Updated from 3:49 p.m.

Compaq

( CPQ) became the latest tech heavyweight to issue a profit warning, saying that revenue and earnings for the fourth quarter ending Dec. 31 will be below Wall Street's expectations.

The computer-maker now expects revenue of $11.2 billion to $11.4 billion, or 8% to 10% below expectations, but about 7% above the same quarter last year. Earnings from operations, excluding charges, will total 28 cents to 30 cents a diluted share. Analysts are expecting the company to earn 36 cents a share for the fourth quarter, according to

First Call/Thomson Financial

. The company earned 19 cents in the year-ago period.

Analysts are looking for revenue of $12.3 billion.

In a statement, the company said, "While we had a good start to the fourth quarter, it is now clear that market confidence has wavered and that we will be affected by the general softness in U.S. consumer, small- and medium-business and dot-com markets. Business activity in the rest of the world remains on track."

The company will also make downward adjustments in the valuations of some of its holdings, mainly

CMGI

( CMGI) and its related assets, and probably take a nonoperating, noncash charge in the fourth quarter. Compaq closed down $2.67, or 12.9%, to $18.10.

Mergers, acquisitions and joint ventures

General Motors

(GM) - Get Report

, just one day after announcing that it would be jettisoning the Olsmobile brand due to declining sales, announced that it has formed a joint venture with

CNF

( CNF), to form a new management company called

Vector SCM

. The new company will become GM's logistics service provider, helping it to speed up the shipment of parts and vehicles. GM closed up $1.44, or 2.8%, to $53.19; CNF was down $1.13, or 3.8%, to $28.63.

Procter & Gamble

(PG) - Get Report

announced it bought Dr. Johns Products, maker of the Dr. Johns Spinbrush. The move further expands P&G's dental care line, which includes Crest products. Unfortunately, terms of the deal were not provided. P&G ended the day up 50 cents, or 0.7%, to $72.44.

After Tuesday's Close

Chilean power producer

Gener's

( CHR) stockholders agreed to eliminate a shareholders' concentration limit, which will allow U.S.-based

AES

(AES) - Get Report

to buy 80% of Gener for about $1.1 billion.

AES raised its offer for Gener to $16.50 from $16 per American depositary share shortly before the stockholders' vote. Gener closed up cents, or 1.95%, to $16.31; AES was up $1.50, or 3%, to $51.44.

Back to top

Earnings/revenue reports and previews

Heidrick & Struggles

(HSII) - Get Report

is an executive recruiter, and with the job market tight for the last year or so, it's no real surprise that the company said it would exceed estimates. The company said that fourth-quarter revenues would come in 20% above the year-ago period.

Heidrick said it won't have to struggle to meet the

First Call/Thomson Financial

estimate of 37 cents a share. And for the full year, the company said that earnings will come in around $2 a share, beating the $1.92 estimate. The official results will be released Feb. 13. The company's stock closed up $3.13, or 8.9%, to $38.13.

Illinois Tool Works

(ITW) - Get Report

said its fourth-quarter earnings would miss estimates, blaming its miss on the most dastardly thing to happen to business since the invention of the office party -- the weak euro. The manufacturer said earnings will come in between 65 cents and 70 cents a share, missing the 77 cent analyst estimate due to foreign currency translation. The full-year picture was also affected. Earnings will come in between $3.14 and $3.19, lower than the $3.27 estimate. Illinois Tool Works closed down $1.88, or 3.1%, to $58.88.

Hear that sucking sound? Well, that's coming from

Whirlpool

(WHR) - Get Report

, the appliance-maker, who surprised some by warning about its fourth-quarter and first-quarter 2001. The company said fourth-quarter earnings will look a lot like third-quarter earnings, which came in a 98 cents a share. That would fall well short of the analyst estimate of $1.42 a share.

Whirlpool cited appliance-industry shipment declines and a much broader-than-expected industry slowdown in Europe as major factors behind the miss. There's something very disconcerting about the hint that there's an industry-wide slowdown in Europe. Look for Whirlpool rivals,

Maytag

( MYG) and

General Electric

(GE) - Get Report

to come under some close scrutiny today.

