TheStreet.com's MIDDAY UPDATE
June 15, 2000
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.
Wrong! Rear Echelon Revelations: Is Tech Tethered to the Economy?
The trader offers his take on this controversial question.
Silicon Babylon: Counting Chickens Before They're Cash
Is your Net stock hurting? A check of receivables could hatch a tale.
Dear Dagen: Beware of Shrinkage When Jumping Into HOLDRs
The 20-stock portfolios get smaller from mergers, and replacements aren't added.
Midday Musings: Market Comes Off Lows, Treads Cautiously Into the Green
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
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
. "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."
Dow Jones Industrial Average was lifting 43, or 0.4%, to 10,731, despite weakness from its financial components.
was sliding 3.3%, with
Preannouncement woes left regional-bank investors running for cover, as one stock proved a spoiler for the sector.
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.
was trading down in sympathy, along with other financials within the broker/dealer sector.
American Stock Exchange Broker/Dealer Index
stumbled 1%, with a 2.1% loss from
Elsewhere on the
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%. (
reported on Corning's possible interest in acquiring
Oils, which teetered on an intraday all-time high level yesterday, retreated with weakness from
American Stock Exchange Oil & Gas Index
Nasdaq Composite Index was rallying back into positive territory, up 18, or 0.5%, to 3816, with
flying after an upgrade from
Morgan Stanley Dean Witter
. The chipmaker was lifting 8 1/2, or 20.5%, to 50.
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
In other tech news,
TheStreet.com Internet Sector
index was higher by less than a point to 899, helped by
, which inked a deal with
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
James J. Cramer
6/15/00 2:35 PM ET
Nobody ever confused me with
, but I know this: A site divided, half-free, half-paid, will not stand. So scheduled for late Thursday,
"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
. That starts Friday.
But you also love your
. 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
and you love your
, 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
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
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
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
Herb on TheStreet: Why One Short-Seller Is Attracted to InfoSpace
6/15/00 6:29 AM ET
When I asked Paul McEntire to join me at the
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
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
," 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
, 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
, 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:
. 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
, 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
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
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