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June 16, 1999

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Market Data as of 6/16/99, 12:55 PM ET:

o Dow Jones Industrial Average: 10,753.93 up 158.94, 1.50%

o Nasdaq Composite Index: 2,495.25 up 80.58, 3.34%

o S&P 500: 1,326.37 up 25.21, 1.94%

o TSC Internet: 540.72 up 36.64, 7.27%

o Russell 2000: 440.27 up 6.26, 1.44%

o 30-Year Treasury: 88 25/32 up 18/32, yield 6.064%

In Today's Bulletin:

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TheStreet Recommends

o Midday Musings: Forgetting Troubles, Wall Street Gets Happy
o Herb on TheStreet: Is Stewart Enterprises Whistling Past the Graveyard About Possible Problems?

Also on

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Biotech/Pharmaceuticals: Price, Perception Put Pfizer in a Costly Fix

The drug firm's still a strong performer, but its premium price pressures its stock.

Brokerages/Wall Street: Eye of the Tiger Turns to Robertson's Succession Plan

The Tiger Management head is widely respected, but Wall Street worries who will take over when he leaves.

Dear Dagen: Dear Dagen: Dreyfus Tech Fund Sports Great Numbers -- Except for One

The 5.75% load is a tough pill to swallow.

Midday Musings: Forgetting Troubles, Wall Street Gets Happy


Heather Moore

Staff Reporter

The fog is still about three layers thick on computer monitors belonging to jovial traders and investors alike. But the lasting power of moisture aside, the

Consumer Price Index

-granted great sigh of relief still has something of a temporary feel to it, for this week's battle for the bulls is only half-won.

Just about nothing -- in fact, nothing -- can match the hallowed words scheduled to be bestowed upon us tomorrow by one very important balding man with the mouth of a trout and the oversized glasses of an economist. After this morning's super-market-friendly inflation data, investors will pay extra close attention to



Alan Greenspan's

address to the congressional

Joint Economic Committee

tomorrow. Market players and commentators can be expected to dissect his every sentence, looking for any clues as to what the

Federal Open Market Committee

plans to do, or not do, at its June 29-30 meeting.

Until 8:30 EDT this morning, when the May CPI report

came in unchanged, many Wall Streeters feared the Fed might raise the fed funds rate several more times after a near-done-deal boost to 5% from 4.75% at the end of the month. Now, a lot of folks -- arguing that the lately falling bond market may have done the Fed's job for it -- are encouraged that inflation isn't quite the problem it was feared to be. Economists were calling for a 0.2% gain in the overall CPI figure. The core, which excludes the volatile food and energy sectors, gained 0.1% against expectations for a 0.2% increase.

Last month, the rise in the April CPI was twice as large as expected and the largest in years. The 0.7% increase in the overall figure was the largest monthly gain since October 1990.

Barbara Marcin, portfolio manager at

Gabelli Asset Management

in Rye, N.Y., said: "Today's reaction is no surprise. We've got a real relief rally here on the positive side. After the poor CPI last month, we now have a more even-handed inflation picture with pretty strong growth. People were spooked, and this month certainly makes last month look like a fluke situation. If it weren't for the inflationary April CPI number, I don't think bonds would be where they are now. "

The strategist pointed out that after April's CPI number, the majority of economic data -- employment,

Purchasing Managers Index


Employment Cost Index

figures -- have been tame.

But Marcin still expects the Fed to raise interest rates by 25 basis points. "The Fed needs to confirm the bond market's move so far," she said. "The bond market can't do the whole job, and I don't think people will feel comfortable until the Federal Reserve confirms it. This lingering uncertainty is the worst. ... We've actually heard Greenspan say he regrets that third easing last year, so I think he'll take that back.

"They eased too aggressively last year," she continued, "and that was welcomed by the global market but it was too much for the U.S. -- I don't think anyone would say that was done for the U.S. But you never know the effects until it's over."

The 30-year Treasury was rallying up 18/32 to 88 24/32, dropping its yield to 6.07%. That's off the long bond's best levels of the day, however. (For more on the fixed-income market, see today's early

Bond Focus.)

'We're pretty bouncy this morning, and I think it will carry through the day," BT Brokerage's Ken Ducey said. 'I don't think this is a false rally -- this is a real rally.'

Meanwhile, stocks -- especially in techland -- were on fire. The

Nasdaq Composite Index

was soaring 83, or 3.4%, to 2498, and the

Nasdaq 100

was climbing 3.9%. The

Philadelphia Stock Exchange Semiconductor Index

was up 1.9%, on pace for another record close, and the

Morgan Stanley High-Tech 35

was up 4.4%.



was jumping 27.8% following last night's strong earnings and today's circus of upgrades. (See more below.)

Lately out-of-favor Internet names were getting a full-body hug after yesterday's pat on the back. Internet Sector

index was zooming up 37, or 7.3%, to 541, with

America Online


rising 11.9%,



rising 12.4% and


rising 11.2%.

