TheStreet.com's MIDDAY UPDATE
October 13, 1999
Market Data as of 10/13/99, 1:07 PM ET:
o Dow Jones Industrial Average: 10,313.52 down 103.54, -0.99%
o Nasdaq Composite Index: 2,828.52 down 43.91, -1.53%
o S&P 500: 1,295.40 down 17.64, -1.34%
o TSC Internet: 706.81 down 17.37, -2.40%
o Russell 2000: 420.48 down 4.20, -0.99%
o 30-Year Treasury: 97 30/32 down 20/32, yield 6.271%
In Today's Bulletin:
o Midday Musings: Stocks Retreat as Bond Yields Swell to Highs
o Herb on TheStreet: Mystery Theater: Who Said What to Whom Regarding Ancor?
Four Weddings, No Funerals. Mystery Theater. These aren't listings for your local movie theater, they're topics for today's boards. Help Herb get to the bottom of the Ancor rancor and join Jim Seymour for some high-tech nuptials. Plus, Cramer on Intel and much more.
Herb Greenberg: Mystery Theater: Who Said What to Whom Regarding Ancor?
Jim Seymour: Four Weddings, No Funerals
Gary B. Smith: Profiting From Your Profit-Per-Day Calculation
The Market According to Cramer
TheStreet.com on the Fox News Channel
We put ourselves to the test this week on "Stock Drill" as Jeff Bronchick of Reed Conner & Birdwell -- and a TSC contributing editor -- goes over his favorite stock picks with Jim Cramer and Herb Greenberg.
Big market drops, big market gains. The market's been manic for months, but stocks aren't really moving that much. Does that mean your investments should tread water? We'll hear what our "Word on TheStreet" panel has to offer.
Plus, we'll preview our upcoming "Cracking the Books" series. Alex Berenson introduces us to the world of earnings, and why things aren't always as good as they seem.
"TheStreet.com" on the Fox News Channel airs Saturdays at 10 a.m. and 6 p.m. EDT and Sundays at 10 a.m. EDT.
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Also on TheStreet.com:
Wrong! Dispatches from the Front: Putting Out the Fires
Heck, it's darn hot in here. But for Cramer, playing part-time fireman is kind of business as usual.
Tech Savvy: Four Weddings, No Funerals
A few high-tech deals shouldn't be overlooked in the crowd of the past few days.
Energy: Update: Rowan's Upside Surprise Can't Lift the Gloom in the Oil Patch
A jump in oil prices boosts oil-service firms, though a worldwide turnaround is far from assured.
Dear Dagen: Dear Dagen: Readers Debate Best and Worst Fund Trends
Also, end-of-year predictions and index funds vs. Spiders.
Midday Musings: Stocks Retreat as Bond Yields Swell to Highs
10/13/99 1:15 PM ET
Like fans of the
New York Mets
after last night's game against the
, investors wanted to look past negative news like weak earnings reports and believe in more positive factors, like a stronger dollar vs. the yen.
But pessimism and interest-rate jitters were winning out in morning trading, as major proxies picked up where they left off yesterday and continued to slide. (Of course, unlike today's market, the Mets
have a comeback.)
Dow Jones Industrial Average
was down 108, or 1%, to 10,309, while the broader
was off 18, or 1.4%, to 1295.
disappointing earnings news announced
last night was putting pressure on the technology stocks and the
Nasdaq Composite Index
which was lately down 44, or 1.6%, to 2828. Intel was off 5.2%.
But some didn't see the fallout from the earnings report as all that harsh. Semiconductors "are still showing some signs of life," said Bryan Piskorowski, market analyst for
. One progression in recent years, he said, is recognition of the segmentation of bellwethers like Intel and other companies, so there is not a "sweeping downside" based on a single negative earnings report. The
Philadelphia Stock Exchange Semiconductor Index
was down 1.2%.
Others thought the reaction to the news was too muted. "Most companies that missed earnings would have gotten really hurt. But Intel is the darling of the street and is treated with kid gloves," said Larry Rice, chief investment strategist at
. Rice saw it as emblematic of a larger problem of heavyweight technology stocks accounting for too big a percentage of the Nasdaq's strength in recent months.
Abercrombie & Fitch
were, like, sooo out of style after the company reported a slump in its October sales. Never mind that third-quarter same-store sales climbed 12%, or that the company said it is still on track to meet its earnings estimates. "We want the bad news!" shouted investors, who stripped the stock down 19.2%.
Oil sector stocks were enjoying a pop with the
Philadelphia Stock Exchange Oil Service Index
up 2.6%, and the
American Stock Exchange Oil & Gas Index
up 1.6% amid signs that
production discipline is taking effect.
Investors can expect more choppy trading and volatility as earnings releases with economic indicators later this week. September
figures are scheduled to be released tomorrow, and Friday brings the September
Producer Price Index
. "The Fed is scrutinizing every number and so are we," said Piskorowski of Prudential.
