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TheStreet.com's MIDDAY UPDATE

July 01, 1999



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Market Data as of 7/1/99, 12:58 PM ET:

o Dow Jones Industrial Average: 10,992.97 up 22.17, 0.20%

o Nasdaq Composite Index: 2,695.71 up 9.59, 0.36%

o S&P 500: 1,374.45 up 1.79, 0.13%

o TSC Internet: 634.86 up 18.20, 2.95%

o Russell 2000: 453.94 down 3.74, -0.82%

o 30-Year Treasury: 89 04/32 down 31/32, yield 6.040%

In Today's Bulletin:

o Midday Musings: Wall Street Cheers Stocks' Resilience as Gains Continue
o Herb on TheStreet: More Winners Than Losers in This Column's Report Card for the First Half

Also on TheStreet.com:

Wrong! Dispatches from the Front: Cramer Berkowitz Plays Ball With the Bears

Your favorite team gets back in and scores.


Networking: Slowly but Surely, Tellabs Tiptoes Onto the Net

With its purchase of NetCore, Tellabs can move more easily into the market for Internet gear.


Market Features: Lehman Unleashes a Value List That's Short on Value Stocks

Forget the 'value' label, says Lehman's Jeffrey Applegate: The Uncommon Values list is all about being higher next year than now.


Dear Dagen: Dear Dagen: Is Now the Time to Invest in Small-Cap Value Stocks?

Don't take sides in the eternal growth-vs.-value debate. When it comes to small-caps, own both.


Midday Musings: Wall Street Cheers Stocks' Resilience as Gains Continue


Justin Lahart

Senior Writer

Wall Street was just as impressed with stocks for edging higher at midday as it was with the big rally they put on after yesterday's



Easy to see why: In three days, the

S&P 500

goes up 4.4%, and on the fourth it's still finding strength. Even when the first of the big economic reports between now and the next

Federal Open Market Committee

meeting came in strong. Despite a bond market that's busy taking back all of yesterday's gains. That's the kind of market that Wall Street could fall in love with all over again.

It's as much about earnings as it is about the Fed. Sure, people will talk your ear off about how stocks are up today because the Fed signaled that it won't raise rates when it meets in late August. "One and done!" they'll shout. "Just a flu shot!" they'll exclaim. Never mind that most Fed watchers

haven't changed their takes on what will happen at the next meeting. Never mind that the bond market is selling off on a

Purchasing Managers' Index

that suggests the Fed may have to go.

What really matters is that the meeting's not going to happen until August, and August is


away. But earnings -- earnings are going to start coming out next week. And earnings look pretty damn good.

"Bonds aren't really responding well today," said Barbara Marcin, portfolio manager at

Gabelli Asset Management

, "but earnings look like they're coming in strong for the quarter. If we shake off concerns about interest rates and focus on earnings, then I guess we could have a strong summer."

That's a bet that investors are making today. The

Dow Jones Industrial Average

was up 25 to 10,996 while the

S&P 500

was up 2 to 1374. The

Nasdaq Composite Index

was up 8 to 2694.

TheStreet.com Internet Sector

index was up 17, or 2.7%, to 634.


Russell 2000

was trading down 4 to 454 -- typical action on the day after the small-cap index was rebalanced, as investors who had been front-running the stocks that index funds would have to load up on sell their shares.

Market internals were positive. There were 72 new highs vs. 21 new lows on the

New York Stock Exchange

, where advancers were outpacing decliners 1,511 to 1,397. In

Nasdaq Stock Market

action, there were 137 new highs and just 18 new lows, but losers were topping gainers 1,891 to 1,746.

Volume was back, suggesting that the buyers' strike is over. On the NYSE, 466 million shares had passed hands. On the Nasdaq, 627 million shares had traded.

Those stats, combined with the recent move up, make technicians happy.

"We're back in the saddle on the upside," said Robert Dickey, managing director of technical analysis at

Dain Rauscher Wessels

in Minneapolis. "The reaction to the Fed announcement and the break through 10,900 is really good. For the next two or three weeks, we're going to be heading higher. We're pretty strong up to 11,400 on the Dow. I think the Nasdaq will perform even better than that. And the Russell even better than that."

