Updated from 12:13 p.m.

Merrill Lynch

gored the brokerage community this morning, telling investors that the bottom could fall out on first-quarter earnings as investors shy away from trading.

"Upcoming broker-dealer earnings results look set to disappoint vs. current Street estimates," wrote analyst Judah Kraushaar in the opening of his note to investors, fittingly called

Crunch Time

. "Consensus first-quarter and 2001 forecasts may fall near term."

He reduced his earnings per share estimates on a handful of companies and named three near-term challenges as major factors in the revision. The first problem is that retail investors have stopped trading, leading to a downturn in revenue created from trading-related fees. Also, private equity results might face more losses while mergers and acquisitions and underwriting fees have dried up as the market grows cold and hostile.

Goldman Sachs'

(GS) - Get Report

first-quarter earnings estimate was cut to $1.18 per share from $1.24 per share, while the full year 2001 was dropped to $6 from $6.15. Wall Street currently expects Goldman to make $1.39 a share in the first quarter and $6.29 a share in 2001.

Morgan Stanley Dean Witter's

(MWD)

first-quarter estimate was cut to 88 cents a share, like the Goldman call, 15% below Wall Street's forecasted $1.02 a share. Kraushaar said that private equity losses and weak commissions would hurt Morgan Stanley but hoped that fixed income markets could help alleviate the pain. He trimmed his 2001 estimate to $4.40 from $4.45 a share.

Lehman Brothers

(LEH)

received the lightest slap, with only its first-quarter earnings estimate getting scaled back. Kraushaar dropped the estimate to $1.39 a share from $1.46 a share, lower than the consensus $1.50 a share currently on the books at

First Call/Thomson Financial

. "Nonetheless, we think that Lehman may be unusually well-positioned for leveraging the revival in fixed income markets as 2001 unfolds," wrote the analyst, who actually upped his 2001 estimates to $6.20 a share from $6.05 a share.

Once those nasty earnings problems begin to alleviate, Kraushaar advised investors to take the opportunity to pick up shares of

Citigroup

(C) - Get Report

and

J.P. Morgan

(JPM) - Get Report

, two companies that have expanded their securities business by making purchases in recent weeks.

"We are optimistic that first-quarter earnings results may mark a cyclical bottom, and we see positive year-to-year comparisons reemerging in the third quarter," Kraushaar wrote. "We see a reasonably speedy stabilization/revival in earnings given rebounded liquidity in fixed income markets."

Goldman closed down $6.59, or 6.7%, to $91.75; Morgan Stanley ended the trading day off by $4.53, or 6.5%, to $65.13; Lehman was down $4.50, or 6.2%, to $68.65; Citigroup was off by 62 cents, or 1.2%, to $49.18; and J.P. Morgan was down by 94 cents, or 1.97%, to $46.66.

After another

sound of softness came from

Altera

(ALTR) - Get Report

, a programmable chipmaker, the analyst community has stepped in and restated earnings forecasts and provided more guidance for their investing customers.

Lehman Brothers analyst

Dan Niles slashed his 2001 earnings per share estimate to 59 cents from 89 cents, coming in well below the current consensus Wall Street estimate of 94 cents a share. For 2002, Niles cut his estimate to 74 cents a share from $1.10 a share, which is also lower than the average forecast of $1.15 a share. This is the second time in the past week that Niles has adjusted his estimates on Altera.

"We continue to believe we have not seen the bottom," Niles wrote. He also said that Altera has eight months of inventory on hand, something that'll make it harder for Altera to push things down the pipeline going forward.

Credit Suisse First Boston

analyst Tim Mahon cited slowing North American demand for networking, telecommunications and digital subscriber line (DSL) equipment as a major trouble spot for Altera. And the analyst said those high inventory levels will only be exacerbated by high inventory levels at subcontractors and distributors, meaning that demand is not set to improve for a while.

Mahon said that the upcoming year would be challenging for Altera and reduced his 2001 earnings estimate to 56 cents a share from 95 cents a share. He also cut his first-quarter revenue estimate to $294.4 million from $349.6 million. Altera closed down 25 cents, or 1.1%, to $23.13.

