midday06-15-00 - TheStreet

TheStreet.com's MIDDAY UPDATE

June 15, 2000

http://www.thestreet.com

Market Data as of Close, 6/15/00:

o Dow Jones Industrial Average: 10,742.40 up 54.45, 0.51%

o Nasdaq Composite Index: 3,832.36 up 34.95, 0.92%

o S&P 500: 1,477.44 up 6.90, 0.47%

o TSC Internet: 896.54 down 2.14, -0.24%

o Russell 2000: 508.70 down 0.97, -0.19%

o 30-Year Treasury: 104 15/32 down 9/32, yield 5.927%

In Today's Bulletin:

o Midday Musings: Market Comes Off Lows, Treads Cautiously Into the Green
o Wrong! Tactics and Strategies: Get Psyched for the New Sites
o Herb on TheStreet: Why One Short-Seller Is Attracted to InfoSpace

Also on TheStreet.com:

Wrong! Tactics and Strategies: The Power of Rumors

Nervousness about the slowdown and the quiet period make for a dangerous combination.

http://www.thestreet.com/comment/wrongtactics/961878.html

Wrong! Rear Echelon Revelations: Is Tech Tethered to the Economy?

The trader offers his take on this controversial question.

http://www.thestreet.com/comment/wrongrear/962397.html

Silicon Babylon: Counting Chickens Before They're Cash

Is your Net stock hurting? A check of receivables could hatch a tale.

http://www.thestreet.com/comment/siliconbabylon/959480.html

Dear Dagen: Beware of Shrinkage When Jumping Into HOLDRs

The 20-stock portfolios get smaller from mergers, and replacements aren't added.

http://www.thestreet.com/funds/deardagen/962243.html

Midday Musings: Market Comes Off Lows, Treads Cautiously Into the Green

By

Tara Murphy

Staff Reporter

6/15/00 1:36 PM ET

Preannouncement woes and a tech giant's price-target downgrade weren't taking the optimistic air out of the stock market, as investors continued to buy in the face of interest-rate uncertainty. But this morning's conflicting economic data left Wall Street insiders feeling puzzled on the direction of the economy and choosing to sit tight, instead of putting their wallets on the line.

This morning's stronger-than-expected May

industrial production

report, which indicated a 0.4% increase coupled with a contrary

Philadelphia Fed Index for June failed to provide another clue as to what

Fed action, if any, will be taken at the

Federal Open Market Committee meeting June 27-28.

"We're in a difficult situation," said Ronny Kraft, CEO at

Merchant Intercapital

. "We had an industrial production report that showed that manufacturing was strong and then the Philly Fed Index indicated a decrease. There are many anomalies in the economic data that are coming out."

Lately, the

Dow Jones Industrial Average was lifting 43, or 0.4%, to 10,731, despite weakness from its financial components.

J.P. Morgan

(JPM) - Get Report

was sliding 3.3%, with

Citigroup

(C) - Get Report

falling 2.4%.

Preannouncement woes left regional-bank investors running for cover, as one stock proved a spoiler for the sector.

Wachovia

(WB) - Get Report

warned investors that interest rates would put a dent into its second-quarter and fiscal 2000 earnings, signaling investors that trouble might be on the horizon for the group as a whole.

SunTrust

(STI) - Get Report

was trading down in sympathy, along with other financials within the broker/dealer sector.

The

American Stock Exchange Broker/Dealer Index

stumbled 1%, with a 2.1% loss from

Lehman Brothers

(LEH)

.

Elsewhere on the

Big Board,

Corning

(GLW) - Get Report

was taking top honors as the biggest gainer, after

Donaldson Lufkin & Jenrette

upgraded its fiscal 2000 and 2001 earnings estimates. Corning was climbing 3.3%. (

TheStreet.com

reported on Corning's possible interest in acquiring

SDL

(SDLI)

in a

Monday story.)

Oils, which teetered on an intraday all-time high level yesterday, retreated with weakness from

Texaco

(TX) - Get Report

and

ExxonMobil

(XOM) - Get Report

.

The

American Stock Exchange Oil & Gas Index

slipped 1.7%.

