Tuesday's Winners & Losers: Analysts International, Quanta, Supervalu, Merix, Ciena, SBC

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Updated from 1:26 p.m.

Morgan Stanley Dean Witter

(MWD)

today reported fourth-quarter earnings and revenue that were down from a year ago and fell short of analysts' expectations.

For the full year, the securities and brokerage firm posted record net income that rose 14% above year-ago levels but that, nevertheless disappointed analysts.

Morgan Stanley earned $1.06 per share in the fourth quarter on revenue of $5.7 billion. Fifteen analysts surveyed by

First Call/Thomson Financial

were expecting fourth-quarter earnings of $1.29 a share. Revenue of $5.7 billion was equal to last year's fourth quarter, but net income of $1.208 million was down 26% from the year-ago quarter.

The firm blamed the decline on weak results in its fixed income and private equity businesses and on "unusual compensation pressure" in institutional securities. "We are disappointed with the decline in our operating margins," the company said in a statement.

For the full year, Morgan Stanley reported earnings per share of $4.73 on revenue of $26.4 billion. Analysts had forecast full-year earnings of $4.98 per share.

The company also announced a 15% increase in its quarterly dividend to 23 cents per share from 20 cents. The dividend is payable Jan. 20, 2001, to shareholders of record as of Jan. 12. Morgan Stanley closed down 25 cents, or 0.4%, to $69.

Mergers, acquisitions and joint ventures

It's the holiday season, and you know what that means -- time to stuff the stocking.

Ciena

(CIEN) - Get Report

announced that it purchased privately-held

Cyras Systems

for 27 million shares of its stock. Just to give you a ballpark figure on the deal, Ciena's stock ended yesterday's trading at $96.38, which would make this deal worth $2.6 billion.

Hmm, might need a bigger sock, eh?

Cyras develops optical-switching systems for metropolitan -- and therefore high traffic -- areas. This move helps expand Ciena's reach further into the optical-networking biz. Cyras will become a new division within Ciena as its multiservice access and switching division.

The deal, unanimously approved by both companies' boards, will be dilutive to 2001 earnings by 19 cents to 21 cents a share. It will close in the first quarter of 2001. Ciena closed down $23.19, or 24.1%, to $73.19.

Computer-maker

Hewlett-Packard

(HWP)

and mobile-phone company

Sprint PCS (PCS)

said they are teaming up to market and sell a feature allowing employees to check company email wirelessly. H-P closed up 19 cents, or 0.6%, to $31.31; Sprint PCS was down 81 cents, or 3.1%, to $25.25.

Boozehounds take note:

Seagram's

(VO) - Get Report

liquor business, which includes such brands as Chivas Regal, Captain Morgan's Rum and Crown Royal Canadian Whiskey, might become part of the

Diageo

(DEO) - Get Report

and

Pernod Richard

beverage empires. This morning, the

Wall Street Journal

wrote that the sweepstakes over Seagram's lucrative alcohol business was nearing a final round and the winner looks like a joint bid from France's Pernod and Britain's Diageo, valued at $8.15 billion.

According to the paper, the pair will divvy up the Seagram brands, which will help Diageo, the world's largest liquor company, avoid some of the antitrust concessions that might be required. Seagram closed flat at $50.50; Diageo was down 6 cents, or 0.2%, to $41.94.

After Monday's Close

General Dynamics'

(GD) - Get Report

bid to purchase

Primex Technologies

(PRMX)

has cleared the mandatory antitrust waiting period, the companies said today. A shareholder vote on the deal will take place Jan. 24. General Dynamics closed down 44 cents, or 0.6%, to $75.75; Primex was up 6 cents, or 0.2%, to $31.88.

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Earnings/revenue reports and previews

Out with the old. In with the restructuring.

Analysts International

(ANLY)

, an information technology consultant, said it would cut 120 jobs and consolidate offices in order to reduce costs. Why? Well, the company announced that second-quarter earnings would come in between 9 cents and 12 cents a share, lower than the 12 cents expected by Wall Street.

The restructuring plan will eliminate those 120 jobs, or 15% of its nonbillable staff, while taking its 45 local offices and putting them into its 13 district sales offices, thereby reducing the company's exposure to high-cost leasing agreements. Analysts International closed up 56 cents, or 15%, to $4.31.

