midday07-09-99
TheStreet.com's MIDDAY UPDATE
July 9, 1999
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Market Data as of 7/9/99, 1:04 PM ET:
o Dow Jones Industrial Average: 11,162.99 up 36.10, 0.32%
o Nasdaq Composite Index: 2,775.84 up 3.98, 0.14%
o S&P 500: 1,397.64 up 3.22, 0.23%
o TSC Internet: 660.56 down 4.40, -0.66%
o Russell 2000: 455.58 up 0.83, 0.18%
o 30-Year Treasury: 89 15/32 down 9/32, yield 6.006%
In Today's Bulletin:
o Midday Musings: Stocks Float Higher as the Wind Whispers Weekend
o Herb on TheStreet: The IDT Plot Advances: Simon Lermer Finally Calls Back
Also on TheStreet.com:
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Midday Musings: Stocks Float Higher as the Wind Whispers Weekend
By
Heather Moore
Staff Reporter
With the weather in New York finally reasonable, today was a choice day for the more privileged Wall Streeters to catch up on their summer reading or decide which kind of fish to serve tonight at the beach house.
And with
Abbott Laboratories
(ABT) - Get Abbott Laboratories Report
and
Consolidated Papers
(CDP)
providing the most exciting earnings news (right, not very exciting), little corporate or economic news and extra-lite volume, it's small wonder the major equity indices also seemed to have left the building a bit early.
But that doesn't mean all isn't swell. Folks still are encouraged by the calm that's been following record highs for the big three stock proxies. That we haven't seen an up-200-points-one-day, down-200-points-the-next trend is widely viewed as a good sign.
"We're trading on prewarnings now -- that's where we're seeing the volume-intensive action," said Jay Meagrow, vice president of trading at
McDonald
in Cleveland. "Tech is still trading on that neutral bias that put the momentum back into this thing. But I think you may see a little profit-taking today from the small-retailer group afraid to go (long) into the weekend ahead of earnings. And it's a Friday in the summer," which often means lighter volume and exaggerated equity moves. But the trader said that, in general, he is encouraged by "pretty good" volume of late.
"After today," Meagrow continued, "we're going to see earnings moving stock by stock, group by group." He expects the major indices to be mixed to positive throughout the second-quarter earnings season, which gets under way for real next week. While technology stocks tend to trade skyward ahead of earnings reports (and then fall flat or trade Hades-ward after the report), the trader said the whisper phenomenon doesn't terrorize the rest of the market.
A whisper number, of course, is the figure stock market players and chat-room sayers posit for a company's per-share earnings.
Yahoo!
met its whisper number of 11 cents a share Wednesday, for example.
After falling as low as 11,124.04, the
Dow Jones Industrial Average
lately was up 24.06 to 11,150.95. Those among the gilded 30 fighting hardest for the bullish cause were
DuPont
(DD) - Get DuPont de Nemours, Inc. Report
, up 5.2% after announcing the details of its
Conoco
(COC)
spinoff, and
McDonald's
(MCD) - Get McDonald's Corporation Report
, up 6.8% after receiving an upgrade from
Schroders
. Financials
American Express
(AXP) - Get American Express Company Report
and
J.P. Morgan
(JPM) - Get JPMorgan Chase & Co. Report
were trading on the downside. The
Philadelphia Stock Exchange/KBW Bank Index
was down 0.1% while the
American Stock Exchange Broker Dealer Index
was up 0.2%.
Meagrow said he's not worried about yesterday's and today's mild weakness in financials. Attributing the decline to constant sector rotation, the trader said he expects banks to post good quarter earnings. "But these things won't trade up ahead of earnings like technology," he said. "They'll trade up once they come in (with earnings reports) unless we have some sort of a move in rates or overseas, then their earnings are null and void."
In that land of love and hate, techland, the
Nasdaq Composite Index
was up 1.99 to 2773.85 after rising as high as 2787.17.
Dell
(DELL) - Get Dell Technologies Inc Class C Report
, up 5.5%, was a notable gainer.
TheStreet.com Internet Sector
index was down 6.13 to 658.83, with Yahoo! dropping 2.4%.
The broader
S&P 500
was up 2.40 to 1396.82, and the small-cap
Russell 2000
was up 0.64 to 455.39. The
Dow Jones Transportation Average
, one of the few indices making an audible move either way, was off 23.79, or 0.7%, at 3427.60.
The 30-year Treasury was down 7/32 to 89 15/32, yielding 6.017%. (For more on the fixed-income market, see today's early
Bond Focus.)
Market internals were unconvincingly positive. On the
New York Stock Exchange
, advancers were leading decliners 1,497 to 1,268 on 413.6 million shares. And the ups had the downs 1,846 to 1,767 on 549.5 million shares in
Nasdaq Stock Market
activity. New 52-week highs were outpacing new lows 80 to 39 on the Big Board and 135 to 23 on the Nasdaq.
Friday's Midday Watchlist
By
Aaron Task
Staff Reporter
With all the merger activity (and rumors thereof) today, you just know
CNBC's
writers are going crazy trying to find something to match the "wackiness" of the overused-to-death "Merger Monday." (How about "Fornication Friday"?)
