeserve is the largest Internet service provider in the U.K. Deutsche Telekom fell 7/16 to 67 9/16, while Freeserve stayed flat at 78 1/4.

Fatbrain.com

(FATB)

said it received a $36 million investment in its

Mightywords

unit, which offers digital versions of books and texts that can be downloaded to a personal computer.

The company said

Barnes & Noble.com

(BNBN)

is among the investors and that the online bookseller will own about 30% of Mightywords. Fatbrain also named Dennis Capovilla as CEO. Fatbrain.com increased 2 9/16, or 33.6%, to 10 3/16, while Barnes & Noble.com decreased 1/32 to 9.

Lucent Technologies

(LU)

said it signed a technology partnership with China's

Unicom

(UCM)

, making it the preferred vendor for the Chinese telecommunications company. Lucent lifted 3/8 to 64 7/16, while Unicom gained 1 3/16 to 40 15/16.

Microsoft

(MSFT) - Get Report

signed a nonexclusive agreement with

Cable & Wireless

(CWP)

that calls for Microsoft to supply software and services for Cable & Wireless' applications service provider business. Microsoft will also make marketing, product and support staff available, but won't invest any cash. Microsoft rose 2 9/16 to 69 7/16; Compaq improved 13/16 to 27 5/8; Cable & Wireless dropped 1 1/2 to 52.

Cable & Wireless announced plans for an ASP business in November last year, in conjunction with

Compaq

(CPQ)

. At that time, Cable & Wireless agreed to invest $300 million and Compaq agreed to invest $200 million over five years. Cable & Wireless would own 100% of the business, but Compaq will benefit from a revenue-sharing arrangement.

Reuters

(RTRSY)

and

Equant

(ENT) - Get Report

said they formally launched

Radianz

, their independently managed company for global financial communications. In early February, Reuters, which own 51% of the venture, and Equant, which owns 49%, announced their plans to establish Radianz. The joint company will offer the world's biggest secure Internet-standard communications network for financial markets. Reuters lowered 1 9/16 to 102 3/4, while Equant added 3/4 to 44 11/16.

India's

Satyam Infoway

(SIFY) - Get Report

and Sterling Commerce, a unit of

SBC Communications

(SBC)

, are extending their partnership to offer an Internet-based information and transaction portal to consumers in India and Australia, said George Zacharias, Satyam's president. Sterling Commerce has a 5% stake in Satyam Infoway, he said. Satyam boosted 1 3/4, or 5.9%, to 31 1/2, while SBC Communications advanced 1 1/8 to 45 7/16.

Sawtek's

(SAWS)

subsidiary

Microsensor Systems

announced it has entered into an exclusive agreement with

Transense

to manufacture surface acoustic wave sensors for automotive tire pressure and torque applications using Transense's patented technology. Under the terms of the agreement, Microsensor has the right to sell the sensors to other Transense licensees. Sawtek rose 7/16 to 75 1/2.

Stockwalk.com

(STOK) - Get Report

will acquire the brokerage and investment banking firms

Kinnard Investments

(KINN)

and

R.J. Steichen

in deals worth a total of about $90 million, the companies said. Each Kinnard share will be exchanged for $6 cash and half a share of Stockwalk common. Shares of Stockwalk.com missed 1 1/4, or 13.9%, to 7 3/4, while Kinnard added 3/4, or 9.8%, to 8 3/8.

Optical-network equipment company

Sycamore Networks

(SCMR)

said it agreed to buy privately held

Sirocco Systems

in a deal valued at about $2.9 billion in common stock. Under terms of the deal, Sycamore's common stock will be exchanged for all outstanding shares of Sirocco, a Connecticut-based optical network firm that targets the metropolitan access market. Sycamore declined 1 1/4 to 101 11/16.

TeleWest Communications

(TWSTY)

, a United Kingdom-based cable operator, signed a distribution deal with British interactive family entertainment channel

e-district.net

. TeleWest lifted 1 7/8 to 48 7/8.

Unilever

(UL) - Get Report

will acquire

Bestfoods

(BFO) - Get Report

, after the two companies agreed to a sweetened $73 a share offer. According to Unilever, the deal, which values Bestfoods at $20.3 billion, will be accretive to cash earnings in its first full year and will save about $750 million annually. Unilever will also take on $4 billion of Bestfoods debt, bringing the total value of the transaction to $24.3 billion. Unilever increased 1/8 to 27 1/16, while Bestfoods jumped 6 7/16, or 10.1%, to 69 3/8.