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Mergers, acquisitions and joint ventures

After Tuesday's Close

Sodexho Marriott

(SDH)

, a food and facilities management service provider, said it formed a special committee to consider a buyout offer from its parent

Sodexho Alliance

, worth $900 million in cash, or $27 a share.

UBS Warburg

was hired as Sodexho Marriott's financial adviser. Sodexho Alliance currently owns about 48% of Sodexho Marriott's stock. Sodexho Marriott closed down 10 cents, or 0.3%, to $29.20.

UAL's

(UAL) - Get Report

United Airlines said it is buying 15 new

Airbus

aircrafts -- seven A319s and eight A320s. Financial terms were not disclosed. The planes are scheduled for delivery in the first quarter of 2003.

In a statement, the company said the new aircraft will replace the airline's

Boeing

727-200 aircraft, which are scheduled to be retired by the end of 2003.

As of today, there are 103 Airbus aircraft in the United fleet -- 35 A319s and 68 A320s. UAL closed down 25 cents, or 0.7%, to $38.05.

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Earnings/revenue reports and previews

Aurora Foods

(AOR) - Get Report

, which holds products like Aunt Jemima frozen foods, Lender's bagels and Mrs. Butterworth's syrup, announced fourth-quarter losses of 8 cents a share, even with the year-ago loss. Analysts did not have an estimate on the company, which lost $5.4 million in the fourth quarter. But Aurora said it hoped to revitalize sagging sales with new marketing campaigns and products.

This is the latest in a string of bad news for Aurora, which recently settled a shareholder lawsuit over accounting problems, forcing the resignation of four Aurora executives who were charged with securities fraud by the

Securities and Exchange Commission

. Its former CEO, Ian Wilson; former CFO, M. Laurie Cummings and two vice presidents were indicted in the suit. Aurora closed up 5 cents, or 1.2%, to $4.25.

After Tuesday's Close

Allied Waste

(AW)

posted fourth-quarter earnings of 22 cents a share, a penny better than the

First Call/Thomson Financial

eight-analyst estimate and up from year-ago earnings of 18 cents a share. Allied Waste closed down 45 cents, or 2.7%, to $16.15.

Altera

(ALTR) - Get Report

warned after the bell that first-quarter revenue will fall 20% sequentially, but like countless other companies, the programmable chipmaker is holding on to the hope of a second-half turnaround.

The company said resale rates, though improved from the end of last year, haven't accelerated. Altera said incoming orders deteriorated in February, leading the company to believe that resale rates will decline toward the end of the current quarter, which ends March 31. As a result, the company expects revenue to fall 20% from the top line of $368 million reported in the fourth quarter.

Analysts expect the company to earn 22 cents a share on revenue of $412.6 million in the first quarter, according to First Call/Thomson Financial.

"An industrywide inventory correction began in the fourth quarter, and now reduced end-market consumption is exacerbating the impact of that correction," Altera said in a press release. "The slowdown in end-market activity is prolonging the inventory correction, but we believe that moderate sequential revenue growth will resume in the second half." As noted above, Altera closed down 25 cents, or 1.1%, to $23.13.

AutoZone

(AZO) - Get Report

, which sells car parts, posted second-quarter earnings of 28 cents a share, in line with the eight-analyst estimate and with year-ago earnings. The company said domestic

same-store sales increased 2% in the second quarter.

AutoZone said it expects to earn 55 cents a share for the third quarter, in line with the seven-analyst estimate and up from year-ago earnings of 50 cents a share.

The company revised its estimates for fiscal 2001 to $2.25 a share, assuming the company meets its same-stores sales goal of 2% to 4% growth. In mid-January, AutoZone previously expected to earn between $2.25 and $2.30 a share for the fiscal year with a 15% earnings per share growth in fiscal 2002. The First Call nine-analyst estimate is currently $2.26 a share for the year. AutoZone closed down 14 cents, or 0.6%, to $25.26.

Avanex

(AVNX)

lowered its previous third-quarter and full-year 2001 projections, citing customers' lower spending on legacy systems.