But the company will not take this lying down. It plans to reduce costs by eliminating jobs, reducing general and administrative costs all while reconfiguring operations to trim the bottom line. The company expects to take a $300 to $350 million restructuring charge on the moves, which will result in annual savings of $225 million to $250 million. Whirlpool closed down $2.75, or 6.2%, to $41.44; Maytag was down $1.13, or 3.7%, to $29.69; GE was up 19 cents, or 0.4%, to $53.

After Tuesday's Close

Actel

(ACTL)

, which makes integrated circuits, said it would miss fourth-quarter revenue estimates. It now expects revenue to be about the same as its third quarter, which was $60.1 million. First Call/Thomson Financial had no revenue estimate for the quarter. Actel closed down $6.13, or 20.4%, to $23.88.

Ask Jeeves

( ASKJ) completed the realignment of its organization into two businesses and will incur a pretax restructuring charge of $10 million to $12 million in the fourth quarter. That charge includes costs associated with cutting 180 jobs, or 25% of its work force.

Ask Jeeves, which provides an online question-and-answer service, said the moves will help the company save $45 million next year and achieve profitability in the fourth quarter of 2001.

Analysts polled by First Call expect the company to lose 50 cents a share for the fourth quarter of 2000, compared with a loss of 56 cents a share in the same period last year. Wall Street expects Ask Jeeves to lose 23 cents a share for the 2001 fourth quarter.

Last week, Ask Jeeves said it expected this year's fourth-quarter results to come in below estimates and indicated that Rob Wrubel, chief executive, would step down from his post. Ask Jeeves closed up 16 cents, or 3.9%, to $4.13.

Engage

(ENGA)

, a majority-owned operating company of

CMGI

( CMGI), posted a wider-than-expected first-quarter loss and said that revenue declined sequentially, in part because of the sluggish online-advertising market.

The software and interactive media company said it lost 26 cents a share in the quarter, before amortization, stock compensation and other costs. The 10-analyst estimate expected a loss of 23 cents a share. The loss exceeded the company's own recent guidance, in which Engage said it expected a loss of 25 cents, because of an additional bad-debt expense.

In addition, Engage said it expects to reduce its prior 2001 revenue and operating guidance as a result of pending organizational changes and expectations of continued softness in near-term online media spending. The company didn't provide any figures, but analysts on average expect a full-year loss of 53 cents a share, compared with a loss of 67 cents a share in 2000. Analysts are also expecting 2001 revenue of $215.2 million, up from $176.9 million in 2000. Engage closed down 63 cents, or 31.8%, to $1.34; CMGI was down $2.25, or 18.95%, to $9.63.

Medtronic

(MDT) - Get Report

, which makes medical devices, said it expects to meet the consensus estimate of 26 cents a share for the third quarter and 31 cents a share for the fourth quarter.

The company also said it expects the weak euro to reduce revenue by about $55 million to $60 million in the third quarter and $40 million to $45 million in the fourth quarter, a slight improvement from its earlier guidance. Medtronic closed up $2.06, or 3.8%, to $56.

Net2Phone

( NTOP) posted a narrower-than-expected first-quarter loss and said the number of paid subscribers in the quarter grew to 1.8 million from 390,000 last year.

The telecommunications company said its first-quarter loss, before items, was 25 cents a share, compared with a loss of 11 cents a share last year. Six analysts polled by First Call were expecting a loss of 30 cents a share for the quarter.

Net2Phone, based in Newark, N.J., said revenue for the quarter was $30.8 million, compared with $13.1 million during the same period last year. Also, Net2Phone said it's expecting 2001 first-quarter revenue to be down 5% to 7% from the fourth-quarter results. The stock closed up $1.94, or 19.9%, to $11.69.

ON Semiconductor

(ONNN)

warned that it would miss fourth-quarter earnings estimates because of delays or cancellations of customer orders.

The company said earnings per share will be 10 cents to 12 cents, excluding amortization of goodwill and other intangibles. The First Call five-analyst estimate is 18 cents for the quarter. ON closed down $2.16, or 24.6%, to $6.59.