Viacom

(VIA) - Get Report

has restarted talks with

Chris-Craft Industries

(CCN)

to acquire its television station group, the

Journal

reported, citing people familiar with the situation. A TV station deal between the two companies has been valued at as much as $3.5 billion, the story said. Viacom lost 1/2 to 65 1/4, while Chris-Craft hopped 5 5/8, or 9.1%, to 67 9/16.

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Earnings/revenue reports and previews

Circuit City

(CC) - Get Report

said its first-quarter totals sales rose 14%. Circuit City said it expects its business to show a first-quarter EPS of 23 cents a share, lower than the 16-analyst estimate of 27 cents. Circuit City slumped 11 15/16, or 22.8%, to 40 1/4.

CVS

(CVS) - Get Report

said May

same-store sales were up 11.9%. CVS moved down 7/8 to 40 3/4.

Inamed

(IMDC)

said it expects second-quarter diluted earnings a share to be 56 cents a share, 15% higher than analysts' estimates of 49 cents a share due to favorable sales and margin trends.

A First Call/Thomson Financial survey of four financial analysts produced a mean earnings estimate for the company's second quarter of 50 cents a diluted share. Inamed decreased 1/8 to 39 7/8.

U.S. clothing retailer

Nordstrom

(JWN) - Get Report

said May same-store sales fell 11%, reflecting a shift in timing of its Women's Half-Yearly sale and other calendar variations. Excluding the variations, the company said May same-store sales rose 4.6%. Nordstrom slipped 1 3/16 to 22 3/4.

RadioShack

(RSH)

said May same-store sales rose 7%, driven by strong results in its computer and audio video business. RadioShack decreased 2 3/4, or 6.2%, to 41 1/2.

24/7 Media

(TFSM)

CEO David Moore told a

PaineWebber

growth and technology conference that he sees the Web advertising and media company to post breakeven results earlier than the first half of 2002. Moore said he that he has seen a strong resurgence in dot.com spending, after a slowdown in April and May and expects European operations to quadruple from the year-ago report. 24/7 Media advanced 2 53/64, or 18.4%, to 18 3/16.

TLC

(TLCV)

said it expects to post a fourth-quarter after-tax loss of 23 cents to 27 cents, wider than the current seven-analyst expected loss of 7 cents. The company also said it will not participate in a price war in the laser eye surgery industry. TLC shed 9/16, or 7.4%, to 7 1/16.

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Analyst actions

Donaldson Lufkin & Jenrette

cut its rating on the cable industry to market perform from outperform. DLJ downgraded

Comcast

(CMCSA) - Get Report

to buy from top pick. Comcast slipped 1 1/2 to 35 1/2.

Upgrades

FleetBoston Financial

(FBF)

: price target UP to 48 from 44 at

ING Barings

. FleetBoston Financial slid 1 9/16 to 38 3/8.

Gucci

(GUC)

: UP to buy from market performer at

DLJ

. Gucci edged up 13/16 to 85 15/16.

IDEC Pharmaceuticals

(IDPH)

: UP to outperform from neutral at

Morgan Stanley Dean Witter

. IDEC Pharmaceuticals jumped 4 3/16 to 92 15/16.

PMC-Sierra

(PMCS)

: UP to buy from hold at

SG Cowen

. PMC-Sierra climbed 2 7/8 to 190.

Downgrades

Basin Exploration

(BSNX)

: UP to market perform from buy. Basin stumbled 1 3/4, or 10.7%, to 14 9/16.

Electronics for Imaging

(EFII) - Get Report

: DOWN to neutral from strong buy at

U.S. Bancorp Piper Jaffray

. Electronics for Imaging plummeted 10 11/16, or 30.7%, to 24 1/16.

M.S. Carriers

(MSCA)

: DOWN to hold from buy at

Credit Suisse First Boston

. M.S. Carriers declined 3/16 to 17 5/8.

Terra Networks

(TRRA)

: DOWN to outperform at

Lehman Brothers

; price target 60 euros. Terra tumbled 3 1/8, or 6.4%, to 45 1/4.

