Skip to main content's MIDDAY UPDATE

July 6, 1999


"THE SOLUTION FOR BEST EXECUTION!" ATTAIN¿ IS THE ANSWER! "Point and Click" Nasdaq, Listed, and Options Order Entry! Visit us at: or call for a free CD-ROM demo at 888-3-ATTAIN.

Market Data as of 7/6/99, 1:17 PM ET:

o Dow Jones Industrial Average: 11,222.51 up 83.27, 0.75%

o Nasdaq Composite Index: 2,781.71 up 40.69, 1.48%

o S&P 500: 1,403.14 up 11.92, 0.86%

o TSC Internet: 686.04 up 21.77, 3.28%

o Russell 2000: 458.84 up 2.33, 0.51%

o 30-Year Treasury: 88 31/32 down 19/32, yield 6.045%

In Today's Bulletin:

o Midday Musings: Broad Rally Greets the New Week as Bonds Are Ignored
o Herb on TheStreet: Why Did Computer Associates Change Auditors?

Also on

Wrong! Dispatches from the Front: It's Better to Be Lucky

TheStreet Recommends

Today's market ramp brings back memories of 1984, when Cramer was trading while preparing for the bar exam.

Europe: Tartan Technology: Scotland's Quiet Riot

Many people conjure the skirl of bagpipes and a wee dram, but high-tech Silicon Glen is creating a new image for Scotland.

Tech Savvy: The Logic Behind Intel's Dialogic Deal

Plus, mall rats move online, and a neat, offbeat little search engine.

Biotech/Pharmaceuticals: Centocor Finding Wall Street Reluctant to Stomach Latest Setback

The Pennsylvania biotech's bowel drug isn't meeting sales targets. Once again, it's wait till next year. CEOs Aren't Us at

The online unit's CEO search begins again after Bob Moog announces his decision to stay at University Games.

Dear Dagen: Dear Dagen: Are There Funds That Short Stocks?

Long-short and market-neutral funds both use short positions. But one strategy is risky and the other is unsuccessful.

Midday Musings: Broad Rally Greets the New Week as Bonds Are Ignored


Brian Louis

Staff Reporter

Doing their best imitation of former powerhouse

Houston Oilers

running back

Earl Campbell

, major market averages plowed ahead again today, led by the

Nasdaq Composite Index



Dow Jones Industrial Average

, the

S&P 500

and the Nasdaq Comp are all in record-closing-high territory again. If the S&P 500 and the Nasdaq Comp manage to close at a record high, it would mark the fourth consecutive session with a new mark for those market barometers.

Stocks were ignoring the beefy losses in the Treasury market. Instead, investors were sending money into equities in part on expectations of upcoming strong quarterly earnings. Major market indices were lately at their session highs.

Prominent in tech was


(INTC) - Get Intel Corporation (INTC) Report

, which was up solidly thanks to upgrades from

Merrill Lynch


Prudential Securities

. Meanwhile,

BancBoston Robertson Stephens

cut earnings estimates on the chip giant.

The Nasdaq Comp was up 44, or 1.6%, to 2785.


Nasdaq 100

was up 1.4%. The

Philadelphia Stock Exchange Semiconductor Index

-- of which Intel is a member -- was up 2.4%. The

Morgan Stanley High-Tech 35

was up 2.2%.

Ralph Acampora, Prudential's widely followed chief technical analyst, raised his outlook on the Dow.

"Due to the recent upside breakout in so many stocks, groups and market indices, we feel comfortable in raising our 1999 long-term target," he wrote in commentary on the firm's Web site. "Our new conservative 1999 Dow target is 12,000/12,300 based solely on the fact that interest rate concerns are behind us for a while and now we have improved earnings expectations ahead of us. An aggressive long-term target of 12,500/13,000 is also offered because so many individual issues look technically attractive."

As for Net stocks, Internet Sector

index was up solidly. It was up 23, or 3.5%, to 688.



was solidly higher ahead of its earnings report, slated for release tomorrow.

