Publish date:



September 16, 1999

Market Data as of 9/16/99, 1:34 PM ET:

o Dow Jones Industrial Average: 10,694.09 down 107.33, -0.99%

o Nasdaq Composite Index: 2,777.44 down 36.73, -1.31%

o S&P 500: 1,309.14 down 8.83, -0.67%

o TSC Internet: 600.69 down 16.55, -2.68%

o Russell 2000: 430.37 down 5.96, -1.37%

o 30-Year Treasury: 100 17/32 up 9/32, yield 6.072%

In Today's Bulletin:

o Midday Musings: Stocks Get No Satisfaction from Bonds' Early Rise & Close
o Herb on TheStreet: Rumored Bid From Computer Sciences Raises Hackles of Policy Management Investor

"" on the

Fox News Channel


That's right, "" on the

Fox News Channel

is on the move. Check us out at our new times: Saturday at 10 a.m. and 6 p.m. ET and Sunday at 10 a.m. Michael Kagan, director of Salomon Brothers Asset Management and portfolio manager of the Salomon Brothers fund, will join James Cramer and Herb Greenberg for this week's "Stock Drill." Plus, Gary B. Smith and Adam Lashinsky will have at it in "Chartman" and get the "Word on TheStreet" from Cramer, Herb and Dave Kansas.To find the

Fox News Channel

in your area, call your local cable operator or see our TSC on Fox page at (look for the yellow box in the upper right hand corner).

Also on

Wrong! Dispatches from the Front: Strong Bonds, Weak Stocks, Idle Hands

The trader's not going home yet, but he isn't finding a lot to play in this thin market, either.

Market Features: Dollar's Stumbles Have Traders on Watch for U.S.' Helping Hand

But some analysts don't believe the Treasury will intervene despite the bleak technical picture.

Market Features: Resurgent Oil Prices Fuel a Renewed Inflation Debate

So far, other commodity prices remain mostly stable despite oil's sharp rebound this year.

Dear Dagen: Dear Dagen: A Glossary of Fund Management Terms

Momentum, GARP, top-down, quantitative and more defined.

Midday Musings: Stocks Get No Satisfaction from Bonds' Early Rise & Close


Tara Murphy

Staff Reporter

9/16/99 1:36 PM ET

While the bond market decided to closed up shop at 1 p.m. due to inclement weather, the

New York Stock Exchange

chose to be brave, announcing it will buy and sell until its usual 4 p.m. close today. But with major stock proxies all in the red as lunchtime beckoned on Wall Street, those long stocks might be wishing

Richard Grasso

& Co. reconsider and follow the lead of their fixed-income counterparts.

Halfway through the trading session major stock proxies were bleeding, although coming off worst levels of the morning. The decline came despite a buying bent expressed by the early exiting bond traders. Another round of profit warnings from varied companies overshadowed the advancing bonds.


Dow Jones Industrial Average

was falling 106.07, or 1%, to 10,695.35, vs. its early low of 10,626.65. The broader

S&P 500

was off 8.23, or 0.6%, to 1309.74. The small-cap

Russell 2000

was down 6.48, or 1.5%, to 429.85.

The tech-laden

Nasdaq Composite

, was down 36.61, or 1.3%, to 2778.56 after trading as low as 2756.03, with bellwether names down in near unanimity. The

Nasdaq 100

was off 0.9%.



was also putting the Comp in a bind after warning its third- and fourth-quarter earnings would be lower than expected. Quintiles was plummeting 17 1/16, or 49%, to 17 3/4. Internet Sector

index was down 15.47, or 2.5%, to 601.77.

"Tech is taking a pretty good hit today, said Bob Basel, director of listed trading at

Salomon Smith Barney

. "The market is better for sale right now."