Lately, the

Nasdaq Composite Index was rallying back into positive territory, up 18, or 0.5%, to 3816, with

Conexant

(CNXT) - Get Report

flying after an upgrade from

Morgan Stanley Dean Witter

. The chipmaker was lifting 8 1/2, or 20.5%, to 50.

Qualcomm

(QCOM) - Get Report

was sinking 8 5/16, or 11.8%, to 62 3/16, after an estimate downgrade from

Chase Hambrecht & Quist

. Touted with 1000 price targets in 1999, Qualcomm rocketed to a high of 179 5/16 (after a 4-for-1 split) in early January, after closing in the mid-50 range just three months earlier. But as with many tech highfliers, Qualcomm's fast run-up could not be sustained this spring, as investors began to question whether lofty valuations could be justified.

"To see it deteriorate the way it has is alarming," said Kraft. "It was probably the best performing Nasdaq stock in 1999 but it's just an indication of how much froth existed in the market last year," he added, noting that $100 million was removed from its market capitalization as of yesterday's close.

Semiconductors were making a comeback after yesterday's declines. The

Philadelphia Stock Exchange Semiconductor Index

climbed 1.7%, with gains from

Intel

(INTC) - Get Report

and

Applied Materials

(AMAT) - Get Report

.

In other tech news,

TheStreet.com Internet Sector

index was higher by less than a point to 899, helped by

America Online

(AOL)

, which inked a deal with

Sprint

(FON)

.

Market Internals

Breadth was negative on both the NYSE and the Nasdaq on moderate volume.

New York Stock Exchange:

1,352 advancers, 1,456 decliners, 615 million shares. 39 new 52-week highs, 33 new lows.

Nasdaq Stock Market:

1,596 advancers, 2,145 decliners, 833 million shares. 41 new highs, 45 new lows.

For a look at stocks in the midsession news, see Stocks to Watch, published separately.

Wrong! Tactics and Strategies: Get Psyched for the New Sites

By

James J. Cramer

6/15/00 2:35 PM ET

Nobody ever confused me with

Abe Lincoln

, but I know this: A site divided, half-free, half-paid, will not stand. So scheduled for late Thursday,

The Street.com

goes free.

"What the heck??" you say. "But, I've been paying to read you and these other great columnists!"

Good for you. From now on you will get more for your money, because you will get us in nearly real-time, practically as we write, using new formats that will drastically speed up the time it takes for my thoughts to get in front of your eyes. And you'll get to listen in on a special message board during the trading day, on which our collection of the best financial commentators on the Net talk to each other about what's going on. And all in a smart, new look in

RealMoney.com

. That starts Friday.

But you also love your

TSC

. The markets insight, the company news, the analysis, the personal finance information. You want it all together. No changes. You are angry, nervous, confused. Don't be. Those emotions are wrong. Here is why: If you are like me, you love your

TSC

and you love your

TheStreet.com

(TSCM)

, the company. They are not two different things. We have to do what is right to make TheStreet.com strong. And we couldn't do it the old way. When we started

TSC

people told us that there wasn't any advertising to speak of on the Web. We had to get paid. We chose subscriptions. Slow and steady.

But we were wrong about advertising. It blossomed. And what we needed to make a business was page views to monetize in the form of advertising. Subscriptions inhibit page views on the Net. They don't off the Net, but they do on the Net. We know we have content that can help you make money, and you will pay for it, but we have to get you to see it first, and too many people were turned off by our whole paid concept.

Candidly, I want to entice you to migrate to

RealMoney

because that's where you'll find me first, in a place where I can make the biggest difference for you. Now we will turn off nobody. No longer will the single biggest page selected be a page that rejects you because you are not a subscriber.

Now we will embrace everybody with a simple business model that will be faster, easier to use, and understandable to the readers, to the advertisers and to Wall Street. It's called progress. And we must welcome progress if we are to prevail as a site and a company. So Friday, let's embrace the changes together and get the most of our new

TSC

.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, Cramer himself and Cramer's fund were long TheStreet.com. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.