"These stocks, especially the Internet stocks, were beaten up pretty badly prior to today," said Ken Ducey, director of trading at

BT Brokerage

. "So this rally is to be expected, the momentum was there. Any CPI numbers viewed as not a disaster were due to lift us up. And in these market conditions, flat to better was viewed as good. So we're pretty bouncy this morning, and I think it will carry through the day. I don't think this is a false rally -- this is a real rally."

The trader said the Wall Streeters with whom he's spoken this morning still believe the Fed will hike rates, but are actively on Greenspan Watch -- "He's like the pope of Wall Street, he's the gospel." As for today's action, Ducey said he thinks daytraders will take us higher all the way into the close.

"This market has slowed down, so there's money just waiting to come in," he said. "By the end of the year, we'll be at new highs. These daytraders playing games are the ones fanning the flames. And they're the ones that pulled us back because they got scared. They hadn't really seen that kind of slide before. And now they're back. They were in yesterday morning, and then we saw them unwinding positions in the afternoon -- they decided to go home flat at the end of the night. And that's why we've been seeing these big moves in the last hour, half-hour of trading. They'll be the ones again fanning the flames. The real investors, the big-money investors, will help sustain the move."

The "real, big-money" index, the

Dow Jones Industrial Average

, was hopping up 160, or 1.5% to 10,755, with the bluest of blue-chips (mostly in finance and technology) rallying hardest and the losing index members in the red by only about a fraction each. Among the winners,

American Express


was up 3.4%;

General Electric


was up 2.5%;

General Motors


was up 5.4%;



was up 4%; and

J.P Morgan


was up 4.3%.

The broader

S&P 500

was expanding 26, or 2%, to 1327, and the small-cap

Russell 2000

was advancing 6, or 1.5%, to 440.

Breadth was strong and volume was pretty well recovered. On the

New York Stock Exchange

, advancers were leading decliners 1,920 to 955 on 472 million shares. And the ups had the downs 2,265 to 1,339 on 600 million shares in

Nasdaq Stock Market

activity. Nasdaq volume should top 1 billion shares today for the first time since May 20.

New 52-week highs were topping new lows 73 to 54 on the Big Board and 65 to 35 on the Nasdaq.

Marcin, calling for a summer slowdown in tech and continued rallying in cyclicals, said despite recent calls for better breadth and volume, she's encouraged by this year's action. "This is still a good scenario for value stocks. There is room there. Last year was such a narrower move upward. This year we've seen more stocks participating. But I don't think it's a situation where you pick sectors, but individual stocks that aren't that highly valued."

Wednesday's Midday Movers

By Thomas Lepri
Staff Reporter

As noted above, stocks are, well, up. A lot of them.

Indeed, you can't swing a 27-year-old CEO today without hitting a highflying Internet stock. The list includes, rising 10 13/16, or 11.2%, to 107 1/8;


, popping 14 1/2, or 15.4%, to 108;



, jumping 11 13/16, or 15.4%, to 88 11/16;



, up 16 and a teenie, or 17.8%, to 106 9/16; and Yahoo!, moving ahead 15 1/2, or 12.4%, to 140 11/16. Over on the NYSE, bellwether

America Online


was bouncing up 11 1/4, or 11.9%, to 106; Dow component IBM was riding the wave too, up 4 5/8 to 120 1/2.

Elsewhere in the Dow, financials like American Express and J.P. Morgan were benefiting from today's friendly CPI. American Express was up 4 1/4 to 123 5/16, while Morgan was moving forward 5 3/8 to 133 1/2.

In other news:

Up days like this make the stocks that are losing ground look all the more conspicuous. Like

New Era of Networks


, which was plummeting 3 15/16, or 9.2%, to 39 1/16 after it agreed to buy tiny


, a maker of application integration software, for $34 million cash and stock.




was trading like an Internet stock today, up 4 1/8, or 11.7%, to 39 1/4. That's because, at least in part, it is one, having today received a $45 million equity infusion from, with which the 255-year-old company will set up a joint online auction service.

Some M&A arbitrage was taking



up 6 5/8, or 29.5%, to 29 1/8 after

Pharmacia & Upjohn


was buying the biotechnology company for about $728 million in Pharmacia stock, or about $31 a share.

Earnings/revenue movers

Circuit City


was up 8 7/8, or 10.8%, to 90 7/8 after it said it was pulling out of the unprofitable

Digital Video Express

partnership marketing the Divx home-video system, a business that helped the company post a first-quarter loss of 89 cents a share. Excluding the discontinued


operations, Circuit City reported first-quarter earnings of 41 cents a share, easily surpassing the 15-analyst

First Call

consensus of 25 cents and up from the year-ago. Circuit City, which also announced a 2-for-1 stock spit, was raised to strong buy from buy by

Credit Suisse First Boston


CNB Bancshares


was advancing 13 5/16, or 32.1%, to 54 3/4 on news that Cincinnati-based

Fifth Third Bancorp


is buying the Indiana bank in a $2.1 billion stock transaction. Based on Tuesday's closing prices, the deal is worth about $59.68 a share to CNB stockholders.



was rocketing up 6 15/16, or 27.8%, to 31 15/16 after it last night reported fourth-quarter earnings of 36 cents a share, topping the 30-analyst prediction of 32 cents and moving ahead of the year-ago 27 cents. The news caused Credit Suisse First Boston to raise Oracle from buy to strong buy and hike the stock's 12-month price target to 34 from 32.

