Blue-Chips Nose Into the Green but Stocks Still Smell Stale

The Nasdaq posts a 1.5% decline as Motorola and General Instrument take a pounding amid deal rumors.
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Market players back from vacations and holidays found themselves walking (and waving) into the tar pits of mediocrity today, a la Fred Flintstone in his ill-fated attempt at acting.

Following the bond market's weakness -- itself a reaction to the dollar's continuing woes -- equity gauges were mired in negative territory for the bulk of the session, although the most public face of equities ended with a minuscule gain. The price of the 30-year Treasury bond fell 8/32 to 100 31/32, its yield rising to 6.06%. The greenback, meanwhile, fell as low as 106.13 yen, its lowest level since May 15, 1996. In late New York trading, the dollar was quoted at 106.56 yen after being quoted at 108.75 late Friday.

Losses for major stock proxies were relatively modest and trading action largely unmemorable. But the absence of momentum troubled some.

"I thought everyone would come back after Labor Day ready to rock n' roll, but we've got the same blahs as in midsummer," said Charles Payne, president and chief analyst at

Wall Street Strategies

. "We got the

employment report

everybody wanted

and core

PPI

was great, but we couldn't sustain rallies. We've had enough data go our way to have the

Dow

well above 11,000. The fact we're not probably doesn't bode well short-term. It's definitely a symptom of something. It seems like every day there's something that falls in the path of the market," with the dollar's slide against the yen today's likely culprit.

But at the same time, the strategist is still somewhat optimistic.

"It feels like doom and gloom but what happens is, when everyone starts to feel a little down and comes to expect the worst, that's the type of atmosphere that sparks big rallies," Payne said. "I'm hoping

Oracle

(ORCL) - Get Report

can spring some life into this market" when it reports earnings tomorrow after the close. Then "we've got to see if

Wednesday's

CPI

numbers hold."

Today, however, tech stocks were unable to hold

Friday's momentum. The

Nasdaq Composite Index

retreated from Friday's record heights, falling 42.29, or 1.5%, to 2844.77.

3Com

(COMS)

gained 6% on news it will spin off its

Palm Computing

unit, but none of the biggest tech bellwethers posted a sizable advance; the

Nasdaq 100

fell 2%. Additionally, the Comp was also hampered by

Qualcomm

(QCOM) - Get Report

, down 7.4%. Payne attributed the decline to the company canceling an appearance at a

Cowen

conference.

"The stock was already weak to begin with," he said of Qualcomm, which fell 13% Sept. 1 after some cautious comments from

Everen Securities

.

Richard Grannis, treasurer at Qualcomm, attributed the cancellation to "scheduling conflicts" and noted the company has a "full-blown" analyst meeting in New York on Wednesday, featuring Chairman and CEO Irwin Jacobs. Grannis declined to comment on the stock action.

A bigger story in techland was

Motorola

(MOT)

, down 8.2% on reports it may acquire

General Instrument

(GIC)

, which declined 5.4%. Motorola weighed on both the

Morgan Stanley High Tech 35

, which fell 2.2%, and the

Philadelphia Stock Exchange Semiconductor Index

, off 3.3%.

Internet stocks such as

Yahoo!

(YHOO)

and

America Online

(AOL)

also suffered, sending

TheStreet.com Internet Sector

index down 14.40, or 2.3%, to 612.38.

"The only thing that's really rocking is companies coming out of quiet periods tomorrow or later this week," Payne said. "That's the game right now."

The category includes

Bamboo.com

(BAMB)

and

Imagex.com

(IMGX)

, which each rose over 15%, and

Agile Software

(AGIL)

, up 8.5%. Others include

Lionbridge Technologies

(LIOX)

, which rose as high as 37 3/8 but closed off 12.3% at 26 15/16, and

MyPoints.com

(MYPT)

, down 8% to 21 1/2 after trading as high as 26 1/2.

There was also some positive action in online financial names such as

Hoover's

(HOOV)

, which gained 51%, and

TheStreet.com Inc.

(TSCM)

-- the publisher of this Web site -- up 33.3%.

Among blue-chips, the

Dow Jones Industrial Average

closed up 1.90 to 11,030.33 after trading at low as 10,982.20. The

S&P 500

declined 7.53, or 0.6%, to 1344.13, saddled by weakness in tech bellwethers and financials such as

J.P. Morgan

(JPM) - Get Report

.

Both averages were buoyed by strength in cyclical names such as

Caterpillar

(CAT) - Get Report

,

Eastman Kodak

(EK)

and

International Paper

(IP) - Get Report

. Paper stocks overall soared in anticipation of a strong pulp inventory report. The

S&P Forest & Paper Products Index

rose 2.3%.