Del Webb

(WBB)

builds "active adult" communities, you know, places like "Sunnyvale Acres" and "Old Fogey Plantation." And with the number of elderly people increasing with every passing year, the builder announced that it will beat second-quarter earnings expectations. The company announced earnings of $1.10 a share, topping the 94 cent analyst call and the year-ago 73 cents. Del Webb closed up 38 cents, or 1.4%, to $27.25.

As auto sales continue to slow, as evidenced in last week's retail sales report, it comes as no surprise that more and more automakers and auto-related companies continue to warn. But auto-parts maker

Lear

(LEA) - Get Report

will buck that trend, expecting fourth-quarter and 2000 earnings to top already lowered analyst estimates.

The company announced it would post fourth-quarter earnings of $1.35 a share, 2 cents better than the

First Call/Thomson Financial

estimate, which has been substantially lower in the past two months. This quarter's earnings per share data was lower than the year-ago $1.36 a share. Therefore, 2000 will now come in at $4.20 a share, better than the lowered $4.18 per share analyst expectation.

Don't get too excited, though. This is just the latest in a string of preannouncements about the fourth quarter. In October, the company said it was comfortable with the fourth-quarter analyst estimate of $1.54 a share, but that sales would be flat because of weakness in Europe. As a result, a handful of analysts lowered estimates. Then, Lear said on Nov. 14 that its 2001 picture would rise 3% to 5%, but still mentioned the weakness in sales, while telling Wall Street it was comfortable with the now-lowered $1.45 a share estimate.

But, as more and more companies began warning, analysts took Lear's estimate down even further, despite the fact the company said it was "comfortable" with estimates. And today, it beat the estimate, which was all the way down to $1.33 a share. Lear closed down 94 cents, or 4.4%, to $20.63.

Merix

(MERX)

, a maker of computer circuit boards, posted second-quarter earnings of 70 cents a share, beating the estimate of 67 cents and up from year-ago earnings of 12 cents a share. The company said a slowdown in demand will put third-quarter earnings at 44 cents to 48 cents a share, which will miss the estimate of 69 cents a share. Merix closed down the ever-popular "whopping" 51%, that's

51%

, or $12.81 to $12.31. The Forest Grove, Ore.-based company was the main percentage decliner in the

Nasdaq index and among the top net decliners.

Shopping to a better bottom line!

Quanta Services

(PWR) - Get Report

, a telecommunications solutions provider, said its 2001 earnings would be better than expected after its four-company buying spree. The company said 2001 earnings will come in between $2.14 and $2.18 a share, easily topping the $2.10 estimate at First Call/Thomson Financial.

Quanta bought four service providers across the United States; the company said the purchases will result in up to $94 million a year in revenues. The coast-to-coast purchases were: California's

JT Telecommunications

, Connecticut's

Professional Teleconcepts Group

, Nevada's

Network Electric

and Rhode Island's

Parkside Utility Construction

.

But 2000 earnings won't be as spectacular. The company, which hasn't yet officially released the results of its fourth quarter, said that 2000 earnings will come in between $1.67 and $1.69 a share. And that's before an after-tax 29-cent per share charge, related to a $28.7 million payment to largest shareholder

UtiliCorp United

(UCU)

for management services. The analysts expected the company to make $1.68 a share in fiscal 2000. Quanta closed up $2.06, or 7.1%, to $30.94; UtiliCorp United was down 13 cents, or 0.4%, to $28.50.

Michael Jordan's not used to failure, or even association with one. (Well, not counting his early history with the Chicago Bulls.) Now the

Rayovac

(ROV)

pitchman will need to get used to it, and the fact that his association with the Washington Wizards isn't reaping the wins that beltway fans once thought.

Today, Rayovac announced that first-quarter earnings will come in between 30 cents and 33 cents a share, far lower than the 47-cent call from the folks at First Call/Thomson Financial and the year-ago 48 cents. Y2K madness and paranoia increased both the top and bottom lines at Rayovac last year. This year, with fewer people moving to bunkers in the desert, Rayovac won't be seeing huge sales, but said that it expects to return to the 7% to 8% historical growth rate in early 2001. Rayovac closed down $1.63, or 11.6%, to $12.38.

SBC Communications

(SBC)

became the latest company to warn today, announcing that its earnings per share would grow 11% to 14% next year, just south of the 14.5% growth picked by the folks at First Call/Thomson Financial. The second-largest local phone company also said that revenue would shrink as well, coming in with growth of 8% to 9%, lower than the 10% expected by analysts. And the fourth quarter is also looking a little sad, with earnings of 56 cents to 58 cents a share, at the low end of the 58 cent analyst call. SBC closed down $6.75, or 12.7%, to $46.56.