The company, which manufactures fiber-optic-based products, anticipates third-quarter pro forma earnings of 2 cents to 3 cents a share, while seven analysts surveyed by First Call estimated earnings of 6 cents a share. In the same period one year ago, Avanex lost 4 cents a share.

For full-year 2001, Avanex expects pro forma earnings of 15 cents to 16 cents a share, up from the year-ago loss of 11 cents a share. The First Call eight-analyst estimate is currently 25 cents a share for the year. Avanex closed down $4.56, or 19.1%, to $19.38.

Cable Design Technologies

(CDT)

posted second-quarter earnings of 30 cents a share, excluding a 4-cent charge for

Anicom

, a distributor that recently filed for bankruptcy. The First Call three-analyst estimate was 29 cents a share. Cable Design earned 24 cents a share in the year-ago period.

Sales for the period totaled $202.6 million, easily topping the $178.2 million in the same period last year. Network communication segment sales for the second quarter totaled $140.2 million, up 17% over last year.

Two weeks ago, the company said it was comfortable with analysts' estimates of 29 cents a share. At the time, Cable Design, which is based in Pittsburgh, said Anicom "may have affected sales to a small extent" in the second quarter, but won't have a "material impact" on the top line in the future.

The company said it was being "conservative" and projecting earnings of 28 cents to 33 cents for the third quarter. A two-analyst consensus is calling for earnings of 36 cents in the period. Cable Design Tech closed down $2.26, or 11.2%, to $17.84.

Chartered Semiconductor

(CHRT)

cut its earnings and revenue forecasts for the first quarter because of the weakening economic environment and market conditions.

The supplier of chips to the telecommunications industry said it expects revenue to decline 35% sequentially, wider than its previous forecast of a 15% to 20% decline. Chartered expects to lose between 22 cents and 24 cents per American depositary share. The company had previously forecast a profit of 4 cents to 6 cents per ADS. Five analysts polled by First Call were calling for the company to earn 5 cents in the period. Chartered earned 29 cents a year ago.

TheStreet.com

wrote more about the announcement in a

separate story. Chartered Semiconductor closed down $1.81, or 5.8%, to $29.25.

Cintas

(CTAS) - Get Report

lowered its previous earnings outlook for fiscal 2001 to a range of $1.30 to $1.35 a diluted share on revenue of $2.15 billion to $2.18 billion. The First Call 11-analyst estimate is currently $1.34 a share.

The uniform supplier revised its outlook to reflect the slowing economy, additional distribution center startup costs, higher energy costs and weather-related factors. In December, Cintas said it expected to earn $1.33 to $1.35 a diluted share on revenue of $2.17 billion to $2.20 billion in fiscal 2000.

Also, it was announced that the company will replace

Summit Bancorp

(SUB) - Get Report

on the

S&P 500. The change is scheduled for Feb. 28 when

FleetBoston

(FBF)

is scheduled to close its acquisition of Summit. Cintas closed down $6.73, or 15.8%, to $36.02; Summit was down $1.29, or 2.98%, to $42; FleetBoston was down 81 cents, or 1.9%, to $41.25.

H&R Block

(HRB) - Get Report

reported third-quarter earnings today that beat Wall Street's slightly lowered estimates by a whopping 26 cents, as the company's U.S. tax operations turned a profit outside of the fourth quarter for the first time in history.

The company cited an early start to the tax filing season, expense controls, e-commerce improvements and strength in its mortgage business as factors in the profit. H&R Block noted that the early tax filing trend will take away some revenue from the fourth quarter, but the company is "on track" to meet its revenue and earnings targets for the year. Analysts expect the company to earn $2.79 for the year.

For the third quarter, ended Jan. 31, H&R Block earned $5.6 million, or 6 cents a share, up from its year-ago loss of $7.1 million, or 7 cents a share. Five analysts surveyed by First Call estimated the company, which is based in Kansas City, would lose 20 cents a share.

H&R Block also posted third-quarter revenue of $661.4 million, up 29% from $512.5 million in the same quarter one year ago. H&R Block closed up $3.85, or 8.5%, to $49.30.

