TheStreet.com's MIDDAY UPDATE
August 16, 1999
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Market Data as of 8/16/99, 1:28 PM ET:
o Dow Jones Industrial Average: 10,974.92 up 1.27, 0.01%
o Nasdaq Composite Index: 2,634.92 down 2.89, -0.11%
o S&P 500: 1,325.71 down 1.97, -0.15%
o TSC Internet: 536.16 up 7.75, 1.47%
o Russell 2000: 432.86 down 1.19, -0.27%
o 30-Year Treasury: 10 016/32 up 5/32, yield 6.093%
In Today's Bulletin:
o Midday Musings: Wall Streeters Satisfied With Meandering Session
o SiliconStreet.com: *Extra* Sitting Pretty, and Comfortably, on a Cash Cushion
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Midday Musings: Wall Streeters Satisfied With Meandering Session
8/16/99 1:14 PM ET
Stocks were holding up fairly well at midday against a
crunch of economic data.
Producer Price Index
behind it and tomorrow's
Consumer Price Index
ahead, the major proxies were all hanging close to break-even at midday. The
Nasdaq Composite Index
which had been leading to the upside, was off 2 to 2636 after a recent stumble.
Dow Jones Industrial Average
was up 7 to 10,981, led by
, which was up 4.3%. Indefatigable
was also driving the Dow, lately up 3.3%.
was off 1 to 1327, while
TheStreet.com Internet Sector
index remained up 9 to 537. The small-cap
was off 1 to 433.
No one was complaining. "It's a real quiet day," said Phil Marber, head trader at
. "Actually, it's a really good day, considering the move on Friday. The market's not giving up much" of those gains.
"We're seeing a little bit of a continuation of Friday's enthusiasm," said Peter Cardillo, chief strategist at
. "But I think we'll see some profit taking later in the session, and basically end up with a flat day."
The market's gotten a bit carried away with its concerns that incipient signs of inflation will force the
to raise rates again after its Aug. 24 meeting, Cardillo continued. "We just need confirmation of that before the bull run starts all over again."
Cardillo sees the market reacting favorably to an in-line figure tomorrow, though not necessarily with the vigor of Friday's rally. Economists are expecting a 0.2% increase in consumption costs vs. the previous month's unchanged reading.
Not everyone was focused on the CPI. To Marber, the data have already been prefigured by last week's softer-than-expected PPI. "What, the CPI's going to come out and be terrible? It's not a big deal."
Others were less interested in tomorrow's data itself than the bond market's reactions to it. "It's not the CPI but the bond market that matters," said Rao Chalasani, chief investment strategist at
in Chicago. "If bonds go to 6%, the market will rally."
The 30-year Treasury still has a bit to go in that direction. It was lately up 8/32 to 100 19/32, its yield falling to 6.08%. (For more on the fixed-income market, see today's early
Volume was moderate, with 336 million shares traded on the
New York Stock Exchange
while 462 million shares changed hands on the
Nasdaq Stock Market
Breadth was not inspiring. Decliners were beating advancers 1,612 to 1,182 on the NYSE, where there were 35 new 52-week highs against 79 new lows. In Nasdaq action, decliners were beating advancers 1,902 to 1,649, with 83 new highs and 40 new lows.
Monday's Midday Watchlist
was up 11/16 to 24 1/4 despite saying the
Securities and Exchange Commission
New York Stock Exchange
plan to examine insiders selling stock prior to its July 6 profit warning. According to a 10-Q filing, the SEC will "formally investigate" the company's financial statements and accounting policies and will conduct an "informal inquiry" into insider trading activity.
The market apparently likes Waste Management's announcement today that Rodney Proto, COO and president, has stepped aside, and John Drury, chairman and CEO, who is undergoing medical treatment, is also being replaced. Drury will remain on the board. Waste Management's board elected Ralph V. Whitworth chairman and Robert S. Miller president and CEO earlier this month.
The company also announced a new strategic plan, which includes disposing of "nonstrategic and underperforming assets." Also, Waste Management anticipates earnings, as adjusted, to be in the range of 90 cents to $1 a share for the six-month period ending Dec. 31. The
estimate calls for earnings of $1.14 for the period.
Mergers, acquisitions and joint ventures
was off 3/16 to 66 5/16 after it announced plans to launch a cash tender offer this week for
at a price of $65 a share. Reynolds Metals' board unanimously decided in a special meeting yesterday that Alcoa's more than $4 billion offer to buy Reynolds was "inadequate for our shareholders." The board also said -- with the assistance of its financial adviser
-- that the company "should explore all alternatives to maximize shareholder value," including selling the company. Shares of Reynolds were off 1/2 to 68 7/8.
was up 1/2 to 64 after it said is buying
, a privately held U.K.-based Internet technology group, for $55 million in stock.
E-commerce and communications provider
was up 19% to 3 on news that it forged a deal with
to sell its
. The company expects the computer to hit shelves in Minneapolis, Tampa, Fla., and Indianapolis by its fourth quarter this year.
was up 1/2 to 22 3/8 after it announced plans to acquire
for $8.50 a share in cash. The deal has been approved by Players' board, and Players has given notice to terminate its existing merger agreement with
. Players stock was up 1 7/16, or 22.1%, to 7, while shares of Jackpot were up 3/4, or 10%, to 8 1/4.
Nielsen Media Research
was soaring 4 3/8, or 13.3%, to 37 3/16 after
, a Dutch publisher, said it was buying the company for $37.75 a share in cash.
was up 1/4 to 9 15/16 after it confirmed that it was still in ongoing talks for a possible "significant transaction" with another company.