Initiations

Bausch & Lomb

(BOL)

: coverage RESUMED at

Morgan Stanley Dean Witter

with a strong buy; price target: 82. Bausch & Lomb hopped 1 1/16 to 69 3/16.

Cysive

(CYSV)

: NEW buy at

U.S. Bancorp

; price target: 42. Cysive slipped 1 3/4, or 5.4%, to 30 1/4.

Cleco

(CNL)

: NEW buy at

PaineWebber

; price target: 40. Cleco tacked on 1/4 to 34.

Digex

(DIGX)

: NEW strong buy at

Morgan Stanley Dean Witter

; price target: 98. Digex advanced 4 15/16, or 8.9%, to 60 1/16.

Imax

(IMAX) - Get Report

: NEW buy at

CSFB

; price target: 30. Imax lifted 1 3/16, or 5.7%, to 22.

NRG Energy

(NRG) - Get Report

: NEW intermediate, long-term buy at

Merrill Lynch

. NRG Energy bounced 3/16 to 17 1/8.

Open Market

(OMKT)

: NEW buy at

PaineWebber

; price target $30 to $35. Open Market mounted 1 7/8, or 13.3%, to 15 13/16.

Sequoia Software

(SQSW)

: NEW buy at

Lehman Brothers

; price target: 30. Sequoia Software climbed 1 11/16, or 21.2%, to 9 5/8.

XL Capital

(XL)

: NEW attractive rating at

Bear Stearns

; price target: 65. XL Capital was unchanged at 58 3/4.

Group moves

.

Credit Suisse First Boston downgraded two European drug groups:

  • AstraZeneca (AZN) - Get Report DOWN to hold from buy at Credit Suisse First Boston. AstraZeneca lost 7/16 to 40 13/16.
  • Aventis (AVE) DOWN to hold from buy at CSFB. Aventis shed 1 3/4 to 61 3/4.

CSFB also lowered its rating on the European drug sector as a whole to neutral from overweight.

UBS Warburg

initiated coverage of four beer and wine makers:

  • Adolph Coors (RKY) at strong buy; price target: 72. Adolph Coors bounced 1 7/16 to 57 7/16.
  • Beringer Wine Estates (BERW) at hold; price target: 42. Beringer Wine Estates tacked on 1/8 to 37 11/16.
  • Canandaigua Brands (CDB) at buy; price target: 62. Canandaigua Brands hopped 1 9/16 to 52 7/16.
  • Robert Mondavi (MOND) at hold; price target: 36. Robert Mondavi added 1/4 to 31 7/8.

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Miscellany

Cephalon

(CEPH)

lifted 3/8 to 60 1/8 after it said Italy's

Ministry of Health

gave a subsidiary and a private company authorization to market Provigil tablets in Italy to treat excessive daytime sleepiness associated with narcolepsy.

Standard & Poor's

said

Convergys

(CVG)

and

Starbucks

(SBUX) - Get Report

will replace

Times Mirror

(TMC)

and

Shared Medical Systems

(SMS)

in the

S&P 500.

Convergys hopped 1 1/4 to 49 1/4 and Times Mirror declined 2 1/16 to 94 5/16, while Starbucks climbed 2 9/16, or 7.1%, to 38 3/16. Shared Medical Systems was unchanged at 72 13/16.

General Electric

(GE) - Get Report

skidded 5/16 to 51 1/4 after it named three executives to new jobs in a shuffling which seemed be a reassurance to investors that the upcoming decision on CEO Jack Welch's successor will not cause disruption.

Intel

(INTC) - Get Report

lifted 2 1/8 to 134 11/16 after it said last night it will delay the introduction of its low-cost Timna microprocessor until the first quarter of 2001, but said the delay will not hurt sales or earnings.

MedImmune

(MEDI)

bounced 3 5/8, or 6%, to 63 5/8 after it said David Mott will succeed Wayne Hockmeyer as chief executive, effective at year-end. The company said Hockmeyer, who founded the company, will remain as chairman.

Philip Morris

(MO) - Get Report

stumbled 3/16 to 25 5/16 after it said it plans to drop advertising from magazines in which 15% of its readers are under the age of 18. The company said it will also drop ads from magazines that are read by more than 2 million people under 18.

E-commerce software provider

Unify

(UNFY)

slipped 3/8 to 13 13/16 after it said it named Gary Pado as acting president and CEO while president and CEO Reza Mikailli is on medical leave of absence.

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