After Monday's Close

Aaron Rents

(RNT)

, a rental, rental purchase and furniture retailing company, said it expects fourth-quarter revenue to be "somewhat less than estimated earnings." The company hid that information in a press release announcing it was purchasing 27 real estate leases auctioned off by

Heilig-Meyers

in bankruptcy court. Aaron did not give a new estimate. The three-broker First Call consensus anticipated earnings of 35 cents a share for the quarter. Aaron Rents closed down $1.81, or 10.5%, to $15.44.

Dollar Tree

(DLTR) - Get Report

said fourth-quarter sales are likely to be between $605 million and $615 million, a reduction from its previous expectations. The company anticipates earnings of 59 cents to 62 cents a share for the fourth quarter, far short of the 70 cent figure estimated by the 14-broker consensus. Dollar Tree closed down $15.94, or 43.8%, to $20.44.

Mead

(MEA)

said it expects fourth-quarter earnings to fall short of estimates due to high energy prices and weak foreign currencies. The company said earnings for its paper unit will be down about $15 million from the same time a year ago, while packaging and paperboard operations will earn about $20 million less than the same time a year ago.

The company expects to earn between 15 cents and 20 cents a share for the quarter, well short of the 10-broker First Call/Thomson Financial consensus looking for 33 cents a share. Mead closed down 13 cents, or 0.4%, to $28.38.

7-Eleven

(SE) - Get Report

said November same-store sales were up 1.7%. The stock ended the day down 18 cents, or 2.1%, to $8.50.

Grocery retailer

Supervalu

(SVU)

reported quarterly earnings of 36 cents a share, in line with the six-broker consensus. The company earned 42 cents a share in the same time period a year ago. Supervalu closed up $1, or 8.5%, to $12.75.

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Analyst actions

Hold yer guns there, pardner. Don't be a-goin' into dem chips, ya hear?

Credit Suisse First Boston

analyst John Pitzer made some notes about the semiconductor equipment industry, telling investors that now is not the time to snap up those battered semiconductors. In a note to investors this morning, the analyst wrote, in all capital letters, no less: "We continue to believe that a better buying opportunity will present itself in

the first quarter of 2001."

Pitzer said that although changes in the

Fed

bias and rate picture seem imminent, this sector won't really be affected. Put simply, semiconductors will gain no solace if the Fed makes changes. This industry is still bound by the fundamental laws of supply and demand. And right now, demand seems to be abating as capital spending in the semiconductor industry declines.

"We have been cautioning that the semiconductor industry was in the midst of a inventory correction, the depth and breadth of which was perhaps more severe than most realized," he wrote. "The impact of this inventory correction would be a dramatic reduction in capital budgets for capacity addition in 2001, especially

the first half of 2001."

In plain English, don't look for the picture to change until mid-2001, since inventory levels are still quite high.

Upgrades

Amerada Hess

(AHC) - Get Report

: UP to buy from neutral at

Bear Stearns

; 2001 earnings estimate UP to $7.60 from $5.25. Amerada Hess closed up $1.63, or 2.7%, to $62.38.

Union Pacific

(UNP) - Get Report

: UP to buy from neutral at

Salomon Smith Barney

. Union Pacific closed up $3.06, or 6.6%, to $49.38.

Downgrades

ACNielsen

(ART)

: DOWN to hold from strong buy at

ING Barings

. ACNielsen closed up 25 cents, or 0.7%, to $36.25.

Pentair

(PNR) - Get Report

: DOWN to market perform from buy at

Banc of America

; 2000 EPS DOWN to $2.30 from $2.72 and 2001 EPS DOWN to $2.40 from $3.50. Pentair closed down $1.63, or 7.1%, to $21.25.

SBC Communications

(SBC)

: DOWN to accumulate from buy at

Merrill Lynch

. SBC closed down $6.75, or 12.7%, to $46.56.

Terayon

(TERN)

: DOWN to neutral at

W.R. Hambrecht

. Terayon closed down 56 cents, or 10.7%, to $4.69.

Initiations

Alliance Forest Products

(PFA)

: NEW neutral at Solomon Smith Barney. Alliance Forest closed down 19 cents, or 2%, to $9.19.