America Online


was up nicely in part on a favorable article in Sunday's

New York Times

. AOL was most active on the

New York Stock Exchange

with 16.7 million shares changing hands.

Meanwhile, AOL also set a pact with


, which sent shares of the medical Web site company up 54.2%.

The Dow was up 80, or 0.7%, to 11,220.

General Motors

(GM) - Get General Motors Company (GM) Report

was the biggest boost to the average, thanks to an analyst's upgrade.


S&P 500

was up 12, or 0.9%, to 1404. The

Russell 2000

was up 2, or 0.5%, to 459.

Philip Roth, chief technical analyst at

Morgan Stanley Dean Witter

, pointed out that the market has gone through a spring correction, which has now given way to a summer rally. But he said he'd be surprised if the market embarked on a sustained and broad advance. He sees the market making nominal new highs.

Roth sees a decay in the market down the road this fall. He's looking for the next bottom in the market to come sometime between mid-September and mid-November.

Treasuries were getting crushed. The 30-year bond was lately down 22/32 to 89 2/32, yielding 6.05%. (For more on the fixed-income market, see today's early

Bond Focus.)

Roth said he thinks long-term interest rates are going to keep going up until stocks go down.

Gold prices and gold mining stocks were getting crushed after the

Bank of England

sold off a boatload of the precious metal as part of its plan to slice the U.K.'s gold reserves. The

Philadelphia Stock Exchange Gold and Silver Index

was down 5.2%.

Oil and oil service stocks were on the move higher. The

Chicago Board Options Exchange Oil Index

was up 2.5%, while the

Philadelphia Stock Exchange Oil Service Index

was up 2.6%.

In news from the oil patch, shares of

Elf Aquitaine

(ELF) - Get e.l.f. Beauty, Inc. Report

were flying in the wake of word that


(TOT) - Get Total SA Sponsored ADR Class B Report

made an unsolicited $43 billion bid for it. Elf was up 23.3%.

On the

New York Stock Exchange

, advancers were leading decliners 1,497 to 1,314 on 403 million shares. On the

Nasdaq Stock Market

, winners were beating losers 2,070 to 1,664 on 660 million shares.

On the NYSE, 125 issues had set new 52-week highs while 22 had touched new lows. On the Nasdaq, 207 issues had set new 52-week highs while new lows totaled just 15.

On the Nasdaq,

General Nutrition


was most active with 20.3 million shares changing hands. General Nutrition agreed to be taken over by


, a Dutch foods group, for $1.8 billion.

Meanwhile, among other indices, the

Dow Jones Transportation Average

was down 0.6%, the

Dow Jones Utility Average

was up 0.3% and the

American Stock Exchange Composite Index

was up 0.9%.

Tuesday's Midday Watchlist

By Heather Moore
Staff Reporter

As noted above, Elf Aquitaine was climbing 17 5/16, or 23.3%, to 91 5/8 following

yesterday's news that Franco-Belgian oil giant TotalFina made a $43 billion unsolicited bid for its smaller rival. TotalFina was up 2 3/16 to 67 15/16.

Mergers, acquisitions and joint ventures

AOL was up 8 7/16, or 7.3%, to 123 5/8 after agreeing to a four-year, $89 million alliance with, the Internet health-care network led by the former surgeon general. was soaring 12 13/16, or 54.2%, to 36 23/ 32. Also, as mentioned above,

The New York Times'

Sunday Money & Business section reported AOL is aiming to double its current subscriber base of 17 million over the next five years or so, and to more than triple average daily usage to three hours a day.


Cable & Wireless


was up 2 15/16, or 7.8%, to 40 11/16 following a

Sunday Times

of London story saying that

Deutsche Telekom

(DT) - Get Dynatrace, Inc. Report


France Telecom



Bell Atlantic



SBC Communications


"are all believed to have made informal approaches in recent months to sound out C&W about a deal."

General Nutrition was up 1 11/16, or 7.4%, to 24 19/32 after receiving a $1.8 billion cash bid from Dutch foods group Numico.