Mergers, acquisitions and joint ventures
Abbott Laboratories was down 13/16, or 1.9%, to 42 1/16 after
last night agreeing to buy
Perclose
(PERC)
in a stock swap valued at $680 million. Perclose was up 10 7/8, or 28%, to 49 7/8.
Meanwhile, Abbott reported second-quarter earnings of 42 cents a share, in line with the
First Call
14-analyst estimate and up from the year-ago 38 cents.
AlliedSignal
(ALD)
was up 1, or 1.5%, to 66 1/8, on news it is acquiring U.K.-based
Johnson Mattley Electronics
for $655 million. Separately, AlliedSignal sold its Laminate Systems business to privately held plastics and chemicals maker
Rutgers
(Go, Scarlet Knights! Rah! Rah!) for about $425 million.
Allstate
(ALL) - Get Allstate Corporation Report
was up a fraction on news it is acquiring
American Heritage Life Investment
(AHL)
for $32.25 a share in stock or cash. American Heritage was rocketing up a very uninsurancelike 4 1/8, or 15.3%, to 31 1/16.
KN Energy
(KNE)
was soaring 5 1/2, or 45.1%, to 17 11/16 on word it is buying
Kinder Morgan
, the lone stockholder and general partner of
Kinder Morgan Energy Partners
(ENP)
, for $506 million in stock. KN Energy will issue about 41.5 million shares in return for all the outstanding shares of Kinder Morgan, whose Energy Partners holding was up 5/16, or 0.8%, to 38 11/16
Sweden's
Volvo
(VOLVY)
was up 1 13/16, or 6.2%, to 30 15/16 after the Swedish newspaper
Dagens Industri
reported the truck maker rejected as too low an unofficial $17 billion takeover bid by
DaimlerChrysler
(DCX)
,
Reuters
reported. Volvo sold its car division to
Ford
(F) - Get Ford Motor Company Report
in January. Daimler Chrysler was up 1.4%, Ford off a fraction.
Earnings/revenue reports and previews
Cerner
(CERN) - Get Cerner Corporation Report
was down 7/8, or 4.5%, to 17 3/8 after forecasting second-quarter earnings of between break-even and 2 cents a share vs. the 20-analyst estimate for profits of a dime per share.
Consolidated Papers
(CDP)
was up 5/8, or 2.3%, to 27 3/4 after posting second-quarter profits of 12 cents a share, down from 26 cents a year ago but a penny ahead of the 11-analyst consensus.
Parametric
(PMTC)
was up 9/16, or 4.3%, to 13 7/8 despite forecasting third-quarter earnings of 13 to 15 cents a share (including charges) vs. the 12-analyst estimate of 18 cents and year-ago earnings of 16 cents.
Picturetel
(PCTL)
was down 5/8, or 8.6%, to 6 11/16 after forecasting a second-quarter loss of between 60 and 62 cents a share vs. the four-analyst estimate of a 46-cent deficit and profits of 3 cents a share last year.
Visio
(VSIO)
was tumbling 9 1/8, or 24.1%, to 28 13/16 after warning its third-quarter earnings will be 29 to 30 cents a share vs. the nine-analyst estimate of 35 cents and year-ago results of 29 cents.
Visual Networks
(VNWK)
was up 6 1/2, or 19.2%, to 40 1/2 after posting second-quarter earnings of 16 cents a share, 2 cents ahead of the eight-analyst estimate. Today,
Goldman Sachs
moved the firm to its recommended list from a market outperform while
BancBoston Robertson Stephens
upped its recommendation to buy from long-term accumulate.
Offerings and stock actions
DuPont was higher by 3 9/16, or 5.2%, to 72 1/16 after the Dow component announced it will exchange one DuPont share for each 2.95 shares of
Conoco
(COC)
DuPont holders still own. The exchange will complete DuPont's spinoff of Conoco, begun last October with the largest-ever IPO in U.S. history. Conoco was down 7/8, or 3.2%, to 26 1/2.
Liquid Audio
(LQID)
was up 23 7/8, or 159%, to 39 on its first day of trading. Lead underwriter
Lehman Brothers
priced 4.2 million shares of the software company at $15 a share, above the expected range of $10 to $12.
Analyst actions
Cymer
(CYMI)
was up 2 3/16, or 8.7%, to 27 5/16 after
ING Barings
initiated coverage with a strong buy recommendation.
Dell
(DELL) - Get Dell Technologies Inc Class C Report
was up 2 1/8, or 5.3%, to 42 1/16 after
Goldman Sachs
made positive comments about the boxmaker, according to
CNBC
.
Echostar Communications
(DISH) - Get DISH Network Corporation Class A Report
was down 7 3/8, or 4.6%, to 151 5/8 after
Morgan Stanley Dean Witter
cut its recommendation to outperform from strong buy.
McDonald's was up 2 3/4, or 6.8%, to 43 3/8 after
Schroder & Co.
upped its recommendation to outperform from perform in line.