In

New York Stock Exchange

trading, 654.7 million shares were exchanged while declining stocks led advancers 1,728 to 1,210. In

Nasdaq Stock Market

action, 978.2 million shares traded while losers led 2,200 to 1,665. New 52-week lows bested new highs 157 to 70 on the Big Board, while new highs led 119 to 61 in over-the-counter trading.

'Levitating' Market Fails to Impress

"This was much ado about nothing," said Doug Myers, vice president of equity trading at

Wachovia Securities

in Atlanta. "We're up 1.90 on the Dow but the Nasdaq

being down is disappointing. It was sort of a down day."

Myers said it "wasn't that hard" to buy stocks today, "unless they were in the news." Investors were "reluctant to buy" such names because "you don't know if you'll get hit more." Specifically, he noted Motorola losing 8 1/8, which was "unpleasant if you bought on the opening, which normally is a rationale way to do something."

The dollar's struggles "add to the overall uncertainty," the trader said, noting the market is largely unchanged in the past week. "The market is sort of levitating, but you want something with conviction and we don't have it."

Among other indices, the

Dow Jones Transportation Average

rose 0.70 to 3091.53; the

Dow Jones Utility Average

lost 2.41, or 0.8%, to 313.54; the

Russell 2000

fell 1.54, or 0.4%, to 439.65; and the

American Stock Exchange Composite Index

slid 1.45, or 0.2%, to 804.50.

Elsewhere in North American equities, the

Toronto Stock Exchange 300

slid 53.27 to 7110.10 and the

Mexican Stock Exchange IPC Index

gained 18.71 to 4998.64.

Monday's Company Report

By Tara Murphy
Staff Reporter

(

Earnings estimates from First Call; new highs and lows on a closing basis unless otherwise specified. Earnings reported on a diluted basis unless otherwise specified.

)

Mergers, acquisitions and joint ventures

Bell Atlantic

(BEL)

advanced 1 3/4 to 64 1/4 after it confirmed that it was in talks with

Vodafone AirTouch

(VOD) - Get Report

to consolidate the companies' U.S. cellular phone operations,

The New York Times

reported Sunday. An agreement would create a U.S. network capable of rivaling

Sprint

(PCS)

and

AT&T

(T) - Get Report

. Shares of Vodafone soared 10 3/4, or 5.5%, to 205 9/16.

BP Amoco

(BPA)

and

Mobil

(MOB)

are in aggressive, last-minute negotiations to set terms for Mobil to leave a European downstream joint venture with BP before it merges with

Exxon

(XON) - Get Report

,

Reuters

reported. Shares of Mobil slid 1 3/4 to 103 3/8, while Exxon fell 1 13/16 to 78 5/8.

Motorola

(MOT)

dropped 8 1/8, or 8.2%, to 90 1/2 after published reports said it was in talks to acquire

General Instrument

(GIC)

in an all-stock deal worth about $10 billion. Under the deal, each General Instrument common share would be exchanged for little more than half of a Motorola share. The proposed merger is aimed at giving the companies a presence in the broadband market for high-speed access to interactive voice, data and video services over cable TV lines. Shares of General Instrument slipped 2 13/16, or 5.3%, to 49 11/16.

Separately, Motorola president and COO Robert Growney reiterated the company's third-quarter and 1999 earnings estimates of 51 cents and $2 a share, respectively, slightly below the consensus estimates of 53 cents and $2.04.

Mark IV Industries

(IV)

declined 1/16 to 20 13/16 after it said it sold its

Percolator Industrial Filters

to

Clarcor

(CLC)

in a deal valued at $144.8 million. Shares of Clarcor also skidded 1/16 to 18 3/8.

TheStreet.com Inc.

(TSCM)

, publisher of this Web site, was up 6 7/16, or 33.3%, at 25 11/16. The company said it would launch a sister financial news site in the U.K. in early 2000, and

Jagnotes.com

cited an unconfirmed rumor that the company was a possible takeover target.

Total Fina

(TOT) - Get Report

agreed to acquire

Elf Aquitaine

(ELF) - Get Report

for $54.24 billion in stock, potentially ending a noisy fracas and creating the world's fourth-largest oil company. Elf agreed to the offer after Total Fina sweetened a $45 billion hostile bid it made in early July.

Ziff-Davis

(ZD)

rose 1 3/16, or 8%, to 15 15/16 after it said it was not discussing a possible sale of the company to Rupert Murdoch's

News Corp.

(NWS) - Get Report

.

Earnings/revenue reports and previews

ABM Industries

(ABM) - Get Report

was off 7/8 to 23 9/16 after it reported third-quarter earnings of 46 cents a share, in line with the three-analyst estimate of 46 cents a share and up from the year-ago 40 cents.

Audiovox

(VOX) - Get Report

was up 3/16 to 16 7/8 after it posted third-quarter earnings of 32 cents a share, beating both the two-analyst estimate of 26 cents and the year-ago 14 cents.