Thursday's Midday Movers

By Heather Moore
Staff Reporter

Members of

Lehman Brothers'


"10 Uncommon Values" stock list were benefiting solidly from being anointed as such. (


looked at the absence of traditional value names on the list of values in an earlier


  • America Online (AOL) was up 4 1/8 to 114 1/8.
  • AT&T (T) - Get Report was up 1 13/16 to 57 5/8.
  • Firstar (FSR) was up 15/16 to 28 15/16.
  • Ford (F) - Get Report was up 1 3/8 to 57 13/16.
  • General Instrument (GIC) was up 1 5/8 to 44 1/8.
  • Intel (INTC) - Get Report was up 1 7/8 to 61 1/2.
  • KLA-Tencor (KLAC) - Get Report was up 5 1/8, or 7.9%, to 69 15/16.
  • Eli Lilly (LLY) - Get Report was up 2 5/16 to 73 15/16.
  • Microsoft (MSFT) - Get Report was up 3/16 to 90 1/2.
  • Tyco International (TYC) was up 1 1/8 to 95 7/8.

Commerce One


, an e-commerce software firm, was flying 42 7/8, or 204.1%, to 65 1/16 after

Credit Suisse First Boston

priced its 3.3 million-share IPO above-range at $21.

Among other new issues,



was climbing 12 3/8, or 82.5%, to 27 1/2 after Credit Suisse First Boston priced its 4 million-share IPO top-range at $15. The telecommunications software company is based in Redwood City, Calif.


Salem Communications

(SALM) - Get Report

was hopping up 4 3/8, or 19.4%, to 27 after

Deutsche Banc Alex. Brown

priced its 8.4 million-share IPO above-range at $22.50. The company is a religious and family radio operator.

In other news:



was storming up 6 1/4, or 83.3%, to 13 13/16 after forming a strategic alliance to be


(WMT) - Get Report

exclusive provider of books and related products. Wal-Mart was flat at 48 1/4.


(CNET) - Get Report

was down 5 5/16, or 9.2%, to 52 1/4 after Deutsche Banc Alex. Brown said the company is planning to spend $100 million over the next 18 months to build brand awareness. The firm cut its 1999 estimate for the company to a loss of 50 cents a share from a profit of 20 cents.


(DIS) - Get Report

was off 1 7/16 to 29 3/8 after

Morgan Stanley Dean Witter

downgraded the stock to neutral from strong buy, citing weakness in the company's creative content business.

First Busey

(BUSE) - Get Report

was down 4 3/16, or 16.2%, to 21 11/16 after last night agreeing to acquire

Eagle BancGroup


for $26.6 million, or $25.74 a share, in cash. Eagle BancGroup was up 2 5/16, or 10.5%, to 24 3/8.

Hearst-Argyle Television


was up 1 1/4, or 5.2%, to 25 1/4 after last night saying it will issue about $100 million in new stock to its majority shareholder, Hearst, to raise cash for trimming debt.



was up 5 15/16 to 178 1/8 after expanding its marketing relationship with

Procter & Gamble

(PG) - Get Report

. P&G was down 3 to 86 1/4.

Earnings/revenue movers

Herman Miller

(MLHR) - Get Report

was up 2 1/4, or 10.8%, to 23 1/4 after last night posting fourth-quarter earnings of 48 cents a share, topping both the seven-analyst outlook for 37 cents and the year-ago 40 cents.


(NKE) - Get Report

was down 3 to 60 3/8 even after last night posting fourth-quarter earnings of 38 cents a share, a penny higher than the 16-analyst outlook and above the year-ago 4 cents. The retailer said it sees 2000 percentage revenue growth in the mid-single digits.



was up 2 1/16, or 22.8%, to 11 3/16 after saying it expects to beat second-quarter estimates by 15 cents to 20 cents a share thanks to design agreements with big computer makers. The three-analyst view called for a loss of 20 cents vs. the year-ago loss of 23 cents.


(SBUX) - Get Report

was tanking 11 1/4, or 30.1%, to 26 3/16 after last night predicting fiscal 1999 earnings of 54 cents a share, below the 20-analyst forecast of 60 cents but above the year-ago 44 cents. The company, blaming slower than anticipated growth and costs from its Internet launch, said it expects the 6-cent shortfall to be evenly split between the last two quarters of the year. Today, Deutsche Banc Alex. Brown dropped the stock to buy from strong buy,

Goldman Sachs

lowered it to market outperformer from recommended,


slashed it to hold from strong buy and

Thomas Weisel Partners

cut it to buy from strong buy.

Herb on TheStreet: More Winners Than Losers in This Column's Report Card for the First Half


Herb Greenberg

Senior Columnist

Six months down. Six to go. This column historically grades itself and its sources at year-end. But, hey, do you


care that far from the fact? Do you care at all? I dunno, but for accountability's sake I care.