Federal Express



(FDX) - Get FedEx Corporation Report

was sinking the

Dow Jones Transportation Index

. Disappointing first-quarter earnings -- blamed on high fuel costs -- pushed the shares of FDX down 5 7/8, or 13.5%, to 37. The transports, already mired in a steep correction now approaching official bear market territory, were down 90.62, or 2.9%, to 2996.98. A close at this level would leave the index 20.8% below its all-time high of 3783.50, set May 12.


(XRX) - Get Xerox Holdings Corporation (XRX) Report

was selling up a storm, off 4 13/16, or 10%, to 42 3/16, after CFO Barry Romeril said at an

SG Cowen

technology conference that poor exchange rates in Brazil and Europe could dent its revenue growth.

On the Big Board, losers were flying past winners 2,102 to 744 while 475.5 million shares had been exchanged. On the

Nasdaq Stock Market

, laggards were beating gainers 2,430 to 1,138 on 616.8 million shares. New 52-week lows were topping new highs 167 to 11 on the Big Board and by 89 to 33 on the Nasdaq.

On a brighter note, the price of the benchmark 30-year Treasury closed up 12/32 to 100 22/32, its yield falling to 6.07%. The dollar was bouncing back vs. the yen amid reports in

Nihon Keizai Shimbun

Japan will ask U.S. and European monetary authorities to jointly intervene to curb the yen's recent steep rise. The dollar was lately quoted up 0.87 to 105.05 yen.

U.S. Industrial Production

rose 0.3% in August, down from 0.7% in July but above expectations for an unchanged reading. The results indicate a "firm industrial sector," according to Andrew Groat, economist at

Merrill Lynch

. However,

capacity utilization

at 79.8% below expectations of 80.5%. Capacity utilization is "sustaining at a remarkably low rate, Groat said. "Basically, corporate America has no pricing power."

Groat didn't think the

U.S. Initial Jobless Claims

report was damp, commenting that the 4,000 decline, "continues to indicate a healthy and robust labor market," but cautioned that, "it is the primary constraint in the economy as well as the primary concern for the Fed."

In other economic news, the

Labor Department

reported that 288,000 Americans filed first-time claims for unemployment benefits, for the week ended Sept. 11, down by 4,000 from the week before. Economists generally consider claim levels below 300,000 as an indication of an extremely tight labor market. (For more, see today's

Bond Focus .)

Thursday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

The weather wasn't the only thing causing a foul mood on Wall Street today. Companies with negative earnings news were taking a blow. FDX was transported south via the express lane, down 5 7/8, or 13.5%, to 37 13/16, after it delivered negative earnings and outlook news. The company reported first-quarter results of 52 cents a share, 2 cents shy of the 11-analyst estimate of 54 cents, and above the year-ago 50 cents, hurt by higher fuel costs and lower-than-expected growth in domestic packages. The company warned that second-quarter and full-year results could fall below analyst expectations, and said fuel costs could hurt its 2000 operating income by as much as $150 million. FDX said it would institute cost-cutting measures to deal with lower growth rates and bolster productivity.

Coinstar also lost a lot of cash, down 10 13/16, or 49.3%, to 11 3/16, after

Donaldson Lufkin & Jenrette

cut its recommendation to market perform from buy. Yesterday, Coinstar said it expects third-quarter earnings to fall below estimates.

Mergers, acquisitions and joint ventures


(T) - Get AT&T Inc. Report

inched up 3/8 to 44 13/16 and

British Telecom


added 3 5/8 to 151 3/8 after the companies said they plan to form an alliance of their mobile phone operations. The alliance, called


, will have annual sales of $12 billion, but will not be formed as a separate company.

Freedom Securities

(FSI) - Get Flexible Solutions International Inc Report

added 1/4 to 14 1/16 after it agreed to buy small stock dealer

Hill, Thompson, Magid

for $45 million in cash and stock. Freedom said the acquisition of the dealer in 8,000 small stocks will enable it to participate in the growth of small-cap trading.

