Wednesday's Winners & Losers: MP3.com, Citigroup, Micron, Berkshire Hathaway

Author:: TSC Staff
Publish date:: Sep 6, 2000 5:56 PM EDT

(

Updated from 3:21 p.m. EDT

)

A U.S. District Court today ruled that online music company

MP3.com's

(MPPP)

Universal Music Group

, the world's largest music group, was "willful" and that it must pay $25,000 per each infringed CD. Universal is controlled by

Seagram

(VO) - Get Report

Anticipating a negative ruling, investors were dumping the stock all morning. Trading was halted at 1:54 p.m. for the rest of the regular trading day. It finished down 69 cents, or 8%, to $7.88.

Time Warner's

(TWX)

Warner Brothers music group;

Sony Music Entertainment

;

BMG

, the music unit of

Bertelsmann

; and

EMI Group

have all reached settlements with MP3.com that allow their music to be used in the database.

TheStreet.com's

Justin Dini wrote about the trial in an earlier

story and also covered the

settlement MP3 made with

Sony

(SNE) - Get Report

Citigroup

said it will buy

Associates First Capital

(AFS)

for $31.1 billion in stock, strengthening Citigroup's international business. Associates First Capital added $10.63, or 38%, to $38.63, while Citigroup lost $2.56 to $55.

Shareholders will get $42.49, or 0.7334 Citigroup common share, for each share of Associates, which closed at $27.81 yesterday.

Micron Technology

(MU) - Get Report

was hit hard , falling $9.13, or 11.6%, to $69.38 after a morning downgrade by

Donaldson Lufkin & Jenrette

Its price target was slashed to $50 from $122, and its 2000 EPS estimate was cut to $2.43 from $2.48 and its 2001 EPS to $5.36 from $6.24. DLJ's Boris Petersik said the downgrade was based on a "much earlier-than-anticipated fall in DRAM spot prices and what we expect to be weaker contract pricing starting in the second half of September."

DRAM stands for the dynamic random access memory used in personal computers.

News of the downgrade sparked support from analysts at

Prudential Securities

and

Merrill Lynch

, which reaffirmed their ratings of strong buy and near-term buy, respectively. Yesterday, the stock was started at

SG Cowen

with a buy rating and a price target of $125 a share.

Mergers, acquisitions and joint ventures

Berkshire Hathaway

, the holding company run by

Warren Buffett

, announced plans to take a majority stake in Georgia-based carpet maker

Shaw Industries

(SHX)

. Shaw sailed up $6.44, or 52.8%, to $18.63.

Berkshire said it will buy between 80.1% and 86% of the outstanding stock of Shaw for $19 a share in cash. That's a 56% premium over Shaw's Tuesday close of $12.19. Trading in Shaw was halted all morning, but shares in its closest competitor,

Mohawk

(MHK) - Get Report

, spiked higher on the news. Mohawk moved up $3.06, or 13.1%, to $26.50.

Infonet Services

(IN)

, which provides data communications services to large companies, is in serious discussions to acquire Dutch rival

Equant

(ENT) - Get Report

, according to

The Wall Street Journal

. The

Financial Times

Web site first reported the revived talks, which have been on and off all summer. Infonet slipped 81 cents, or 5.3%, to $14.56, while Equant rose 75 cents to $46.19.

The

Journal

said terms couldn't be determined, but Equant has a market capitalization of about $9 billion. Also, the two companies are still discussing financial aspects, including whether the deal will be a cash or a stock transaction. For Infonet, which has a similar network, the acquisition could realize huge cost savings as well as bringing additional customers.

SCI Systems

(SCI) - Get Report

rose 25 cents to $60.25 after it was awarded a contract from

Ericsson

(ERICY)

that will yield SCI more than $200 million in new business in 2001. The contract calls for SCI to make components for Ericsson's GSM product line. Ericsson lost 50 cents to $20.

Earnings, revenue reports and previews

Avenue A

(AVEA)

added 44 cents, or 5.6%, to $8.25 after it said it expects third-quarter revenues in the low- to mid- $40 millions, which is below expectations. It said it sees fourth-quarter revenues in the mid- to high-$50 millions.

H.J. Heinz

(HNZ)

fell $1.75 to $35.44 after it reported first-quarter earnings of 68 cents a share, beating the 13-analyst estimate by 2 cents and up from year-ago earnings of 65 cents. The company said earnings were propelled by the strong sales performances of its European, North American frozen food and U.S. food service businesses.

Heinz's first-quarter sales fell 1.3% to $2.15 billion from $2.18 billion a year ago. The company said divestitures, unfavorable foreign exchange rates and lower pricing offset increased volume and acquisitions.