, a Swedish temporary employment company, was rumored to be courting Olsten as a possible take over target. Adecco told
that a takeover is planned, but would not confirm if it involved Olsten. ADRs of Adecco were at 70 7/8.
, was up 1/4 to 14 3/8 on news that it will sell off publisher
Supplemental Education Group
Ripplewood Holdings LLC
for $415 million. Profits from the sale will be used to reduce the company's debt. A Primedia spokesperson told Reuters that its long-term and other debt level was roughly $2.1 billion. The magazine publisher, which has
under its label, said its setting its sights for the future on the Internet and television.
Earnings/revenue reports and previews
was up 1 7/8 to 59 7/8 after it reported a second-quarter loss of 81 cents a share, narrower than both the two-analyst estimate of $1.24 and the year-ago $1.56.
Offerings and stock actions
Hewlett-Packard was jumping 4 1/4 to 110 1/4 after its
spinoff filed for a $100 million IPO.
was up 9/16 to 35 1/2 after
upgraded the stock to buy from hold.
was off 1 7/16, or 9.4%, to 13 7/8 after
started coverage with an initial market outperform rating.
was up 11/16 to 33 7/8 after Goldman Sachs initiated coverage at market outperform.
popped up 2 5/16 to 85 after lead underwriter
Credit Suisse First Boston
initiated coverage with a buy rating and set a price objective of 85 to 95.
was off 3 1/4 to 163 3/4 after
Morgan Stanley Dean Witter
initiated coverage of with a neutral rating, while Goldman Sachs stamped the stock as a market outperform.
was up 1 1/2 to 37 1/8 after CSFB, the IPO's lead underwriter, initiated coverage of the stock with a buy rating.
was up 1 7/16 to 29 11/16 on news that Warburg Dillon Read raised the stock's rating from to buy from hold.
American Home Products
was up 1/4 to 41 1/16 after it got the stamp of approval from U.S drug regulators for its short-term insomnia drug, Sonata. The treatment will compete with
joint venture drug,
was up 1/8 to 49 3/8 after a federal court said the telecommunication services provider could use catchphrases like "you have mail" and "IM," which were coined by
. The Internet services company attempted to etch out competition by filing suit against AT&T last December.
was down 11/16 to 76 13/16 after announcing a recall on 1.4 million 1991-1993 model minivans. The company says the vans could have windshield wiper problems.
was off 1/16 to 38 3/16 on news that it set a streamlining plan and will take a one-time pretax restructuring charge of $85 million, or 33 cents a share, in the third quarter. The company plans to cut 1,400 jobs, about 15% of the bank's workforce, over the next 18 months.
was up 1 1/8, or 12.6%, to 10 after its board elected Dale W. Hilpert president and CEO, effective today. Hilpert was Venator's president and COO, a post the company said it has no present plans to fill. Venator also said it is getting out of eight noncore specialty businesses that operate nearly 500 stores altogether.
SiliconStreet.com: *Extra* Sitting Pretty, and Comfortably, on a Cash Cushion
Silicon Valley Columnist
8/16/99 10:22 AM ET
One of the best moments in this past weekend's "TheStreet.com" television
Fox News Channel
James J. Cramer
softballed fund manager
(which Olstein likes) and
(which Olstein doesn't). Cramer -- in his now-to-be-expected
review of the show -- paraphrased Olstein as saying, "One has oodles of cash, the other burns it (you figure which is which)."
Actually, it ain't exactly so.
According to easy-to-access figures at
, Amazon most recently reported having $1.4 billion in cash, or $8.94 per share, an amount equal to 9% of its market capitalization. Real-world retailer Federated has about $239 million in cash, or $1.14 per share, 2% of its market value.
What Olstein meant, of course, is that Federated
cash, while Amazon
it. As Cramer undoubtedly would remind investors, a good cash cushion may make for a good company even if it doesn't make for a great stock.
Healtheon vs. Mede America, Part 2
made up a tiny portion of its gap Friday after
this column pointed out that billing processor Mede is trading below the "collar" at which Healtheon must renegotiate its purchase price or risk cratering the deal. Healtheon's shares were up 1.5% to 34 5/8 (still below the 38 11/16 floor in the Mede America deal), while Mede's shares rose 2.5% to 20 5/8 (below the corresponding floor of 25 1/2).
, a corporate lawyer from Mamaroneck, N.Y., wrote in with an important reality check for investors persuaded that investing in Mede now is an easy bet on Healtheon.
"I think you may have overlooked one scenario," Grehan wrote. "Healtheon does not have to renegotiate to get the better deal. If Healtheon does not 'top up,' Mede's board is faced with a very difficult decision -- close below the collar or call off the deal and risk having its stock fall some more. This happened with the
deal. Because of adverse developments in
for paired-share real estate investment trusts, Meditrust's stock fell below the collar and the company refused to top up. LaQuinta, however, didn't call off the deal, fearing an even lower value on its stock if the merger were called off. Just some food for thought as to why that $2 may not be akin to shooting fish in a barrel."
Good food. And in one additional comment, a different reader wants to know my long-term thoughts about Healtheon? "Say five years out..." Five years? Beats me.
But here's a question back atcha. Ask your doctor if he or she uses any form of electronic record-keeping, referral-processing or supplies-ordering now. Then ask the doc if they'd like to, especially if it could lower their costs without involving an HMO.
Then you be the judge.
Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a column for Fortune called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at
And the winner is.... Investment Challenge on TheStreet.com ends August 20th! Who will be in New York with Jim Cramer for the opening bell?
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