TheStreet.com's MIDDAY UPDATE
June 15, 1999
"READY FOR THE NEXT LEVEL?
Is your online broker starting to look like your OLD broker?
Maybe it's time for direct access.
TRADE ON THE EDGE: http://www.edgetrade.com"
Market Data as of 6/15/99, 12:56 PM ET:
o Dow Jones Industrial Average: 10,671.29 up 107.96, 1.02%
o Nasdaq Composite Index: 2,431.32 up 33.01, 1.38%
o S&P 500: 1,308.87 up 14.87, 1.15%
o TSC Internet: 511.72 up 9.59, 1.91%
o Russell 2000: 434.98 up 3.45, 0.80%
o 30-Year Treasury: 88 25/32 up 11/32, yield 6.059%
In Today's Bulletin:
o Midday Musings: Be Vewwy Quiet, We're Hunting Bargains: Techs Turn Around
o Herb on TheStreet: Which Other U.S. Semi Makers Stand to Gain From Taiwanese Deal?
Also on TheStreet.com:
Wrong! Dispatches from the Front: Sinking in the Programs' Quicksand
Cramer uses the recent action in Georgia Pacific to explain why he worries about whether buying is real or simply the result of programs.
Tech Savvy: McNealy, Microsoft and the Bully Pulpit
The Sun CEO takes the stand tomorrow. Plus, enough of those Qwest-Global Crossing conspiracy theories.
Internet: Net Stocks' Late-Spring Sale Event Finding Few Takers
Many issues are 50% below their 52-week highs, but few investors appear poised to buy this dip.
Internet: Inktomi Revs Up Its Search Engine Technology
A new technology from Inktomi automates tasks involved in compiling a Web directory.
Dear Dagen: Dear Dagen: A Closer Look at Barclays' Proposed Exchange-Traded Funds
On the surface, they'll look a lot like the SPDRs and QQQ shares that already trade on the Amex.
Midday Musings: Be Vewwy Quiet, We're Hunting Bargains: Techs Turn Around
While Internet stocks try to heal the severe wounds of recent days, tech stocks regain some of the ground surrendered
yesterday and blue-chips advance again, three words remain somewhat annoyingly implanted in the market's brain:
Tomorrow, the financial markets will find out of April's sharp rise in the CPI was an aberration or a sign of things to come.
"It's kind of quieting out," said Jay Suskind, head of institutional equity trading at
. "The market's seeing a decent move to the upside on light volume."
"Everyone's got their eyes on tomorrow's CPI number," he said, adding that he hopes the report will crystallize what the Fed will do with interest rates.
Economists are expecting a 0.2% rise in both the overall and core CPI, according to a
Also on the horizon,
is slated to testify Thursday before the
Joint Economic Committee
on monetary policy and the economy.
Internet stocks were trying to piece themselves together after yesterday's dreadful session.
TheStreet.com Internet Sector
index, which tumbled 8.8% yesterday, was up 10, or 1.9%, to 512 -- still a mile off its all-time closing high of 790.44, set April 12.
"Doubt if the correction will end until these stocks reach absurdly low levels," wrote Stephen Shobin, chief technical analyst at
about the Internet sector in a research note this morning. "Most will have to fall under their 200-day moving averages, then build bases for many months. Put/call ratios reflect too much bargain-hunting. Complacency is not a sign of a bottom. Allowing for little bounces, we think the correction has a lot more to go."
In blue-chip land, the
Dow Jones Industrial Average
was up 104, or 1%, to 10,667, padding yesterday's gains.
have been the biggest boosts to the Dow so far.
Cyclicals -- market stars yesterday and prime drivers of the Dow's advance -- were mostly higher again today. The
Morgan Stanley Cyclical Index
was up 0.5%.
Treasuries were firm for the second day in a row and were helping to underpin stocks. The 30-year bond lately was up 15/32 to 88 27/32, yielding 6.06%. (For more on the fixed-income market, see today's early
Nasdaq Composite Index
was up 33, or 1.4%, to 2432, rebounding after yesterday's Internet-led downturn. Among tech-sector gauges, the
Morgan Stanley High-Tech 35
was up 2.1% and the
was up 2%.
Semiconductor stocks -- which have had a joyous month -- were making solid advances again today after
analyst Joe Osha raised his price targets on seven semiconductor companies. The
Philadelphia Stock Exchange Semiconductor Index
was up 3%.
was up 15, or 1.2%, to 1309. The
was up 3, or 0.8%, to 435.
Online brokers, which have suffered steady losses of late, were mixed to higher today.
was up 6.9% and
was up 5.7%, but
was down 1.5%.
"More or less, I think the market's capped on the upside," said Steven Goldman, market strategist at
in Greenwich, Conn.
Sector-wise, Goldman gave positive mention to paper stocks in part because of firming paper prices. Paper stocks have advanced again today. The
Philadelphia Stock Exchange Forest & Paper Products Index
was up 0.8%.
New York Stock Exchange
, advancers were leading decliners 1,676 to 1,121 on 387 million shares. On the Nasdaq, winners were edging losers 1,788 to 1,721 on 474 million shares.
On the NYSE, 106 issues had set new 52-week lows while 64 had touched new highs. On the Nasdaq, 59 issues had set new lows while new highs totaled 39.
On the Big Board,
was most active, with 19.5 million shares changing hands. It was up 6 1/8, or 6.8%, to 96 5/8.
