TheStreet.com's MIDDAY UPDATE
February 10, 2000
Market Data as of 2/10/00, 1:59 PM ET:
o Dow Jones Industrial Average: 10,671.24 down 27.92, -0.26%
o Nasdaq Composite Index: 4,437.84 up 74.60, 1.71%
o S&P 500: 1,415.00 up 3.29, 0.23%
o TSC Internet: 1,159.81 up 12.98, 1.13%
o Russell 2000: 539.58 up 3.58, 0.67%
o 30-Year Treasury: 96 05/32 down 1 08/32, yield 6.412%
In Today's Bulletin:
o Midday Musings: Nasdaq Storms Higher, Leaving Limping Dow Behind
o Herb on TheStreet: How THQ Selectively Disclosed Bad News
Get personal with
as Personal Finance writers Dagen McDowell and Tracy Byrnes answer your fund and tax questions on today's boards. Look for the Dear Dagen and TSC Tax Forum boards in the Community section. And make sure to check out the rest of the busy boards at http://www.thestreet.com/talk/.
Then get up close and personal with Cramer as he chats on Yahoo! at 5 p.m. ET. Register for Yahoo! Chat at: chat.yahoo.com. It's free!
Fox News Channel
Computer hackers are mucking up the works at some Internet titans, how will their handiwork impact your Net stocks? We'll get the "Word on TheStreet" with Ark funds portfolio manager, Christopher Baggini and
's Herb Greenberg, Adam Lashinsky and special guest, "CapitalistPig," Jonathan Hoenig.
Also, funds writers Joe Bousquin and Dagen McDowell face off on the best way to tap into this year's biotech boom. And "Chartman" Gary B. Smith and Adam Lashinsky check out two of the most asked about stocks in Lashinsky's mailbag. All that and predictions.
Fox News Channel
airs Saturdays at 10 a.m. and 6 p.m. ET and Sundays at 10 a.m. ET. FNC is Fox's 24-hour cable news channel. To find
Fox News Channel
in your area, call your local cable operator or see our "TSC on Fox TV" page at www.thestreet.com/tv.
Also on TheStreet.com:
Wrong! Dispatches from the Front: Suspicion Falls on the Value Guys
They're angry that their stocks are down when everyone else is making money.
Under the Hood: Funds That Buy 'Old Tech'
There's still life left in Dell, Intel, Cisco and Microsoft, and here are the funds poised to profit.
Taxes: Key Tax Deadline for Traders Comes Earlier Than Expected
If you plan to mark to market your trades this year, you must declare your intention by April 17.
Dear Dagen: Van Wagoner Lineup Isn't for Those Who Like Variety
Also, Merrill Lynch to launch three new HOLDRs.
Midday Musings: Nasdaq Storms Higher, Leaving Limping Dow Behind
2/10/00 1:34 PM ET
Investors are back in the saddle after some bearish
comments and dot-com hackers threw them off of their bullish ride down Wall Street. At the midday mark, yesterday's sellers were ready to buy growth again, with the tech-laden
Nasdaq Composite Index
showing huge gains while the
Dow Jones Industrial Average
"The focus is still on tech," said Randy Billhardt, co-head of block trading at
. "They proved that regardless of interest-rate fears, they're still the leaders of the market. Until proven differently, that's where the growth has been and will continue to be and unfortunately, the blue-chips have suffered as a result. Just look at
," referring to Cisco edging out
as the second-largest U.S. company.
As usual, today's trading session is proof that investors are sticking with the big growth names that have been good to them in the past. That's making other sectors relatively attractively valued, and some investors are seeing that as an opportunity.
""There are a lot of great companies that are at attractive prices that are just waiting for a catalyst," said Brian Gilmartin, portfolio manager at
Trinity Asset Management
. "Consumer spending is strong and retailers can benefit from that. They're also using the Internet to take costs out of their P&L, seeing the Web not as a competitive threat but an advantage." The
S&P Retail Index
was up 0.3%.
Lately, the Nasdaq was climbing 80, or 1.8%, to 4444.
In Nasdaq trading,
was jumping 38 1/4, or 14.9%, to 294 1/4 after posting better-than-expected fourth-quarter earnings.
Elsewhere in tech land,
TheStreet.com Internet Sector
index was bouncing back from yesterday's "hacked" losses, up 17, or 1.5%, to 1164.
Check Point Software Technologies
were on the upside, while
were tiptoeing back into positive territory after spending some time in the red.
Not all investors are attributing yesterday's selloff to this week's hacking activity. In fact, Gilmartin said that the problems could actually boost sellers of business systems.
"I think the idea of hacking being a force behind the market is overblown," he said. "I think the Internet companies will actually benefit because it will make them more secure because they're working feverishly to prevent it from happening again. This could help e-commerce, too."
Perhaps the better explanation for yesterday's losses came from the
saying it would take a broader approach to scaling back on future issuance, not just focusing on the benchmark 30-year. Lately, the market has been turning to the 10-year and 5-year Treasury notes as a more accurate market indicator. "You need a certain amount of liquidity in the market," Gilmartin said. "If the Treasury would buy back the 30-year, then that liquidity would dry up, which has people looking to the 5- and 10-year."