Palm Harbor Homes

( PHHM) said earnings for its third and fourth quarter will be well below year-ago figures.

The maker of manufactured homes said it now expects third-quarter earnings of 13 cents to 15 cents, which misses the two-analyst estimate of 29 cents by First Call. Its year-ago earnings were 41 cents a share.

One of the reasons for the downturn was the "lack of availability in mortgage funds for many prospective buyers." The company sees those negative factors persisting through the year, affecting fourth-quarter earnings. The First Call estimate for that quarter is 30 cents and the year-ago figure was 31 cents a share. Palm Harbor closed down $2.92, or 18.4%, to $13.

RadiSys

(RSYS) - Get Report

said earnings and revenue for the fourth quarter of 2000 and the first quarter of 2001 will fall short of analysts' expectations because customers have "lowered their near-term forecasts and have postponed shipment of orders previously placed."

The Hillsboro, Ore., computer systems designer said fourth-quarter revenue should total about $83 million, below the $90.7 million previously expected. RadiSys expects fourth-quarter earnings of 20 cents to 24 cents a share before gains, significantly short of the 41 cents a share forecast by analysts. The company earned 32 cents during the fourth quarter of 1999.

The company expects earnings and revenue for the first quarter to be flat with the fourth quarter. Analysts expect RadiSys to earn 42 cents a share in the first quarter, according to First Call. The company earned 33 cents in the year-ago period. The company still expects earnings and revenue for 2001 to grow 25% to 35% from 2000. RadiSys closed down $6.69, or 23.7%, to $21.50.

Internet consulting firm

Razorfish

(RAZF)

said fourth-quarter revenue and earnings would come in significantly below expectations, the result of economic trends that have slowed technology investments and lengthened sales cycles.

The New York-based firm said it expects to post a net loss after amortization and a restructuring charge of 17 cents to 22 cents per share on revenue of $50 million. The 12-analyst estimate expected the company to earn 2 cents a share for the quarter, on revenue of $82.7 million.

The company said the market for its services has changed "dramatically." Nevertheless, "We still believe the underlying trends and strengths of our business model remain in place," said CEO Jeff Dachis in a statement. No significant staff reductions are being contemplated, he added. Razorfish closed down $1.69, or 43.4%, to $1.75.

United Stationers

(USTR)

, which distributes business products to resellers, said "organic" sales for the two months ended Nov. 30 were slightly below its target of 6% to 9% growth and lowered its 2000 earnings estimate to a range of $2.84 to $2.86 a share. The five-analyst estimate is currently $2.92 for the year, while 1999 earnings were $2.37. United Stationers ended the day down $2.19, or 8.8%, to $22.81.

Back to top

Analyst actions

Semiconductors have had a difficult time as PC-makers and chipmakers have warned about the next two quarters. Demand for silicon chips has been slowing, and with profits set to shrink,

Merrill Lynch

analyst Brett Hodess reduced his intermediate-term view on a dozen companies, but maintained a long-term buy on the industry as a whole.

"We are reducing intermediate-term ratings on the front-end process semiconductor-equipment stocks, where our estimate reductions imply that the downside risk is still not recognized," Hodess wrote.

These chips were taken down by Hodess:

  • Advanced Energy (AEIS) - Get Report: DOWN to neutral from accumulate. Advanced Energy closed down $4.31, or 16.9%, to $21.25.
  • Applied Materials (AMAT) - Get Report: DOWN to neutral from accumulate. AMAT closed down $2.81, or 6.2%, to $42.69.
  • Asyst Technology( ASYT): DOWN to accumulate. Asyst Tech ended the day down $1.31, or 9.7%, to $12.25.
  • Cymer (CYMI) : DOWN to neutral from buy. Cymer closed down $1.44, or 5.1%, to $26.63.
  • ElectroScientific (ESIO) - Get Report: DOWN to accumulate from buy. ElectroScientific closed down $1.81, or 7.4%, to $22.63.
  • Entegris (ENTG) - Get Report: DOWN to accumulate from buy. Entegris closed down 72 cents, or 8.95%, to $7.31.
  • KLAC/Tencor (KLAC) - Get Report: DOWN to neutral from accumulate. KLAC closed down $2.19, or 6.7%, to $30.44.
  • Lam Research (LRCX) - Get Report: DOWN to neutral from accumulate. Lam closed down $1.50, or 8.3%, to $16.56.
  • Metron Technology (MTCH) - Get Report: DOWN to accumulate from buy. Metron Tech closed down 75 cents, or 9.4%, to $7.25.
  • Novellus Systems (NVLS) : DOWN to neutral from buy. Novellus closed down $1.13, or 3.6%, to $30.50.
  • PRI Automation( PRIA): DOWN to neutral. PRI ended the day down $3.06, or 12.5%, to $21.50.
  • ThermaWave( TWAV): DOWN to accumulate from buy. ThermaWave closed up 6 cents, or 0.5%, to $13.19.