Miscellany
Cabletron
(CS) - Get Credit Suisse Group AG Report
was up 15/16, or 7.2%, to 14 after
Business Week's
Inside Wall Street column talked up the firm as a potential takeover target, with a global telecom giant playing the role of acquirer. Gene Marcial's rumor mill also has
24/7 Media
(TFSM)
ripe for
DoubleClick's
(DCLK)
taking. 24/7 was up 3 9/16, or 8.6%, to 44 15/16 while DoubleClick higher by a fraction.
Qualcomm
(QCOM) - Get Qualcomm Inc Report
was rising 5 5/8, or 4%, to 147 7/8 on word it will replace
Transamerica
(TA) - Get TravelCenters of America Inc. Report
in the
S&P 500
on a date yet to be announced. Dutch firm
Aegon
is acquiring Transamerica.
Compass Bancshares
(CBSS)
was up 1 5/16, or 5%, to 27 1/2 after S&P said it will replace Qualcomm in the
S&P MidCap 400 Index
.
Herb on TheStreet: The IDT Plot Advances: Simon Lermer Finally Calls Back
By
Herb Greenberg
Senior Columnist
Finally talked yesterday with Simon Lermer, the sole shareholder in
Lermer Overseas Telecommunications
, which as this column pointed out
Wednesday failed to technically exist in New York
before
it received a $25 million loan from
IDT
(IDTC)
. Also on the call were Michael Partem, an attorney for Lermer Overseas, and Lermer CEO Nissan Crespi.
Partem first wanted to make it clear that contrary to Thursday morning's
article, they
did
return my call. (Indeed he did: At 7:14 p.m. Wednesday night -- after the column was written and after I had left the office.)
Partem also wanted to emphasize that contrary to this column's suggestion, "Lermer overseas does indeed exist." He added (the obvious) that it's a private company and as such has a policy of nondisclosure. He said Lermer Overseas does have a contract with IDT, but that it includes a confidentiality agreement, which means it's not at liberty to disclose the details of its relationship with IDT.
He added that Lermer "is expanding from self-generated income."
What about the $25 million loan? "There is a loan," he said, "and it's being paid off."
What was the loan for? "That's not a matter of public record," Lermer said.
Why did Lermer Overseas allow its incorporation in New York to lapse two years ago by not paying its franchise tax? "The franchise tax situation with the State of New York is an unfortunate oversight," Partem said. "It is being acted on; it is being taken care of." Lermer added: "Taxwise, I leave that to my legal staff, and they didn't do a good job on that. They messed up."
As this column
reported, Partem says Lermer has received an ultimatum from IDT to either reincorporate in New York or have its loan immediately called. "However," he added, "from what I understand, reinstatement is fairly routine matter and will take place automatically when we file and pay our delinquent fees."
One other thing, Partem said: "Nobody from IDT is an officer or executive of Lermer," including Howard Balter, the CEO of IDT's soon-to-be-public
Net2Phone
subsidiary. (Balter -- actually someone named Howard
Bolter
, with an "o" -- was listed as Lermer's president on a recent
Dun & Bradstreet
report.)
How many employees work for Lermer? "That's privileged information," Lermer said.
Does he have an office at IDT, given that his name is included in the company's dial-by-name directory? "No." How about Jonas Publishing, whose phone number is one digit away from IDT's? Lermer didn't answer directly other than to say, "I am a self-employed businessman and I may use their facilities." IDT President James Courter actually told me that Lermer had "a desk" at Jonas.
Go figure.
Outta control
This column's Hostile React-O-Meter has never spun
this
much out of control. (Of course, the posting of my email address by some IDT-iot added to the fury.) Historically, the faster the react-o-meter spins and the greater the attempt at intimidation, the more cultish a company's following and the more something is amiss. Will that be the case this time? Hard to say, but you gotta see what some of these IDT-iots -- most of whom apparently have never read this column -- are saying. A real eye-opener.
Some of my favorites (not to mention the ones
posted on the site Thursday) include this one, from
Harry Kranick
, who writes: "I hope you sleep well tonight, knowing that you have destroyed my children's education fund. I will not forget this!"
From
Avi Gross
: "You certainly picked on the wrong target and made many enemies. I pity you." And from
John Toth
: "I hope the f****n SEC fries your short a**. No articles on IDT for
six months
, then two weeks before the IPO -- this s**t. How come no reputable
news
agency went along with this? How much were you
paid
to do this?"
Al Diesz
adds: "Without a doubt you are a scuzzwad and I now understand why Cramer encourages you to wear that coat of slime when he picks a company to crucify! Water always seeks its own level and now I understand your association with 'yellow journalism.' By the way, I hope you get your 'more attractive' end burned shorting."
But my favorite is from
Sukhu George
, who writes: "You are a SOB and I hope you go to hell for your short interest in a company and trying to bring it down by playing dirty tricks. I will be praying very hard that bad things will happen to you. Bad karma is very bad."
Thanks, I'll remember that. And I'll say it again, for the umpteenth time. I don't hold positions in individual stocks, other than that of
TheStreet.com Inc.
(TSCM)
, publisher of this Web site. Which means derogatory statements to the contrary reek of libel.
Suit yourself.
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.
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Copyright 1999, TheStreet.com