Interpublic

(IPG) - Get Report

, an advertising and marketing group of companies, reported fourth-quarter earnings of 46 cents a share. In the year-ago period, Interpublic earned $107.3 million, or 35 cents a share (after restating). The First Call 11-analyst estimate was 45 cents a share for the quarter.

Earnings were within the

guidance Interpublic issued in January.

The company said it expects earnings in 2001 to make double-digit gains over the $1.51 earned in 2000. The current First Call estimate is $1.72. Interpublic closed down $2.46, or 6.1%, to $37.60.

Intimate Brands

(IBI)

posted fourth-quarter earnings, excluding special items, of 46 cents a share, matching the consensus estimate from analysts polled by First Call. The company earned 55 cents in the year-ago period.

Earlier this month, Intimate Brands -- based in Columbus, Ohio -- said fourth-quarter earnings should check in between 48 cents and 55 cents a share. In January, the company, which operates the

Victoria's Secret

and

Bath and Body Works

chains, said it expected fourth-quarter earnings of 44 cents to 48 cents. Analysts had been calling for earnings of 59 cents a share. At the time, Intimate Brands said it was "unhappy with holiday results" and planned to implement "expense reduction initiatives."

"Obviously the fourth quarter of 2000 was a major disappointment for us," the company said in a statement. "Given the U.S. economic situation, we are planning for modest profit growth in 2001, and we are expecting the first three quarters of the year to be particularly challenging." Intimate Brands closed down 31 cents, or 1.9%, to $15.80.

Pall

(PLL) - Get Report

, which makes blood filtration systems, posted second-quarter earnings of 24 cents a share, in line with the six-analyst estimate, but down from year-ago earnings of 27 cents a share.

Eric Krasnoff, Pall's chairman and CEO, said: "The negative effect of foreign exchange rates reduced our results by about 4 cents compared to last year. The widely reported winter slowdown in the U.S. economy, along with the late weakening of the yen, also impacted our earnings as compared to expectations.

Also, Krasnoff added that earnings for the full year are likely to be in the range of $1.25 to $1.30 due to weakness in the U.S. economy, a softening microelectronics market worldwide and continued pressure from foreign exchange rates. The First Call six-analyst estimate for the full year is currently $1.29 a share. The year-ago figure was $1.24 before non-recurring items. Pall closed down 44 cents, or 1.9%, to $22.87.

Symbol Technologies

(SBL)

reported fourth-quarter earnings of 17 cents, in line with the 11-analyst estimate, but down from year-ago earnings of 24 cents a share. The latest quarter's figure excludes non-recurring restructuring, impairment and merger-integration charges of $113.2 million, and in-process research and development charges of $87.6 million.

In a statement, Tomo Razmilovic, Symbol president and CEO, said, "The integration of Telxon is proceeding well and we are on-track to achieve the synergies we have targeted. Although conditions can change quickly and dramatically in the current economic environment, we don't see a softening in our overall business activity."

"We remain optimistic about Symbol's long-term prospects," Chairman Jerome Swartz said. "The continuing need of our customers to cut costs, improve efficiencies, and create new revenue streams coupled with the increasing use of mobile devices and the ongoing evolution of the hybrid 'brick-and-click' extended supply chain bodes well for Symbol for the foreseeable future."

Earlier today, the bar-code scannermaker's board set a 3-for-2 stock split. Symbol closed up $6.09, or 15.1%, to $46.35.

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Offerings and stock actions

Xilinx

(XLNX) - Get Report

was caught in some Altera-related crossfire this morning, getting struck by analyst estimate revisions after its competitor announced that revenue would fall by 20% from the fourth quarter to the first quarter.

Lehman analyst Dan Niles cut his earnings per share view on Xilinx before the company makes comments on Monday, saying that Altera's revenue reduction was a pretty good indication that Xilinx would warn as well.

"We are also reducing earnings per share on Xilinx ahead of their update Monday, as we believe (the first quarter) could be down 12% quarter-to-quarter with the (second quarter)."