But Merrill wasn't the only firm to cut ratings on the semiconductor-equipment industry.

Salomon Smith Barney

was also making moves today, with its analyst Glen Yeung, who cut his buy ratings on eight companies:

  • Applied Materials: DOWN to neutral. See above for AMAT's closing numbers.
  • Axcelis Technologies( CMOS): DOWN to outperform. Axcelis closed down 78 cents, or 8%, to $8.94.
  • Credence Systems( EK): DOWN to outperform. Credence closed down $2.13, or 8.4%, to $23.13.
  • ElectroScientific: DOWN to outperform. See above for the closing numbers of ElectroScientific and the next four stocks.
  • Entegris: DOWN to outperform. See above.
  • KLAC/Tencor: DOWN to neutral. .
  • Lam Research: DOWN to outperform.
  • Novellus Systems: DOWN to outperform.

Downgrades

Eastman Kodak

( EK): DOWN to neutral from outperform at Salomon. DOWN at

Credit Suisse First Boston

, 4Q EPS to 70 cents from $1.06, 2001 EPS to $4.65 from $5.10. Eastman Kodak closed down $1.50, or 3.7%, to $39.56.

General Motors

(GM) - Get Report

: DOWN to buy from strong buy at

UBS Warburg

, price target to $60 from $74. As noted above, GM closed up $1.44, or 2.8%, to $53.19.

Microsoft

(MSFT) - Get Report

: DOWN to hold from accumulate at

Prudential Securities

. Microsoft closed down $1.13, or 1.9%, to $57.25.

STMicroelectronics

(STM) - Get Report

: DOWN to buy from strong buy at CSFB, price target $65 from $80. STMicroelectronics closed down $2.56, or 5.3%, to $45.50.

Initiations

Amdocs

(DOX) - Get Report

: NEW buy at Salomon; price target: $80. Amdocs closed down $1.56, or 2.5%, to $61.06.

Monsanto

(MON)

: NEW buy at UBS Warburg; price target: $35. Monsanto closed up 13 cents, or 0.5%, to $25.25.

Plantronics

(PLT) - Get Report

: NEW accumulate at Merrill; price target: $54.

Group Moves

Lehman Brothers

started a whole host of hosters today, focusing on a variety of names in the Internet-connectivity sector:

  • Akamai Technologies (AKAM) - Get Report: NEW outperform, price target $55. Akamai closed down $5.19, or 13.2%, to $34.25.
  • Digex (DIGX) : NEW buy, price target $52. Digex closed up $3.05, or 11.6%, to $29.25.
  • Genuity (GENU) : NEW outperform, price target $8. Genuity closed up 38 cents, or 7.6%, to $5.31.
  • Interliant( INIT): NEW outperform, price target $14. Interliant closed down 16 cents, or 2.4%, to $6.31.
  • InterNAP Network Services (INAP) - Get Report: NEW outperform, price target $25. InterNAP closed down $1, or 6.3%, to $14.94.

Merrill Lynch analyst Steve Haggerty adjusted his intermediate-term ratings on a wide variety of auto-parts makers and suppliers, most of which have been under a great deal of pressure lately as automobile sales have slowed.