Litton Industries

(LIT) - Get Report

plummeted $13.06, or 24.2%, to $41 after it posted fourth-quarter earnings of $1.54, beating the nine-analyst estimate of $1.49 and up from the year-ago loss of 48 cents a share. But the company warned that its 2001 earnings would miss current estimates.

TheStreet.com/NYTimes.com

joint newsroom covered the announcement and the subsequent investor fallout in an earlier

story.

Novell

(NOVL)

fell 38 cents to $10.69 after saying it will cut 900 jobs, or about 16% of its work force, leaving it with 4,600 employees. It will take a fourth-quarter pretax restructuring charge of between $40 million to $50 million.

Stewart Enterprises

(STEI)

slipped 13 cents to $3.31 after it posted third-quarter earnings of 17 cents a share, in line with the three-analyst estimate, but down from year-ago earnings of 21 cents. The funeral home operator said revenue fell 10%, mainly due to prearranged cemetery sales.

After Tuesday's Close

Grocery store owner

Albertson's

(ABS)

lost $1.13, or 5%, to $21.25 after it announced that same-store sales rose 0.9% during August.

McGraw-Hill

(MHP)

lost $1.25 to $59.69 after it said its purchase of Tribune Education -- which closed yesterday -- will dilute its 2000 earnings by 2 cents to 4 cents more than its original 5-cent estimate.

Analyst actions

Online brokers looked attractive to buyers after some positive research.

Ameritrade

(AMTD) - Get Report

was raised to buy from hold at

CIBC World Markets

with a price target of $25, while

Credit Suisse First Boston

analyst James Marks upgraded Ameritrade and

E*Trade

(EGRP)

to buy from hold. Both have a 12-month target of $35 at CSFB. Ameritrade popped $2.19, or 11.7%, to $20.81, while E*Trade added 31 cents to $18.38.

Still smarting from a

U.S. Bancorp Piper Jaffray

downgrade on chip bellwether

Intel

(INTC) - Get Report

yesterday, the semiconductor sector received a new blow this morning from a

Donaldson Lufkin & Jenrette

downgrade on benchmark chip stock

Micron Technology

(MU) - Get Report

, which was lowered to underperform from buy. Intel stumbled $3.55, or 5.1%, to $65.70 and Micron slipped $8.50, or 10.8%, to $70.

DLJ reiterated a top-pick rating on

America Online

(AOL)

. But America Online slipped anyway, down $1.63 to $55.75.

Upgrades

Duke Energy

(DUK) - Get Report

: price target UP to $100 from $75 at

Banc of America Securities

. Duke Energy hopped $2.13 to $78.88.

KeyCorp

(KEY) - Get Report

: UP to strong buy from hold at CIBC. KeyCorp lifted $1.19, or 5.7%, to $21.88.

PSS World Medical

(PSSI)

: UP to market outperform from market perform at

Goldman Sachs

. PSS World Medical edged up 47 cents, or 9.7%, to $5.28.

Tech Data

(TECD) - Get Report

: 12-month price target UP to $65 from $50 at Banc of America. Tech Data slipped $1.38 to $51.13.

Downgrades

WorldCom

(WCOM)

: DOWN to outperform from buy at

Lehman Brothers

. Worldcom shed $2.25, or 6.7%, to $31.50.

Initiations

AOL Latin America

(AOLA)

: NEW buy at

Salomon Smith Barney

; price target: $21. AOL Latin America lifted 50 cents, or 6.4%, to $8.38.

Active Power

(ACPW)

: NEW market outperform at Goldman Sachs. Active Power bounced $1 to $67.

Equinix

(EQIX) - Get Report

: NEW buy Salomon Smith Barney; price target: $22. Equinix lost 6 cents to $15.50.

(MMM) - Get Report

: NEW buy; price target: $125 at CSFB. 3M tacked on $1.88 to $94.13.

TeleCommunication Systems

(TSYS)

: NEW buy at Salomon Smith Barney; year-end 2001 price target : 40. Telecommunications Systems shed $4.94, or 15.5%, to $27.

Williams-Sonoma

(WSM) - Get Report

: NEW buy at

W.R. Hambrecht

; price target: $48. Williams-Sonoma jumped $2.88, or 7.8%, to $39.88.

Wink Communications

(WINK)

: NEW buy at

ING Barings

. Wink Communications shed 38 cents to $15.19.

TVIA

(TVIA)

: NEW strong buy at CIBC. TVIA moved up 56 cents to $13.06.