Computer Task

(TSK)

stumbled 1 5/8, or 9.6%, to 15 3/16 after it warned investors that it expects to miss analysts' earnings estimates for the remainder of the year. The company said it would post 1999 earnings between $1.13 and $1.17 per share, missing both the consensus estimate of $1.50 and last year's earnings of $1.42.

Hain Foods

(HAIN) - Get Report

slid 1 1/4 to 24 5/8 after it posted fourth-quarter earnings of 23 cents a share, in line with the seven-analyst estimate of 23 and up from the year-ago 13 cents.

Hershey

(HSY) - Get Report

was up 1/16 to 51 7/8 after it said it would miss third-quarter and 1999 earnings estimates by 8% to 10%, citing start-up costs for new business systems in July.

Watson Pharmaceutical

(WPI)

slipped 3 3/4, or 10.2%, to 33 after it said a court's decision to bar sales of its

Nicotine Polacrilex Gum

may leave a $10 million dent in lost sales and expenses. On Sept. 10, a U.S. District Court handed down a preliminary injunction prohibiting the gum's sale and ordered a recall after

SmithKline Beecham

(SBH) - Get Report

brought a copyright suit against the company.

Offerings and stock actions

Harmonic

(HLIT) - Get Report

popped 5 to 140 after it set a 2-for-1 stock split.

Paradyne Networks

(PDYN)

fell 4 11/16, or 10.2%, to 40 15/16 after it set plans for a secondary 5.5 million-share secondary offering.

Containerboard producer

Packaging Corp. of America

announced plans for a $976 million initial public offering. The offering will include

Tenneco's

(TEN) - Get Report

43.5% interest in Packaging. Investment firm

Madison Dearborn

will continue to hold a 49% to 50% stake in the company after the deal is completed. Shares of Tenneco declined 3/8 to 19 3/4.

Analyst actions

Alliance Resources

(ARLP) - Get Report

was off 5/8 to 15 after

Morgan Stanley Dean Witter

rolled out coverage of the stock with an outperform rating and set a price target of 19.

American Express

(AXP) - Get Report

was up 1/4 to 140 1/4 after

Merrill Lynch

analyst Michael Hughes rolled out coverage of the stock with near-term accumulate and long term-buy ratings and set a price target of 160.

BancBoston Robertson Stephens

started coverage of hotel properties REITs

MeriStar Hospitality

(MHX)

, with a buy rating, and

Felcor Lodging Trust

(FCH)

and

Innkeepers USA Trust

(KPA)

, with long-term attractive ratings. Shares of MeriStar were up 5/16 to 16 13/16, while Felcor was up 1/16 to 18 5/16. Innkeepers USA shares advanced 5/16 to 9 5/8.

Cisco

(CSCO) - Get Report

was unchanged at 70 11/16 after Merrill Lynch analyst Mike Ching upped his rating to near-term buy from accumulate.

Coastal

(CGP)

tumbled 1 1/16 to 42 5/8 after

Salomon Smith Barney

raised its fiscal 1999 and 2000 earnings estimates to $2.35 from $2.30 and $2.70 from $2.55, respectively.

Commerce One

(CMRC)

leaped 6 15/16, or 10.3%, to 74 1/2 after

Credit Suisse First Boston

eliminated its price target for the stock.

Delhaize America

(DZA)

rose 3/8 to 24 3/16 after Merrill Lynch sliced its rating to near-term neutral from accumulate.

Hitachi

(HIT)

leaped 7 1/2, or 7.3%, to 109 7/8 after Morgan Stanley raised the shares' rating to outperform from neutral based on strong performance in the company's liquid crystal and semiconductor sales.

Idec Pharmaceuticals

(IDPH)

soared 14 3/8, or 13.6%, to 119 5/8 after Merrill Lynch biotech analyst Eric Hecht upped his rating on the stock to a near-term buy from accumulate.

Incyte Pharmaceuticals

(INCY) - Get Report

plummeted 14 1/8, or 34.2%, to 27 1/4 after

ING Barings

sliced its rating to sell from hold.

Warburg Dillon Read

also lowered its rating to buy from strong buy after the

U.S. Patent and Trademark Office

decided in favor of

Affymetrix

(AFFX)

in a patent disagreement between the firms. Affymetrix shares rocketed 19 11/16, or 19.4%, to 121 1/16.

Leap Wireless

(LWIN)

hopped 5 7/8, or 40.1%, to 20 1/2 after Morgan Stanley rolled out coverage of the stock with an outperform rating and price target of 30.

Lyondell Chemical

(LYO)

was off 1/16 to 14 7/8 after ING Barings boosted its rating to a buy from a hold.