On the Nasdaq,
was most active, with 18.3 million shares changing hands. It was up 1 7/16 to 35 1/2. Qwest fell sharply yesterday in the wake of its announcement Sunday that it made a $55 billion cash and stock bid for
U S West
Meanwhile, among other indices, the
Dow Jones Utility Average
was up 0.6%. The
American Stock Exchange Composite Index
was up 0.5%. The
Dow Jones Transportation Average
was up 0.5%.
Tuesday's Midday Movers
Not participating in today's broad rebound was Dow component
. Possibly having downward influence on the stock was word that the company was withdrawing all drinks produced in Belgium from the Dutch market following a health scare. Scores of Belgian children reportedly have suffered from vomiting, nausea and dizziness after drinking Coke products. KO recently was off 1 5/16 to 63 1/2, continents away from its all-time intraday high of 88 15/16.
In other news:
was down 1 1/8, or 13%, to 7 1/2 after
lowered it to neutral from buy.
was up 2 1/2, or 10%, to 27 5/8 after agreeing to work with
to give motorists access to CD Radio's digital satellite radio. Ford was up 3/16 to 53 3/4.
was up 6 1/8, or 30.5%, to 26 3/16 after
agreed to acquire the company for $29.50 a share in cash, or $957 million. Energy East also will assume about $271 million of CMP preferred stock and long-term debt. Energy East was up 1/8 to 26 3/8.
First Tennessee National
was up 1 5/8 to 39 3/8 after
started coverage with a buy.
was up 1 1/8, or 7.9%, to 15 5/16 on last night's news that the company plans to split its operations into two separate publicly traded companies -- one for inpatients and patients needing hospitalization (to be called
), and the other for the company's larger outpatient group.
was up 6 7/8, or 21.2%, to 39 3/8 after
agreed to buy the company in a deal valued at $679 million. Yankee shareholders will receive $45 a share, 45% payable in Northeast shares and 55% in cash. Northeast Utilities was down 1/8 to 17 3/16.
was up 1 3/4 to 54 1/2 after posting first-quarter earnings of 22 cents a share, beating the 16-analyst
estimate of 20 cents and moving up from the year-ago 8 cents.
was down 2 7/16, or 18.6%, to 10 3/4 after late yesterday recording first-quarter earnings of 1 cent a share, below the year-ago 7 cents.
was down 1 15/16, or 14.4%, to 11 9/16 after last night reporting third-quarter earnings of 28 cents a share, missing the six-analyst view by 3 cents but topping the year-ago figure by 2 cents.
Salomon Smith Barney
downgraded the stock to outperform from buy.
was up 1 1/8 to 24 15/16 after last night reporting first-quarter earnings of 31 cents a share, including relocation charges. The 14-analyst estimate called for operating earnings of 32 cents vs. the year-earlier 30 cents.
was up 2 1/2 to 60 5/8 after posting third-quarter earnings of 29 cents a share, in line with the 21-analyst forecast and above the year-ago 20 cents.
Herb on TheStreet: Which Other U.S. Semi Makers Stand to Gain From Taiwanese Deal?
A late-in-the-day dispatch
yesterday of this column noted how "wild card" assets finally might be getting value at
. Several years ago both participated in a joint venture with Taiwan's
, a private Taiwanese company that runs a semiconductor plant. Only problem: There was no way to put a value on the investment because United Semi was private.
Then, yesterday, United Micro announced plans to buy United Semi and several other joint-venture fabs in return for United Micro stock, which is traded in Taiwan. Based on the price of United Micro's publicly traded stock, analysts calculated attractive values for the S3 and Alliance holdings.
S3 and Alliance, as it turns out, weren't the only U.S. semi companies to hold stakes in the fabs being bought by United Micro.
, for example, owns 9.3% of
United Integrated Circuits
. Same goes for
, which holds 9.3% of United Integrated assets as well. (Meanwhile,
Integrated Silicon Solution
agreed to sell its position in United Integrated back to United Micro in April for its original acquisition cost, although it says it will record a gain of about $1.8 million in the June quarter on the sale. Timing is everything!) Then there's
, which actually records its proportional interest in
, another United Micro venture, as part of its own income.
Adding to the intrigue was United Micro CEO John Hsuan's comments, reported by
, that efficiencies created by consolidating the fabs could cause his company's earnings to double next year.
The purchases are part of United Micro's efforts to play catch-up to
, whose ADRs are the closest thing U.S. investors can get to a pure play in fabs. Most U.S. semi companies have ditched their fabs over the years. (See my colleague
story on the semi shakeout.) "It used to be that foundries were nothing more than glorified
," says analyst Tad LaFountain of
Needham & Co.
"But during the past down cycle, Taiwanese foundries kept investing, and what they've done is shifted the bar on a process technology basis. So instead of being technology laggards, foundries are now leaders, because they can do as sophisticated a process as virtually any semi company."
Which is why U.S. companies have joint-ventured with the Taiwanese and others. Avoid the downside; participate in the upside.
No press release from Iomega
Treasurer Rob Simmons, who negotiated many of Iomega's financial deals with its banks, and chief spokesman Tyler Thatcher have left the company to join an upstart Internet operation. In addition, according to
filings, Simmons sold 56,000 Iomega shares, his remaining stake, at $4.94 a piece. What's more, Iomega still hasn't hired a chief financial officer to replace Len Purkis, who left a little more than a year ago. Iomega officials were not available for comment.
Short-seller Marc Cohodes of
, no stranger to this column, turns the tables when he interviews me live at 4:15 p.m. EDT today on his weekly show on
, an Internet broadcasting site, at
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
firstname.lastname@example.org. Greenberg also writes a monthly column for Fortune.
Copyright 1999, TheStreet.com