"This is a market which is sailing against the headwinds of rising rates," said Thomas Madden, chief investment officer for U.S. equities and high yield at
. Indeed, the benchmark 30-year Treasury was down 20/32 to 97 30/32, its yield rising to a recent high of 6.28%.
On the much-ignored positive side, the dollar was up at 106.62 yen after the
Bank of Japan
said it would leave short-term interest rates unchanged but start buying short-term government debt in the open market to increase liquidity in the banking system.
New York Stock Exchange
decliners were trouncing advancers 1,929 to 937 on 467 million shares. On the
Nasdaq Stock Market
laggards were beating leaders 2,285 to 1,235 on 566 million shares. New 52-week lows were leading new highs 217 to 11 on the Big Board while new lows were topping new highs 94 to 37 on the Nasdaq.
In sympathy with its tech brethren,
TheStreet.com Internet Sector
index was down 18, or 2.6%, to 706. The small-cap
was off 4, or 1%, to 420.
Wednesday's Midday Watchlist
Intel after yesterday's close posted third-quarter earnings of 55 cents a share, shy of the 23-analyst consensus estimate of 57 cents, but above the year-ago 45 cents a share.
wrote about Intel's earnings in a story
Credit Suisse First Boston
cut its per-share earnings forecast for 1999 on the chip giant to $2.23 from $2.31 and its 2000 forecast to $2.55 from $2.66, while, Meanwhile,
sliced its Intel to neutral from buy. Intel was falling 4, or 5.2%, to 72 11/16.
, which was unchanged at 36 7/16, confirmed it's buying
, which was climbing 1/8 to 21 3/8, for about $3.3 billion in cash and stock. Con Ed said it would pay $25 a share for Northeast. Northeast closed yesterday at 21 1/4.
Mergers, acquisitions and joint ventures
, a TV-station operator, is exploring the sale of part or all of the company with companies including
The Wall Street Journal
reported, citing people familiar with the talks. Shares of Chris-Craft were jumping 8, or 13.6%, to 66 1/2.
was unchanged at 98 1/4 after it said it was joining with
to develop pen-based wireless handheld computers. Shares of 3Com were bouncing 1 7/16 to 30 1/2.
Earnings/revenue reports and previews
Abercrombie & Fitch was plummeting 6 1/4, or 19.2%, to 26 1/4 after it that it suffered a decline in October sales, but it is still confident that it will post earnings in line with analysts' estimates. The company said in a statement that "strong back-to-school increases have been reduced somewhat by less favorable results from the company's regular October sales event." The 23-analyst estimate forecasts Abercrombie to report third-quarter earnings of 31 cents a share.
was sinking 4 1/4, or 10.5%, to 36 after it reported first-quarter earnings of $1 a share, 15 cents shy of the five-analyst estimate.
was advancing 1 3/8 to 50 3/8 after it reported third-quarter earnings of 64 cents a share, above the 15-analyst estimate of 61 cents and up from the year-ago 56 cents.
was up 3/8 to 16 1/2 after it reported third-quarter earnings of 24 cents a share, beating the 12-analyst estimate by a penny, and up from the year-ago pro forma 38-cent loss.
was slipping 1/4 to 35 7/16 after it reported third-quarter earnings of 55 cents a share, in line with the two-analyst estimate, but below the year-ago 61 cents. The company said the latest quarter included a pretax charge of $3.9 million, or 8 cents a share, for a refund related to a supply contract with the
Department of Veterans Affairs
was adding 3/4 to 30 3/4 after it posted first-quarter earnings of 45 cents a share, better than the 12-analyst estimate of 43 cents and up from 38 cents a year ago.
was gaining 1 1/8 to 44 3/4 after it reported third-quarter earnings of 49 cents a share, a penny shy of the 12-analyst estimate and down from a year-ago 57 cents.
was declining 3/4 to 64 1/2 after it reported a third-quarter loss of 13 cents a share, better than the 14-analyst estimate of a 16-cent loss, but down from the year-ago 11-cent profit.
Investment Technology Group
was jumping 5/8 to 19 1/2 after it reported third-quarter earnings of 34 cents a share, a penny below the four-analyst estimate and down from 45 cents a year ago.
was hopping 3/16 to 25 5/16 after it posted third-quarter earnings of 19 cents a share, compared with a revised 10-analyst estimate of 18 cents, following the company's earnings warning. Pro-forma year-ago earnings were 13 cents a share.
was falling 2 1/8 to 92 13/16 after it reported, after the close, third-quarter earnings of 53 cents a share, in line with the 27-analyst estimate and up from the year-ago 7 cents a share.
Separately, Motorola and
announced plans to launch a wireless instant messenger. Shares of AOL were climbing 13/16 to 114 5/8.
was mounting 3/16 to 17 1/8 after it posted third-quarter earnings of 34 cents a share, beating the five-analyst estimate of 32 cents and the year-ago 29 cents.
was skidding 1 11/16, or 10.1%, to 14 7/8 after it reported third-quarter earnings of 1 cent a share, above the 24-analyst consensus of breakeven results, but down from a year-ago 38 cents. The company said third-quarter net fell on a $16 million contract dispute.