Group Moves

Beverage stocks were a hot topic this morning as a number of firms commented on the sector. CSFB's group coverage of beverage companies was mostly positive:

Coca-Cola Enterprises

(CCE)

Coca-Cola

(KO) - Get Report

Pepsi Bottling Group

(PBG)

PepsiCo

(PEP) - Get Report

Merrill Lynch

also released research on beverage companies and adopted a cautious stance, calling volumes anemic and saying pricing is in disarray. Merrill lowered its global volume growth estimates for Coca-Cola to 4% from 5%. Among the three bottlers it covers, Merrill said, it continues to prefer Pepsi Bottling Group, since it currently has the best earnings momentum.

Goldman Sachs cut Coke's 2000 EPS view to 50 cents from 52 cents and lowered its 2001 EPS view to 72 cents from 78 cents.

UBS Warburg

started coverage of

Data Return

(DRTN)

Digex

(DIGX)

and

Exodus

(EXDS)

at buy. Data Return rose $1.81, or 8.3%, to $23.69, Digex moved up 88 cents to $68.75, while Exodus was off 38 cents to $62.44.

J.P. Morgan

started coverage of

Lowe's

(LOW) - Get Report

and

Home Depot

(HD) - Get Report

with buy ratings. The news pushed Lowe's stock up 38 cents to $47.63 and Home Depot's up 50 cents to $50.63.

ING Barings started coverage of

TiVo

(TIVO) - Get Report

as a hold and

ACTV

(IATV)

as a strong buy. Despite the coverage, Tivo dropped $1.69, or 6.5%, to $24.31, but ACTV crept up 56 cents to $18.13.

Offerings and stock actions

Optical Cable

(OCCF)

said its board has set a 3-for-2 stock split on top of reporting a third-quarter net income increase of about 27%. The news pushed the stock down $3.06, or 6.8%, to $41.94.

After Tuesday's Close

Semiconductor manufacturer

Avnet

(AVT) - Get Report

fell $3.63, or 5.9%, to $57.81 after it announced a two-for-one stock split for shareholders of record on Sept. 18. The company said the additional shares would be distributed Sept. 28.

Miscellany

Aetna

(AET)

edged up 13 cents to $55.50 after it named John Rowe president and CEO of Aetna U.S. Healthcare, its health care subsidiary. Rowe had been president and chief executive of Mount Sinai NYU Health in New York City. When the previously announced sale of its financial and international businesses to

ING Groep

(ING) - Get Report

goes through, Rowe will become president and CEO of the health-care spinoff, which will be named Aetna.

Aetna has been looking for someone to head its health care business since May, when President Michael Cardillo retired.

Inhale Therapeutics

(INHL)

was off 75 cents to $46.13 after it announced that it and drug giant

Eli Lilly

(LLY) - Get Report

will work together to create an inhalent form of the bone-forming drug Forteo, which is used to treat osteoporosis. Lilly was down $2.38 to $67.38.

Nanogen

(NGEN)

named CFO Kieran Gallahue president, replacing Howard Birndorf, who will remain chairman and chief executive. Gallahue will stay at his current post until a new CFO is found. Nanogen integrates advanced microelectronics and molecular biology into technology platforms for genomics research. Nanogen sunk $1.63, or 6.9%, to $22.

Shipping giant

OMI

(OMM)

announced that it has named Kathleen Haines as CFO and treasurer. She previously was a vice president and controller and replaces Vincent Desosta. It ended the day 25 cents higher to $15.75.

Saks

(SKS)

crept up 6 cents to $10.44 after it said the spinoff of its

Saks Fifth Avenue

Saks Direct

and

Saks Off 5th

units into a separate publicly owned company --

Saks Fifth Avenue Enterprises

-- is expected to be completed in the first half of 2001. Saks had previously expected a November closing.

Each Saks shareholder is expected to get one share of SFA Enterprise stock for every three shares of Saks common stock, the company said. After the spinoffs, Saks will comprise

Proffit's

McRae's

Younkers

P Herberger's

Boston Store

Carson Pirie Scott

and

Bergner's

stores. In recent trading, shares of Saks were up 6 cents to $10.44.

Wal-Mart

(WMT) - Get Report

named Dave Ferguson president and chief executive of its European operations. Ferguson, who most recently headed Wal-Mart's Canadian operations, succeeds Allan Leighton, who is leaving for undisclosed reasons. Wal-Mart hopped up 24 cents to $50.

Weingarten Realty

(WRI) - Get Report

said it has named Andrew Alexander as CEO, effective Jan. 1. The stock was up 31 cents to $40.81.

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.

Kristen French, Diane Hess, Eileen Kinsella, Justin Lahart and Betsy Riley contributed to this column.