Maytag

(MYG)

faltered 1 11/16 to 40 1/16 after

Banc of America Securities

downgraded its shares to market perform from buy. Salomon Smith Barney also cut its rating to outperform from buy.

Netro

(NTRO)

plummeted 5 1/4, or 12.4%, to 37 after Merrill Lynch started coverage of the shares with near-term accumulate and long-term buy ratings.

Nomaved Eyecare

(NOVA) - Get Report

slid 1 1/4, or 8.3%, to 13 5/8 after

Donaldson Lufkin & Jenrette

initiated coverage with a buy rating.

SBC Communications

(SBC)

climbed 1 1/8 to 48 5/8 after Lehman Brothers analyst Blake Bath sliced pro forma 2000 earnings estimates to $2.36 from $2.46, maintaining his buy rating.

Silverstream

(SSSW)

cratered 5 1/4, or 12.4%, to 37 1/16 after BancBoston Robertson Stephens stated coverage of the shares with a buy rating.

Wink Communications

(WINK)

sank 5 1/4, or 9.7%, to 49 1/2 after Donaldson Lufkin & Jenrette analyst Kim Zia began coverage of the shares with a buy rating.

Deutsche Banc Alex. Brown

also initiated coverage with a market perform rating.

Miscellany

The

Foundation on Economic Trends

announced its plans to lead an antitrust lawsuit seeking billions in damages from agribusiness companies for unfairly controlling genetically modified seeds.

Monsanto

(MTC) - Get Report

,

DuPont

(DD) - Get Report

and

Archer Daniels Midland

(ADM) - Get Report

are among companies named in the suit. The foundation's head, Jeremy Rifkin, said the suit alleges that only a small number of companies regulate seeds available to farmers globally and many patent rights prohibit farmers from reusing the seeds. Shares of Monsanto declined 15/16 to 37 1/8, while DuPont hopped 2 3/4 to 68 1/2. Archer Daniels shares slipped 1/8 to 13 1/16.

America Online

(AOL)

could experience rough seas ahead, including a drop as sharp as 50% in its share price, Doug Kass of hedge fund

Seabreeze Partners

told

Barron's

. Kass said AOL could be forced to lower its subscription fees if competitors such as Microsoft and AT&T offer cheaper service. Shares of AOL tumbled 6 3/16, or 6.4%, to 90 1/8.

Barr Laboratories

(BRL)

advanced 1 3/16 to 33 1/2 after it said that it anticipates launching clinical trials for a proprietary drug to remedy symptoms related to prostate cancer.

Compaq

(CPQ)

was off 3/8 to 24 13/16 after it said it would slash computer prices by up to 17%. Compaq's price cut is only days behind rival

Dell's

(DELL) - Get Report

announcement it would slice its business PC prices by up to 18%. In August, the company trimmed prices on most of its

Deskpro

computer line by up to 11%. Dell shares dropped 1 11/16 to 47 7/8.

FDX

(FDX) - Get Report

division

Viking Freight

said that as of Oct. 11 it would raise rates by 5.3%. FDX was off 11/16 to 45 9/16.

IBM

(IBM) - Get Report

unveiled a new line of powerful Unix servers to run Web sites. The company said the RS/6000 S80 servers are more powerful than those of

Sun Microsystems

(SUNW) - Get Report

, but cost as little as one-third as much. Shares of IBM slipped 2 5/8 to 132 3/8, while Sun Micro was unchanged 85 11/16.

Separately,

Harbinger

(HRBC)

rose 15/16, or 6.8%, to 14 9/16 after it said it forged a deal calling for IBM to globally market its software for translation and mapping.

School bus operator

Laidlaw

(LDW)

advanced 3/4, or 11.4%, to 7 5/16 after it said it plans to sell off its U.S. health care operations and seek a buyer for its 44% stake in

Safety-Kleen

(SK)

. The company said it expects to realize proceeds of about $2 billion from the divestitures. Safety-Kleen climbed 1 1/16, or 8.5%, to 13 1/2.

Sony

(SNE) - Get Report

jumped 4 3/16 to 136 1/2 after it unveiled plans to launch its next-generation

Sony Playstation 2

in Japan on March 4, 2000. The company expects unit distribution to hit 1 million.

Microsoft

(MSFT) - Get Report

plans to announce a new strategy acknowledging the company will increase its focus on the Web, as compared with standalone computers,

The Wall Street Journal

reported in its online edition. Shares of Microsoft skidded 1 1/16 to 93 7/8.

3Com

(COMS)

hopped 1 5/8, or 5.9%, to 28 7/8 after it announced plans to sell shares in its

Palm Computing

subsidiary to stockholders in early 2000, in an effort to bolster its strength and allow it to create more Internet products and services.

As originally published, this story contained errors. Please see

Corrections and Clarifications.