Lately, the 30-year Treasury was down 23/32 to 96 24/32, yielding 6.37%, while the 10-year was off a more modest 7/32 to 99 6/32, yielding 6.61%. (For more on the fixed-income market, see today's
Dow Jones Industrial Average
was down 9 to 10,690, after posting the third-largest point and percentage loss of the year yesterday. Tech heavyweight
, up 1.5%, was fighting to keep the index in the green.
New York Stock Exchange
was sinking 9 1/4, or 36%, to 16 7/16, after a disappointing fourth-quarter earnings report.
Biotechs were showing continued strength during today's session. The
Nasdaq Biotech Index
was up 1.7%, with
leading the pack.
was climbing 6 to 1417, while the small-cap
was lifting 5 to 541.
Breadth was mixed on moderate volume.
New York Stock Exchange:
1,243 advancers, 1,626 decliners, 637 million shares. 62 new 52-week highs, 185 new lows.
Nasdaq Stock Market:
2,133 advancers, 1,817 decliners, 1.1 billion shares. 237 new highs, 54 new lows.
For a look at stocks in the midsession news, see Midday Movers, published separately.
Herb on TheStreet: How THQ Selectively Disclosed Bad News
2/10/00 6:30 AM ET
Two weeks ago investors in
, a video game maker, were ready to have my head.
The Hostile React-O-Meter was spinning outta control,
outta control, I tell 'ya
, after my
column headlined, "Is THQ Really That Much Better Than Its Competitors?" There were calls for an
investigation and the usual garbage that follows such a column.
The gist of that column was that, at a time when every other video-game maker was either reporting disappointing earnings or warning of a disappointment, THQ was issuing a press release claiming that it wouldn't just meet its fourth-quarter estimates, it would beat them. (THQ's CFO told me THQ was different because it was better-managed.)
Short-sellers, however, alleged that several important THQ titles hadn't sold very well last quarter, and they claimed the company was relying on aggressive accounting techniques to make its earnings look better than they really are.
Now hear this: Late Tuesday the company apparently met (either together or individually) with analysts to lower the boom: While the fourth quarter will be fine, the bulls say the first and second quarters are likely to be a tad lighter than expected: 25 cents per share this year vs. the 55 cents the company earned in the first quarter last year, and 5 cents vs. 21 cents in the second. (Seems sales aren't as robust as expected and expenses are higher than expected.)
But, hey, not to worry: THQ (according to analysts) will make up all or most of the gap in the second half, especially in what one analyst said will be a "monster" fourth quarter. As a result, most analysts kept their year-end earnings forecasts unchanged.
They now believe the company can more than double earnings in next year's fourth quarter -- a quarter when the entire industry is expected to be hit by a major slump as
transition into new-generation platforms.
What I want to know is how
can forecast such a big increase so far in advance? I also want to know why the company leaked the information to a few analysts rather than doing what most companies do these days -- 'fess up with a press release.
Isn't that called selective disclosure?
And, while we're at it, why were so many top execs selling stock back in November when the stock was in the high 30s, split-adjusted? (It closed yesterday at 18 7/8.) What did
The company's previously chatty CFO, Fred Gysi, didn't return my call.
Herb's Latest: Join the discussion on
TSC Message Boards .
Fun and games:
Two months ago
sold $150 million in convertible bonds as a private placement. Now, so those bonds can trade publicly, it has filed a registration statement with the SEC covering those shares. Right up front the company discloses that just two months
the original offering, the bonds are trading at 55% of their face value.
"So much for taking the low-risk approach and buying bonds," snickers the ever-prolific Eric Von der Porten, a California money manager and regular contributor to this column.
Normally I wouldn't pay attention to the boilerplate: "Although we believe that the net proceeds of this offering, together with current cash, cash equivalents and cash that may be generated from operations, will be sufficient to meet our anticipated cash needs through December 31, 2000, there can be no assurance to that effect."
"Given the bath that the bond buyers have taken in the last two months," Von der Porten points out, "the company had better not need to head back to market anytime soon."
Memo to Cramer:
Happy B'day. (I'm still older, but you're catching up.) Oh, and by the way, loved that
"cheap shot" (your words, not mine) in your column yesterday: "Enough already about
Lernout & Hauspie
. Who cares?"
I also loved the response we both got from Bill Meehan, chief market analyst at
: "At the risk of sounding like a Herb sycophant, I appreciated his comments on LHSP. I agree it's of little use to kick it when it's down, but the stock is up 60% in less than eight days and I'm now considering a short, which I wouldn't have since it's been far removed from my radar screen. (I have no position currently.) If it was still languishing in the 30s I'd agree with you, but today's piece was 'good stuff.'"
Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at
email@example.com. Greenberg also writes a monthly column for Fortune.
Mark Martinez assisted with the reporting of this column.
Copyright 2000, TheStreet.com