American Home Products

(AHP)

: NEW buy at CSFB. American Home Products closed up 80 cents, or 1.4%, to $59.70.

Fiserv

(FISV) - Get Report

: NEW hold at CSFB. Fiserv closed down $1.56, or 3.2%, to $47.56.

Forward Air

(FWRD) - Get Report

: NEW buy at CSFB. The stock closed up 19 cents, or 0.5%, to $36.25.

GoTo.com

(GOTO)

: NEW accumulate at

Prudential Securities

; price target: $10. GoTo.com ended the day down 50 cents, or 5.9%, to $8.

Intermagnetics General

(IMG)

: NEW attractive at

Robertson Stevens

. Intermagnetics closed down 25 cents, or 1.6%, to $15.

NBCi

(NBCI)

: NEW hold at Prudential Securities; price target: $5. NBCi closed down 25 cents, or 5.97%, to $3.94.

New Skies Satellite

(NSK)

: NEW buy at ING Barings; price target: $13. New Skies closed down 75 cents, or 7.9%, to $8.75.

StorageNetworks

(STOR) - Get Report

: NEW attractive at Robertson Stevens. StorageNetworks closed down $4.56, or 15.4%, to $25.06.

Group Moves

Lehman Brothers

initiated coverage on a handful of paper companies, starting them all at buy. In its recommendation to investors, it wrote: "Shares of paper companies have endured the worst bear markets vs. the

S&P 500 since the Great Depression." It recommended an overweight position in the following companies:

  • Georgia-Pacific (GP) . Georgia-Pacific closed up $1.69, or 6.5%, to $27.75.
  • Louisiana-Pacific (LPX) - Get Report. Louisiana-Pacific closed up 25 cents, or 2.7%, to $9.38.
  • Mead (MEA) . Mead closed down 13 cents, or 0.4%, to $28.38.
  • Sappi Limited (SPP) . Sappi closed up 6 cents, or 0.9%, to $6.81.
  • Weyerhaeuser (WY) - Get Report. The stock closed up $1.13, or 2.4%, to $47.88.

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Offerings and stock actions

Bully! UK-based

Aremissoft

(AREM)

announced a 2-for-1 stock split. Aremissoft closed up $1.13, or 2.4%, to $47.88.

PG&E

(PCG) - Get Report

told the

Securities & Exchange Commission

in a filing that its quarterly dividend of 30 cents a share is at risk if its utility subsidiary is unable to recover its growing balance of unrecovered power purchase costs. PG&E closed down $1.25, or 5.3%, to $22.38.

Rational Software

(RATL)

said it plans to resume its 5.9 million share repurchase program. Rational Software closed up 31 cents, or 0.8%, to $39.88.

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Miscellany

Advanced Micro Devices

(AMD) - Get Report

, after warning last week that its earnings would fall short of expectations, announced some good news today. The chipmaker, which produces the

Athlon

chip, a competitor to Intel's

Pentium

brand chip, said that the number of flash memory devices it would ship to

Cisco

would be doubling. The duo has a three-year supply agreement, first announced in March. AMD closed up 13 cents, or 0.8%, to $15.38.

Get ready for a serious dose of dot-com-bat.

eMusic.com

(EMUS)

announced that it filed a copyright infringement suit against

MP3.com

(MPPP)

, which is no stranger to courtrooms after settling suits with five record labels earlier this year. eMusic, which says it has digital rights to 13,000 albums, claims that MP3.com infringed on some of that music. EMusic.com closed up 3 cents, or 9.1%, to 38 cents; MP3 was down 56 cents, or 13.95%, to $3.47.

Time for some musical chairs over at

Level 8 Systems

(LVEL)

. This North Carolina-based company provides infrastructure for e-businesses, and when the music stopped it had a new chief executive and a new chairman. Current president Steven Dmiszewicki will also become the CEO, while Anthony Pizi, a

Merrill Lynch

(MER)

vet, will become the new chairman and chief technology officer. Level 8 closed up 44 cents, or 6.2%, to $7.50; Merrill was up 13 cents, or 0.2%, to $63.88.

St. Jude

(STJ)

, don't make it bad, you took a pacemaker and got approval. Today, St. Jude Medical announced that the

U.S. Food and Drug Administration

gave it premarket approval for the

Integrity Micro AutoCapture Pacing System

, billed as the world's smallest dual-chamber pacemaker. St. Jude ended the day up 63 cents, or 1.1%, to $55.50.

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