Niles cut his 2001 estimate to $1.14 a share from $1.19 a share. His old estimate was in line with Wall Street's consensus estimate. His 2002 estimate was dropped to $1.08 a share from $1.33 a share. The

First Call/Thomson Financial

estimate for 2002 was $1.39. Xilinx closed up 13 cents, or 0.3%, to $38.88.

If

WorldCom

(WCOM)

accounts for 92% of all your sales, and

Nortel

(NT)

,

Lucent

(LU)

and

Cisco Systems

(CSCO) - Get Report

are your other three major customers, then it's a pretty safe bet that earnings will be lower.

That's the situation over at

Avanex

(AVNX)

, a networking-equipment maker, which was taken out by analysts after warning about its third quarter and fiscal 2001 on Tuesday night.

Lehman Brothers analyst Steve Levy acted accordingly and dropped both his rating and estimates on the company, cutting it to market perform from strong buy -- a drop of two rating positions. His 2001 estimate on Avanex fell to 15 cents a share from 26 cents a share, while his 2002 estimate was trimmed by more than half, cut to 31 cents a share from 76 cents a share. "Investors are not going to reinstate a premium valuation on a company like Avanex until the overall uncertainty in the space improves," Levy wrote. "The March quarter shortfall is entirely due to lower-than-expected sales to MCI Worldcom for the PowerFilter product due to the carrier's weak seasonal demand that was even slower-than-already lowered expectations."

The company announced that third-quarter sales would come in around $41 million, resulting in earnings between 2 cents and 3 cents a share. Analysts, on average, expected the company to make 6 cents a share. And going forward, 2001 will also be tough. The company said that full-year earnings could come in between 15 cents and 16 cents a share, missing the 25-cent estimate. Revenues will come in around $169 million, a huge upswing over the year-ago $40.7 million, but well shy of the forecasted $195.5 million.

WorldCom closed down 63 cents, or 3.6%, to $16.63; Nortel was up 21 cents, or 1.2%, to $18.49; Lucent ended the day down 52 cents, or 4.3%, to $11.59; Cisco was down 31 cents, or 1.3%, to $23.69; and Avanex was down $4.56, or 19.1%, to $19.38.

Amgen

(AMGN) - Get Report

, one of the biggest names in the battered biotech sector, got a boost from

Prudential Securities

analyst John Sonnier, who upgraded the company to strong buy from accumulate, a jump of two ratings places. Sonnier also adjusted his 52-week price target to $95 from $75 on the company, citing improved fundamentals.

The analyst wrote a virtual love letter to Amgen, telling investors that the company has a ton of upside, since, unlike its competitors, it faces no patent expiration risks between 2001 and 2005. He also said that current market valuations were rather low on the company, considering the high premium at which other large drug stocks trade and the growth potential of many of Amgen's products.

"Fundamentally, we anticipate the company to break out of its traditional two-product focus with three major drug launches this year and a fourth in the first half of 2002," Sonnier wrote. "We believe these launches will literally change the face of the company." Amgen closed down $1.88, or 2.5%, to $72.06.

Upgrades

Amgen

(AMGN) - Get Report

: UP to strong buy from accumulate at

Prudential Securities

. Closing price is noted just above this item. Don't be lazy like me! Just look up.

Interpublic Group

(IPG) - Get Report

: UP to buy from hold at

Credit Suisse First Boston

. Interpublic Group closed down $2.46, or 6.1%, to $37.60.

Nextel

(NXTL)

: UP to strong buy from accumulate at Prudential. Nextel closed down 6 cents, or 0.3%, to $24.06.

Sybase

(SYBS)

: UP to buy from accumulate at

Merrill Lynch

. Sybase closed up 88 cents, or 4.7%, to $19.63.

Downgrades

Allscripts

(MDRX) - Get Report

: DOWN to neutral from buy at

W.R. Hambrecht

. Allscripts was all down; the stock closed down $3.75, or 39.5%, to $5.75.

Astec Industries

(ASTE) - Get Report

: DOWN to buy from hold at Credit Suisse First Boston. Astec closed down 13 cents, or 0.9%, to $13.31.