Herb on TheStreet: Why One Short-Seller Is Attracted to InfoSpace

By

Herb Greenberg

Senior Columnist

6/15/00 6:29 AM ET

Thursday Thwack:

Short story:

When I asked Paul McEntire to join me at the

RealMoney.com

seminar

later this month, it wasn't because he's a longtime source. (He isn't.) Or that he's widely known in the short-selling community. (Wrong again.) It was because his relatively new

Bearguard Fund

is one of only a few public mutual funds that exclusively short stocks. Given the lack of popularity of short-selling, it's no surprise his fund has less than $10 million in assets. "I know that sounds

de minimus

," McEntire says, "on the other hand, virtually all of my competitors are out of business."

Good point, and with a portfolio of 75 stocks, backed by 11 years experience of shorting stocks in private funds, I figured he had more than just passing knowledge of short-selling. What really hooked me, though, was that unlike many of my sources, who focus on various levels of scams and aggressive accounting, he finds many of his shorts by running quantitative screens that look for extreme ratios.

What about fundamentals? "We mostly look at the fundamentals of losing money," he says. And a catalyst? Isn't there some catalyst that will make your stocks fall? "The main catalyst," he says, "is that every time a company has to announce earnings and sales is a time for people to begin wondering if the stock is overvalued."

Or maybe there has been tremendous insider selling, which is one reason he's short

InfoSpace

(INSP) - Get Report

, the Internet information infrastructure services company (say that three times fast!). Here's a stock, he says, that has a $11.5 billion market cap and quarterly rev of $19 million. "That's an extremely lofty market cap for a company with such small revenue," McEntire says. "Furthermore, they're losing money and insiders have sold something like $500 million in stock. The CEO himself sold 781,000 shares for $110 million. There's nothing wrong, illegal or unethical about doing that, but it just doesn't make any economic sense that the founder is pulling out so much. He could take proceeds from the stock and produce more in revenues than the whole company!"

But with InfoSpace, which is highly promotional, couldn't the stock rise as much as fall? Sure, he says, "but with one-fourth of 1% of my portfolio in it, that doesn't seem too dangerous, and besides, we're willing to wait." To be sure, McEntire has been short

CopyTele

(COPY)

, a favorite of short-sellers, ever since he has been shorting stocks. "But that's the exception," he says. "If you're confident that over a five-year period a company will return to the values justified by its sales, then you short the stock."

Whatever works. InfoSpace officials, by the way, didn't return our calls.

From the "truth is stranger than fiction" department:

An item

Tuesday mentioned

Optical Cable

(OCCF)

. It said I left a message for CEO Robert Kopstein just after 5 p.m. Monday. A subsequent item in

Tuesday's Hotline mentioned that Kopstein had returned my call Tuesday morning and (as promised!) I forwarded along his comments. Then, this morning, a post shows up on the Optical Cable message boards on

Yahoo! Finance

, purporting to represent comments from Kopstein. According to those comments, Kopstein says he talked to me Tuesday "and tried to straighten him out." He says that on Monday he was in the office until 9 p.m. with the exception of a stretch from 5:30 to 5:45. "Herb Greenberg could have called me any time." Which I did, at around 5:15. A receptionist said he had gone for the day and wanted to know whether I wanted to go into voice mail. I did. I left a message. He then returned the call on Tuesday.

The question, of course, is whether the statement really came from Kopstein. I called Kopstein yesterday at around 3:30 p.m. and asked whether it really was him. The receptionist said he was on the phone, and asked if I wanted to go into voice mail. I did, and left a message asking if that posting was legit. I followed up later in the day with an email to what the posting purported to be his address. Haven't heard back. (Don't tell me: He was in his office but there must've been some glitch with the voice mail

and

email systems.)

Please join me and Paul McEntire, president of the Bearguard Fund, as we show you why the shorts can help you save your shirt at the first RealMoney.com Investor's Conference. McEntire, a veteran short-seller, started Bearguard last year. It's the first short-only stock mutual fund. We'll both share our tips on how to spot trouble, followed by my questions to Paul and your questions to both of us.

Surviving and profiting in treacherous markets

June 28th, 2000, Marriott World Trade Center, New York City

For information and registration, go to

RealMoney Conferences.

Copyright 2000, TheStreet.com