General Electric

(GE) - Get General Electric Company (GE) Report

lost 7/16 to 115 9/16 after its subsidiary


said it would invest $415 million in

Paxson Communications


for a 32% stake, in an effort to extend its reach to U.S. households. Paxson slid 1 1/4, or 8.3%, to 13 13/16.


(PLAB) - Get Photronics, Inc. Report

was unchanged at 24 3/16 after saying it would buy

Align-Rite International


TheStreet Recommends

for about $115 million in stock. Align-Rite moved up 4 1/2, or 30.8%, to 19 1/8.

Visual Networks


slipped 7/8 to 38 1/2 after it agreed to buy closely held

Inverse Network Technology

in a stock deal worth about $177 million.

Earnings/revenue reports and previews

American Greetings

(AM) - Get Antero Midstream Corp. Report

added 5/16 to 25 15/16 despite posting a second-quarter loss of 39 cents including charges. The year-ago earning per share figure was 20 cents. The three-analyst estimate called for break-even results. No per share figures from operating income were provided in the most recent quarter.



shed 4 1/16, or 13.1%, to 27 1/16, despite reporting first-quarter earnings of 35 cents a share, in line with the 21-analyst estimate and up from 30 cents a year ago.


(CCL) - Get Carnival Corporation Report

lost 3/4 to 40 1/16, even though it posted third-quarter earnings of 67 cents a share, better than the 23-analyst estimate of 64 cents a share, an up from 58 cents a year ago.

Circuit City

(CC) - Get Chemours Co. Report

slipped 1/8 to 37 7/16 after posting second-quarter earnings of 36 cents a share from continuing operations, in line with the 14-analyst estimate, and up from 22 cents a year ago.

Eastmen Chemical

(EMN) - Get Eastman Chemical Company Report

fell 2 7/16, or 5.3%, to 43 7/8 after warning its third-quarter earnings would fall below the estimated 68 cents a share because of higher oil and natural gas costs, which hurt its bottom line.



climbed 1/2, or 5.4%, to 9 13/16, after reporting fourth-quarter earnings of 6 cents a share, a penny better than the three-analyst estimate of 5 cents, but lower than 24 cents a year ago.


(KOPN) - Get Kopin Corporation Report

lost 1 13/16, or 5.7%, to 30 3/8, after saying it expects a third-quarter loss of 3 cents to 5 cents a share, compared with the four-analyst earnings per share estimate of 3 cents.


(PAYX) - Get Paychex, Inc. Report

climbed 1 1/16 to 31 1/4 after posting first-quarter earnings of 17 cents a share, a penny better than the nine-analyst estimate, and up from a year ago 13 cents.

PMI Group


slipped 1/4 to 39 15/16 despite saying it expects third-quarter and full-year earnings to top expectations as a result of strong volume in new insurance writing.


upgraded the stock to buy from attractive.



lost 5/8 to 33 3/8 after reporting first-quarter earnings of 20 cents a share before charges, ahead of the seven-analyst estimate of 17 cents and up from a year-ago loss of 9 cents.


American Home Products


rose 1 3/8 to 44 3/8 after

The Wall Street Journal

reported it may be near a $3 billion settlement to resolve injury claims by users of its diet drugs. The paper said an announcement on a deal could happen within days, but added that terms were sketchy, and the deal could still fall apart. Paine Webber raised the stock to attractive from neutral.

Daimler Chrysler


lost 1 3/8 to 70 11/16 after it reached a tentative agreement on a new contract with the

United Auto Workers

, which covers more than 70,000 workers. Meanwhile talks continued at a slower pace at

General Motors

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

, lately down 7/16 to 63 3/8 and

Ford Motor

(F) - Get Ford Motor Company Report

, down 9/16 to 49 3/16, where the UAW has indefinitely extended contracts.