In other earnings news:

Railroad products maker

Harmon Industries


was falling 4, or 20%, to 16 after it warned that second-quarter earnings would come in around 10 cents a share, well below the 37-cent three-analyst view and down from last year's 43 cents.

Jabil Circuit


was off 2 5/8, or 5.4%, to 46 3/8 after the circuit board maker last night said that its fourth-quarter earnings would be hurt by design delays on new products.


covered the news in last night's

Evening Update.

Herb on TheStreet: Is Stewart Enterprises Whistling Past the Graveyard About Possible Problems?


Herb Greenberg

Senior Columnist

Wednesday Wallop:

Death watch:

Anytime a company answers my questions with a question that is irrelevant, a big red flag goes up. The company in question,

Stewart Enterprises


, operates funeral homes and cemeteries. If you heard my interview with Marc Cohodes of

Rocker Partners

, on, you heard his firm's analysis of Stewart's accounting.

Last week Cohodes' partner, David Rocker, had passed along to me his valuation of Stewart, which isn't really that much different than it was when we last talked a few months back. (The stock's been largely flat since then.) He thinks it's worth less than 4, compared with the stock's close yesterday of 15 1/2. His analysis is based on what Stewart itself said it recently paid or agreed to pay for 79 mortuaries and 21 cemeteries.

The price, $167.5 million, translates into an average of $1.7 million per facility. Stewart owns 782 properties. Multiply $1.7 million by 782 and the total value of Stewart (in theory, at least) is $1.33 billion. Subtract $925 million in debt and you get $405 million. Divide that by Stewart's 112 million shares outstanding and you get (kaching!) a whopping $3.61 per share.

So, armed with that, last Thursday, I called Stewart's spokesman and asked why the short-sellers were wrong in their analysis. I really wanted to know Stewart's response. I also asked how it was the company met Wall Street's earnings estimate in its latest quarter ended in April while its top line, or revenue, came in short.

Rather than answer the question, he said he'd have to have someone higher in command get back to me (nobody called by yesterday) and he then wanted to know why my "boss" had been fired by


. The subsequent conversation went something like this:

"My boss? Fired? Huh?"

"Yeah, the bald-headed guy? What's his name? He used to be on

Good Morning America

. Why'd he get fired?"

Actually, it was Cramer who gave


the heave-ho last year. Furthermore, Cramer's not my boss; he's a columnist who doesn't even work out of's

offices. I could see where this guy was headed and simply told him that I'd await the call that never came. I wasn't surprised, based on the company's reaction to items I've written in the past.

And by the way, if you guys ever do decide to get back to me: Why do you think the shorts are wrong in assuming that with $900-plus million in debt and $34 million in cash and a penchant for acquiring funeral homes, you'll have little choice but to raise additional cash in the debt markets? (Interest rates aren't getting any lower.) And why do you think the shorts are wrong when they say the banks are likely to be leery to lend to a big acquirer in an industry where one of the leading names,

Loewen Group


, is selling off its properties as part of its bankruptcy reorganization? And finally, why do you think the shorts are wrong to think it's in their best interest, not yours, that you continue to buy as many homes as you can?

If you've got answers, I've got plenty of space to print them.

Short Positions


An item here

yesterday mentioned that

Oak Technology


owned 9.3% of a semiconductor fab being bought by

United Microelectronics

. Should've said it


own that stake until April, when it sold it for no profit. The ownership position was included in the company's latest 10-Q. However, in doing our research, we failed to read the very next paragraph that mentioned the sale.

Another Iomega sayonara:

An item here

yesterday mentioned that two



honchos -- the treasurer and the chief spokesman -- had quit. Add the chief operating officer, Scott Flaig, to the list. The company announced his departure yesterday. (And it still hasn't hired a permanent CFO.) Yesterday Iomega closed at 3 15/16. But even as a $4 stock, the critics like to point out, it still has a market value of slightly more than $1 billion.

Strumming a song:

In JJC's

chat Monday, somebody, under the screen name jss888, wanted to know what I had against

Guitar Center


. "I am starting to think it's personal," he wrote. Personal? Sorry to disappoint, but I didn't cause the company to botch its own strategy and report (its words, not mine) that some of its new stores are cannibalizing existing stores. When you see multiple items about the same company in this column, it merely reflects an evolving story. Just so happens that a few months ago an item

here suggested that Guitar Center's growth would slow. As it turns out, it did!

Stampede to the exit:

Just For Feet


down 22% to 4 7/8 after warning it may default on its credit facility. Last one out, shut the door.

Sabratek undefined:

The company disclosed this morning that it has received an amendment to a class-action lawsuit. For details of what's in that lawsuit, see yesterday afternoon's extra


Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.


Copyright 1999,