Earnings/revenue reports and previews


(AA) - Get Alcoa Corp. Report

was up 1 15/16 to 64 11/16 ahead of its scheduled second-quarter earnings report tomorrow. The 16-analyst forecast calls for earnings of 63 cents a share vs. the year-ago 62 cents. Yahoo!, expected by 21 analysts to post second-quarter earnings of 8 cents a share after tomorrow's closing bell, was up 9 3/8, or 5.3%, to 187 1/2. The company earned a penny in the year-ago quarter.



was down 1 9/16 to 40, above an earlier low of 38 5/8, even after posting fourth-quarter earnings of 37 cents a share, beating the 22-analyst estimate by 2 cents and moving up from the year-ago 30 cents.

King Pharmaceuticals


was up 4 1/16, or 16.5%, to 28 5/8 after saying it expects second-quarter earnings to come in above the four-analyst prediction of 25 cents a share thanks to strong sales. The company made 23 cents in the year-ago quarter.

Analyst actions

Electric Lightwave


was down 1 1/2, or 10.8%, to 12 3/8 after


downgraded it to neutral from buy.

General Motors was up 3 1/8 to 71 3/4 after

Warburg Dillon Read

raised the stock to strong buy with a price target of 91. The firm, saying it expects U.S. auto sales to remain strong in the coming months, also lifted its 2000 earnings estimate to $8.76 from $8.67 a share.

Intel was up 1 5/8 to 65 1/8 after Merrill Lynch upgraded the stock to near-term buy from accumulate and Prudential Securities upped it to strong buy from accumulate.

BancBoston Robertson Stephens

, meanwhile, lowered its second-quarter, 1999 and 2000 earnings estimates for the chipmaker, citing less-than-expected unit volume.



James J. Cramer

this morning

explored the implications of the moves.


was up 7 5/16, or 10.8%, to 75 3/4 after

Credit Suisse First Boston

initiated coverage with a strong buy.


Telemig Celular


was up 2 1/16, or 8.3%, to 27 1/16 after

Donaldson Lufkin & Jenrette

raised the stock to top pick from buy.

Herb on TheStreet: Why Did Computer Associates Change Auditors?


Herb Greenberg

Senior Columnist

There wasn't a press release, and maybe it's not a big deal, but: On Friday,

Computer Associates

(CA) - Get CA, Inc. Report

disclosed, in a

Securities and Exchange Commission

filing, that it had booted its longtime auditor,

Ernst & Young

, in favor of


. (Nothing like disclosing it on a day half the world is on vacation!)

According to the filing and Computer Associates spokesman Doug Robinson, there were no accounting issues or disputes. "We look at this like any other vendor change," Robinson says. "We were impressed with KPMG. They gave us a nice proposal and we decided to go with them."

However, it's always a red flag whenever a longtime auditor is canned, especially one that has been with a company for as long as Ernst has been with CA. (More than 10 years.) It's even more of an eye-opener at a company like CA, which has been under fire from critics for what seems like years for unusually high receivables. At the end of the last fiscal year, ending March 31, CA's receivables days outstanding topped 140 days.

A sign of trouble? Robinson says no. He says that unlike most software companies, CA not only sells its software, it acts as the bank to finance the software. That, in turn, leads to the high receivables. In fact, he adds, nonfinance-related (trade) receivables are closer to 90 days, which is in line with industry standards.

Perhaps, but with the shift in auditors, don't be surprised if short-sellers, who gave up on CA long ago, use the change as a reason to take another look.

Lernahooligan alert

: Still haven't heard back from

Lernout & Hauspie


, the voice-recognition company, on whether its senior vice president of finance and strategic planning, Tom Doherty, has left the company. Doherty was the company's key contact with Wall Street. A call to his office in Burlington, Mass., Tuesday afternoon was greeted by the same voice mail, mentioned

here Thursday, saying he was on vacation and would return today.

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.

Get in the trenches with James Cramer... Invest a cool $500,000 without the risk - register for TSC's Investment Challenge and play for prizes, including a trip to NYC and a morning with James Cramer! Pre-registration - June 21. Game begins - June 28.

Copyright 1999,