Herb on TheStreet: Rumored Bid From Computer Sciences Raises Hackles of Policy Management Investor


Herb Greenberg

Senior Columnist

9/16/99 6:30 AM ET

Thursday thwack:



Policy Management Systems


, a provider of information technology software and consulting to the insurance industry, receive an unsolicited takeover in recent weeks from

Computer Sciences


? And was it rejected as inadequate? That's what I hear from a large Policy Management investor who is also one of this column's longtime, straight-shooting sources and who didn't get his info directly from the company.

Officials from both companies declined comment, citing policies not to comment on rumor, but this much is clear: The investor, whose own holdings are just shy of Policy Management CEO Larry Wilson's 3.7% stake, isn't happy. "This company is worth a lot of money," he says. "It's a principal supplier to an industry that has to spend a fortune on IT."

Fine, but maybe a bid, if one really was received, was genuinely inadequate. Computer Sciences, however, isn't known for being cheap; several years ago, it paid roughly a 30% premium to buy



Closed case on Open Text:

An item

here a mere month ago suggested that the quality of

Open Text's

(OTEX) - Get Open Text Corporation Report

earnings last quarter were lousy. The only reason it beat analyst estimates was that it had a lower tax rate and higher-than-expected interest income -- both of which have nothing to do with operations. Now the company itself is guiding analysts to lower estimates by a few pennies this quarter and next. The company's news release said its recent acquisitions won't help earnings as soon as expected.

Another dollop of DSL:

Did I hit a sore nerve, or what?

Yesterday's item on my unsuccessful efforts at getting DSL connected to my New Jersey home produced an avalanche of email, most of it sympathetic, from readers everywhere who have had a similar experience. We're talking readers who


to pay extra for the speed, but can't because the Bells can't deliver on their promises. We're talking readers like

Jeffery Kelly

, who says, "I received a mailer from them touting DSL and having an extra line for the Net. As usual when I called, no DSL is available at my home. When might it be available ... response, and I quote, "who knows?"

We're talking readers like

Kris Kelley

, who writes: "

Bell Atlantic


mailed me a promotional piece that provided a phone number to call to get the service hooked up at my upper East Side apartment. Was thinking of going with the premium $80 a month service which is their most expensive and probably highest margin offering. Dialed the number several times trying to order the service but the touch-tone phone instructions failed every time and disconnected me. Oh well, maybe I can get a cable modem hooked up in the next year. I think the cable service is at least on a par with my RBOC. Pathetic."

We're talking readers like

Thomas Chamberlain

, who lives in Gurnee, Ill., about 30 miles north of Chicago. "I have been hearing advertisements for cable and DSL for months. I have called all of the numbers and in most cases I do not even get a call back. When I do get a call the representative usually tells me he does not know if I can get the service and will call be back -- they never do."

We're all sick of the lies, damned lies, because this great technology will only work if you live less than 12,500 feet as the wire winds from the central switching station.

Oh, and so much for my plan to move back to tech-savvy Northern California as a solution.

Jim O'Brien

lives in beautiful Saratoga, deep in the heart of Silicon Valley. Not only does he live too far from the central switching office, but his


(T) - Get AT&T Inc. Report

cable doesn't support


(ATHM) - Get Autohome, Inc. Sponsored ADR Class A Report

service in his neighborhood.

One solution, of course, is to avoid the Bells and let the free market fill the void. (Such an opportunity!) Reader

Sean White

, unable to connect with his baby Bell, is getting his DSL in the next 2 weeks from



And one of the perks of my job: I heard from an exec of

NorthPoint Communications


, which leases switches from Bell Atlantic. He says I'm just 10,200 feet from the central switch; he'll check in to see what the problem is. If there's no problem, I say we have a deal. (Unless it's ridiculously expensive.) I'll let you know what happens.

Get in on the DSL discussion on our

Message Boards. Meanwhile, care to join the DSL discussion? Rather than email me, carry on your conversation on


new message boards. Unlike most message boards,


are monitored to filter out the libel, slander, death threats and other nonsense that is helping make a mockery of the First Amendment. Step this way ...

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.

Mark Martinez assisted with the reporting of this column.

Copyright 1999,