In a note to investors this morning, he wrote: "Based on the 1994/95 experience, the potential for a rally in the auto sector if the

Federal Reserve

cuts rates will be marginal and limited in duration. We also believe that this late in the auto cycle, any short-term upside will be muted."

That's not very good news. Here are the companies affected by his changes:

  • American Axle (AXL) - Get Report: DOWN to neutral from accumulate. American Axle closed down 25 cents, or 3.2%, to $7.63.
  • ArvinMeritor( ARM): DOWN to neutral from accumulate. ArvinMeritor closed down 13 cents, or 1.3%, to $9.75.
  • BorgWarner (BWA) - Get Report: DOWN to neutral from accumulate. BorgWarner closed down 44 cents, or 1.3%, to $34.31.
  • Cooper Tire (CTB) - Get Report: DOWN to neutral from accumulate. Cooper Tire closed down 25 cents, or 2.6%, to $9.31.
  • Delphi( DPH): DOWN to accumulate from buy. Delphi ended the day down 31 cents, or 2.6%, to $11.94.
  • Visteon (VC) - Get Report: DOWN to neutral from accumulate. Visteon closed up 6 cents, or 0.6%, to $10.50.

Back to top

Offerings and stock actions

UtiliCorp United

( UCU) will be taking subsidiary

Aquila Energy

to market in an initial public offering. Most of the proceeds in the offering will be used to repay Aquila's debts to Utilicorp.

Lehman Brothers

,

Merrill Lynch

,

Salomon Smith Barney

,

Chase Hambrecht & Quist

and

Credit Lyonnais Securities

will underwrite the deal. Utilicorp closed down 13 cents, or 0.4%, to $28.69.

U.S. Physical Therapy

(USPH) - Get Report

announced a 2-for-1 stock split, to help increase liquidity and broaden ownership of the stock. The move will take affect on Jan. 5 and will result in 5.6 million shares outstanding. The stock closed up 25 cents, or 1.3%, to $20.25.

After Tuesday's Close

China National Offshore Oil

said it will issue 1.64 billion shares in an IPO. The oil firm plans a dual listing on the Hong Kong and New York stock exchanges in 2001.

Cognex

(CGNX) - Get Report

said its board authorized a $100 million stock buyback. Cognex closed up $1.06, or 5.7%, to $19.69.

Back to top

Miscellany

Atmel's

(ATML)

legal battles with

STMicroelectronics

(STM) - Get Report

are now over. The feuding rivals announced that they would end their three-month battle and join forces, thereby dropping all claims against each other. In a very short and relatively vague press release, Atmel said "both companies have entered into a broad patent cross-license agreement."

In September, Atmel sued STM over infringement on seven of its patents, one of many lawsuits that Atmel filed in the fall. It also won a lawsuit with

Silicon Storage Technology

(SSTI) - Get Report

and settled another with

Information Storage Devices

(ISDI)

.

Atmel closed down 56 cents, or 4.1%, to $13.06; STMicroelectronics was down $2.56, or 5.3%, to $45.50.

Enron

( ENE) announced that Jeffrey Skilling has been elected chief executive, adding that title to his resume along with president and COO. Enron closed down $2.69, or 3.5%, to $74.50.

Hey, if you can't beat 'em -- join 'em at a higher paid position! General Motors announced that John Devine, former

Ford

(F) - Get Report

CFO, will be joining up as its new CFO. Ford closed flat at $23.63; and as noted twice above, GM closed up $1.44, or 2.8%, to $53.19.

After Tuesday's Close

Kansas City Southern

(KSU) - Get Report

named its CEO Michael Haverty as chairman, effective Jan. 1. He succeeds Landon Rowland, who resigned as chairman but will stay on the board. Kansas City Southern closed flat at $8.06.

There

Standard & Poor's

goes, mixing things up again. This time it's

Fluor

(FLR) - Get Report

, an engineering, construction and services company, which is replacing

Massey Energy

( MEE) on the

S&P 500.

The change will happen after the close of trading Dec. 21. Massey is spinning off Fluor to Massey Energy shareholders. Fluor closed up 44 cents, to $30.75; Massey was down $1.06, or 2.6%, to $40.31.

Back to top

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.

Back to top