Cintas

(CTAS) - Get Report

: DOWN to long-term accumulate from long-term buy at Merrill Lynch. As noted above, Cintas closed down $6.73, or 15.8%, to $36.02.

J.B. Hunt

(JBHT) - Get Report

: DOWN to sell from hold at Credit Suisse First Boston. The stock closed down $1, or 5.95%, to $15.81.

Trintech

(TTPA)

: DOWN to hold from accumulate at Prudential Securities. Trintech closed down 75 cents, or 20.3%, to $2.94.

Initiations

Accredo Health

(ACDO)

: NEW buy at Credit Suisse First Boston. Accredo Health closed up 44 cents, or 1.5%, to $29.06.

Angiotech Pharmaceuticals

(ANPI)

: NEW buy at Credit Suisse First Boston. Angiotech closed up 38 cents, or 0.9%, to $41.69.

Dial

(DL) - Get Report

: NEW hold at Prudential Securities; price target: $17. Dial closed up 19 cents, or 1.4%, to $14.07.

Investment Technology Group

(ITG)

: NEW neutral at

W.R. Hambrecht

; price target: $55. Investment Tech closed down 56 cents, or 1.1%, to $51.50.

Jack Henry & Associates

(JKHY) - Get Report

: NEW buy at Credit Suisse First Boston; price target: $55. Jack Henry closed down 13 cents, or 0.3%, to $45.69.

Radio Shack

(RSH)

: NEW strong buy at Prudential Securities; price target: $54. Radio Shack closed up $1.95, or 4.8%, to $42.80.

Group Moves

Lehman Brothers analyst Paul Cheng downgraded his ratings on five independent oil refineries, changing his position from an overweight stance to an underweight one. Why the sudden flip from bull to bear?

Although it would appear as if the oil refiners would be set for short-term bullishness because of record margins, the Lehman analyst said that a closer look at the sector reveals intermediate-term weakness -- especially if the U.S. economy continues to cool. Cheng specifically cited rising production rates, strong gasoline imports and the possibility that a slowing economy could keep U.S. vacationers indoors and off the roads this summer.

Concerned, Cheng reduced his rating on the following five companies, dropping them from the best rating, strong buy, to the third-best rating, market perform.:

  • Frontier Oil (FTO) ; the stock closed down 25 cents, or 2.8%, to $8.60.
  • Sunoco (SUN) - Get Report; it closed down $1.39, or 4%, to $33.24.
  • Tesoro Petroleum (TSO) ; Tesoro closed down 83 cents, or 6.2%, to $12.64.
  • Ultramar Diamond Shamrock (UDS) ; Ultramar closed down 81 cents, or 2.2%, to $36.40.
  • Valero Energy (VLO) - Get Report; Valero closed down 86 cents, or 2.3%, to $36.65.

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Offerings and stock actions

After Tuesday's Close

D.R. Horton

(DHI) - Get Report

, a homebuilder, said its board declared an 11% stock dividend. D.R. Horton closed up 43 cents, or 1.9%, to $22.80.

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Miscellany

Regeneron Pharmaceuticals

(RGEN) - Get Report

might have the answer for obesity. The company, which makes Axokine, an obesity fighter, announced that patients who took the drug during a clinical trial maintained their weight loss better than those who took placebos. Regeneron plans to start Stage II, or rather "final stage," testing on the drug in mid-2001. Regeneron closed down 56 cents, or 12.2%, to $4.06.

After Tuesday's Close

BJ Services

(BJS)

Controller and Vice President Matthew Fitzgerald resigned to join

Veritas DGC

(VTS)

as CFO. BJ Services closed down $3.26, or 4.1%, to $76; Veritas was up 75 cents, or 2.6%, to $30.15.

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By the Numbers

The data on NYSE and Nasdaq percent winners and losers are filtered to exclude stocks whose previous day's volume was less than 25,000 shares; whose last price was less than 5; and whose net change was less than 1/2.

Dow point gain and loss data are based on New York closing prices and do not reflect late composite trading.

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