Not only does it keep me and my sources honest, but there's a moral to some of these stories, especially this year, thanks to tougher year-end audits and/or the inability of companies to hide from bloated inventories or botched business plans.

Classic examples, since January, include

Party City

(PCTY) - Get Report


no celebration -- delisted),

Family Golf Centers


(playing golf isn't as popular as watching it --

earnings disappointment),

Just For Feet


(earnings got trampled,

lousy inventory controls),




not enough caution in the amount of surgical gloves -- its specialty -- put into the distribution channel),

Guitar Center


(sad song --

surprising slowdown in earnings growth) and

Select Comfort



deflated -- didn't sell as many airbeds as expected). Each one was a favorite of short-sellers, and each came apart with surprising speed. (A-pluses, all of them!)

This column also gets high marks for raising questions, starting last year, about

CHS Electronics


, a distributor of electronics products overseas. It received an incomplete in my last year-end report card. Funny what a difference a disclosure about

missed earnings coupled with an admission of forged documents can make. (Moral: Never pick a public fight with short-sellers, which is just what CHS' CEO did.)

Also at the head of the class:

Piper Jaffray's

Ashok Kumar, who correctly

warned that


(DELL) - Get Report

revenue growth would slow, and money manager Jim Marquez, of

Bayou Capital

in Greenwich, for his A-plus prediction in

April that


(FLR) - Get Report

was ripe to rise (it has roughly doubled). Also high on his

list at the time:



(up 27%);

Cabletron Systems

(CS) - Get Report

(up 61%);

Network Equipment


(up 26%). Also:

R&B Falcon

(FLC) - Get Report

(up 11%);

Pioneer Natural Resources

(PXD) - Get Report

(up 31%);

Ingram Micro


(up 20%) and



, which he said would eventually get a takeover bid. It did, and now it's about 50% higher than when he first mentioned it. (Which goes to show that if you have passion about something, it can pay to go on the record.)

Speaking of which: Short-seller Marc Cohodes of

Rocker Partners

, no stranger to this column, finally gets an A-plus for predicting that

HMT Technology


, a maker of PC hard disks, would get

flattened. (It did, stockwise and earningswise.) Ditto for Cohodes with



, which is roughly half of where it was six months ago,

Engineering Animation



Network Associates



Other columns worthy of the honor roll:


(PTX) - Get Report

, which

makes towels, and

NCS Healthcare


, which

distributes drugs to nursing homes. Both became very ill


they had already fallen in earlier plunges, proving that just because a company has already been hit by bad news doesn't mean it can't get hit even harder with worse news.

And this column deserves to be on the dean's list for mentioning



and its Internet spinoff,




Both are lower than where they were.

But this column gets failing marks, at least right now, for questioning

Microchip Technology

(MCHP) - Get Report

, which continues to defy the skeptics. And

Hibbett Sporting Goods

(HIBB) - Get Report

. (We could call both incompletes considering that short-sellers continue to whisper that they've got plenty of trouble.) And how about

Bebe Stores


, a fast-growing retailer of clothes for teenage girls? Hasn't budged since I

mentioned it. (Incomplete.) Other incompletes include

Lernout & Hauspie


(hello you unlovable


Stewart Enterprises


(the stock is down but there's certainly been

no funeral procession);



; and

Pre-Paid Legal Services


(jury's still out on



Quite frankly, this is the lowest number of failures since I started this report card a decade ago. I had planned to give myself the worst possible failing marks for having the gall, earlier

this year, to question whether


(SBUX) - Get Report

was finally starting to lose its perk.

But Wednesday, after the market closed, the company did something very un-Starbucks-like: It reported that its fiscal 1999 earnings will miss analysts' estimates. Oops! Says one longtime Starbucks short, who was


short last night: "It's just a coffee company."

On that note, I'm sure there are plenty of others, especially failures, that I missed. If so,

let me know and I'll be more than happy to take the public humiliation.

TV Talk

Memo to the many readers who wonder when I'll be back on


: I won't, and thanks for watching. But you will get a chance to see me,

Brenda B.



and a cast of (OK, not thousands, but quite a few)


ers on


new weekly show on the

Fox News Channel

starting July 17. (So, if your cable carrier doesn't carry


, tell 'em to get it and get it NOW!)

After all, the Fox is faster and slier than the Peacock.

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

herb@thestreet.com. Greenberg also writes a monthly column for Fortune.

As originally published this story contained an error. Please see

Corrections and Clarifications.

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