Stocks to Watch: Microsoft, Unilever, Ben & Jerry's - TheStreet

Stocks to Watch: Microsoft, Unilever, Ben & Jerry's

A Goldman Sachs analyst has cut his revenue outlook for software giant Microsoft.
Author:
Publish date:

Goldman Sachs

analyst Rick Sherlund cut his third-quarter revenue outlook for

Microsoft

(MSFT) - Get Report

to $5.75 billion from $5.95 billion, citing faltering demand for PCs.

"We are reducing our March quarter revenue estimate due to growing evidence that PC unit growth did not likely come up to our expectations," wrote Sherlund. "PC growth was very sluggish from November through February, and while it reaccelerated in March, it does not appear to have occurred fast enough to offset the weakness earlier in the quarter."

Unilever

(UN) - Get Report

, the consumer products giant, is

buying privately owned

Slim-Fast Foods

, the maker of diet shakes and bars, for $2.3 billion in cash. Florida-based Slim-Fast had net sales of $611 million and operating profits of $125 million for the year ended November 1999.

Separately, it's official: Unilever is buying

Ben & Jerry's Homemade's

(BJICA)

for $43.60 a share, or $366 million.

Mergers, acquisitions and joint ventures

Alcan Aluminium's

(AL) - Get Report

plan for a three-way merger with France's

Pechiney

(PY) - Get Report

and Switzerland's

Algroup

is

unraveling in the face of antitrust opposition,

The Wall Street Journal

reported, citing people familiar with the situation.

Alcan could announce as early as today that it won't resubmit its merger plan with Pechiney to the

European Commission

and, as a result, may be forced to renegotiate its $4.1 billion deal with Algroup, the story said.

ATEC Group

(ATEC) - Get Report

, an information technology products and services provider, is buying

IntelleSale.com

, a unit of

Applied Digital Solutions

(ADSX)

, for $375 million in stock.

Level 3 Communications

(LVLT)

said it would sell a 25% ownership stake in its undersea cable system to

Viatel

(VYTL)

. The part-ownership stake is valued at more than $150 million.

Lucent

(LU)

and

TeraBeam

said they will form a venture to use TeraBeam's fiberless optical networking system that provides high-speed data networking between local and wide area networks. Under terms of the agreement, Lucent will invest $450 million in cash, research and development, and products in the venture. Lucent also said it will create 500 jobs as it invests $150 million over the next three years in a major extension of a plant in Dublin.

A dozen or more oil and chemical companies including

Royal Dutch/Shell Group

,

BP Amoco

(BPA)

,

Dow Chemical

(DOW) - Get Report

and

Mitsubishi

are planning to launch an electronic exchange later this year, the

Journal

reported. The story said the companies expect the exchange will account for tens of billions of euros of their spending in the first year alone.

Telstra

(TLS)

, an Australian telecommunications company, announced a strategic alliance with

Pacific Century CyberWorks

that will allow each company to expand its regional reach in Asia's telecommunications market,

The Wall Street Journal

reported in its online edition. Telstra will invest a total of $3 billion in cash in CyberWorks and a new joint venture between the two companies.

Earnings/revenue reports and previews

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.

)

Compuware

(CPWR)

warned that fourth-quarter earnings will come in between 13 cents to 15 cents a share, far below the 15-analyst estimate of 35 cents. The company said it expects to announce its earnings on Monday, May 1.

Delphi Automotive

(DPH)

posted first-quarter earnings of 57 cents a share, a penny better than the 14-analyst estimate and up from the year-ago pro forma 50 cents.

Dow Jones

(DJ)

posted first-quarter earnings of 88 cents a share, before a special gain, well ahead of the 10-analyst estimate of 80 cents and up from the year-ago 44 cents.

Enron

(ENE)

reported first-quarter earnings of 40 cents a share, above the 20-analyst forecast of 37 cents and the year-ago 34 cents.

E*Trade

(EGRP)

posted break-even results for its fiscal second-quarter, far above the 15-analyst estimate, which expected the online broker to lose 16 cents.

Harley-Davidson

(HDI)

, the Milwaukee-based maker of motorcycles, reported stronger-than-expected earnings of 26 cents a share, smacking down the 12-analyst estimate of 24 cents and easily outpacing last year's 19-cent return.

J.P. Morgan

(JPM) - Get Report

reported first-quarter earnings of $3.37 a share, far above the 10-analyst estimate of $2.81, and up from the year-ago $3.01. Net income totaled $628 million, up from $600 million in the year-ago period. Return on common equity was 23% in the quarter, compared with 22% in the first quarter of 1999. J.P. Morgan said strong momentum in equities, investment banking and asset management services powered its top-line growth in the quarter.

Time Warner

(TWX)

, which is being acquired by

America Online

(AOL)

,

posted first-quarter earnings of 5 cents a share, better than the eight-analyst estimate of 2 cents.

Offerings and stock actions

Credit Suisse First Boston

priced 4 million shares of

Corillian

(CORI) - Get Report

at $8 each. The company provides software and professional services to financial Web sites and online financial providers.

ePlus

(PLUS) - Get Report

priced a follow-on public offering for the sale of 1 million shares, at $28.50 a share.

Analyst actions

Apache

(APA) - Get Report

: coverage RESUMED with a strong buy and 12-month price target of 63 at

Warburg Dillon Read

.

Miscellany

The

University of Rochester

said it was awarded a patent for the use of the entire class of drugs known as Cox-2 inhibitors, which are heralded for their effectiveness in killing pain, but without side effects such as stomach pain, bleeding or ulcers. The class of drugs includes the blockbuster arthritis drug Celebrex, which has become a bestseller. The university said that shortly after the patent was awarded, university attorneys filed a patent infringement suit in federal court against

Searle

and

Pfizer

(PFE) - Get Report

, the pharmaceutical companies that jointly market Celebrex. Searle is the drug division of

Monsanto

. Monsanto is now a part of

Pharmacia

.

The university said that the patent awarded Tuesday entitles it to royalties on the sale of all Cox-2 inhibitors. According to the university, doctors prescribed Celebrex to 6.4 million patients in 1999, pushing its first-year sales to $1.5 billion.

The Heard on the Street column in the

Journal

said analysts are seeking new ways to justify rising share prices of some technology giants. The story looks at

Morgan Stanley Dean Witter

analyst George Kelly, who has covered

Cisco

(CSCO) - Get Report

since the company went public in 1990. Kelly has kept a close eye on the company, often raising his target price along with the stock's ascent, the story said, adding that analysts now say investors are calling the shots on share prices, even when it comes to big stocks with predictable earnings growth.

For analysis of the market's preopen tone and trends, see the Wake-Up Call, published separately.