Separately, Rowan said it set plans for a 10 million-share offering, which will be managed by
was declining 5/16 to 63 after it posted third-quarter basic income of 8 cents a share, above the 13-analyst estimate of 4 cents a share, and up from the year-ago loss of 3 cents a share.
Valley National Bancorp
was retreating 5/16 to 25 9/16 after it reported third-quarter earnings of 45 cents a share, a penny better than the 8-analyst estimate and up from the year-ago 42 cents.
Offerings and stock actions
has ditched plans for a possible spinoff and IPO of
, its online brokerage unit, the
reported. Fleet Boston was stumbling 1 1/16 to 37 3/16.
Bob Evans Farms
was falling 3 7/8, or 19.6%, to 15 7/8 after DLJ cut the shares' rating to a market perform from a buy and set a price target of 22. Yesterday, the company warned investors that it sees second-quarter results below analysts' estimate of 42 cents a share.
was mounting 1 1/8 to 23 15/16 after
upped its rating to near-term buy from accumulate.
was plummeting 5 5/16, or 7.9%, to 61 3/4 after
upgraded its shares to accumulate from neutral, saying "the company has taken significant steps to address the shortage issue it faced last quarter." Yesterday,
reported on the company's
was sliding 4 15/16, or 8.5%, to 52 3/4 after SG Cowen downgraded the shares to neutral from buy.
was declining 1 7/16 to 33 9/16 even after
Warburg Dillon Read
raised its fourth-quarter earnings estimate to 83 cents a share from 62 cents, while raising
fiscal 1999 estimates to $5.60 a share from $5.50. The firm also upped its fiscal 1999 estimate on
Donaldson Lufkin & Jenrette
, to $3.65 a share from $3.50. Shares of Merrill Lynch were retreating 1/2 to 66 1/2, while DLJ was sinking 2 1/2, or 5%, to 40 5/16.
In other PaineWebber news, the Heard on the Street column in the
reports that as part of a criminal inquiry into pension fund investments made by the former Connecticut state treasurer, Paul Silvester, federal prosecutors are looking into PaineWebber's activities in the state. The paper cited people familiar with the matter.
was tumbling 15/16 to 23 5/16 after Lehman Brothers cut its fiscal 1999 estimate to $2.70 a share from $3.50, while Donaldson Lufkin & Jenrette sliced its rating to market perform from buy.
was advancing 2 15/16 to 57 3/16 after Merrill Lynch rolled out coverage of the stock at near-term accumulate and long-term buy.
was climbing 3 1/8, or 15.6%, to 23 1/8 after Goldman Sachs upped its rating to trading buy from market outperformer.
was adding 3/4 to 16 3/8 after it said it hired Prudential Securities to weigh strategic options for the company.
Herb on TheStreet: Mystery Theater: Who Said What to Whom Regarding Ancor?
10/13/99 6:30 AM ET
Ancor's away (again):
here two months ago, regarding the relationship between
, questioned the staying power of a deal between Ancor and Sun.
Ancor makes fibre-channel switches, and the deal calls for Sun to buy and distribute Ancor's switch. Sales to Sun were expected to ramp up in the fourth quarter.
Herb on TheStreet:
Join the discussion on
But the tangled saga may have taken yet another twist: After a presentation last week to the brokers at
U.S. Bancorp Piper Jaffray
, Ancor President Cal Nelson was talking to several Piper brokers. During that conversation, he was overheard to suggest that the fourth quarter may not be as robust as he had hoped because of "Sun's concentration on the impact of Y2K for its clients." Sun, mind you, has never mentioned the impact Y2K might have on the spending habits of its customers and, as recently as two weeks ago, Ancor officials refused to give any earnings guidance at the
Banc of America Securities Conference
So, what does Sun say? Not much. A spokeswoman would only tell my associate, Mark Martinez, that "there is no change in our relationship with Ancor." Nelson, meanwhile, acknowledged to Mark that he did have a discussion (not with the entire room) after the Q-and-A session and it did concern issues about Y2K and the impact it was having on the fibre-channel industry. But he adds that it was crazy around there, and someone could have easily overheard what he was talking about and misinterpreted his comments. And his comments, he says, were about the fibre-channel biz in general, not about Ancor or its biz with Sun. "If it weren't for Y2K," he told Mark, "the fibre-channel business would be exploding even faster" than it already is.
So Ancor feels good about the rollout to Sun? Ancor's product rollout to Sun is on track? "Yes. We feel comfortable with fourth-quarter numbers."
Better be right. Otherwise, for the company, this could be a credibility breaker.
Was scanning back through recent press releases from
(not a company I watch daily) and came across last week's release that focused on the company's decision to delay filing its 10-Q beyond the day of its hearing before the Nasdaq to keep its stock from being delisted. The best part of the release, however, was the second sentence, which read, "The board of directors is also considering other accounting issues raised by the company's chief financial officer."
Other accounting issues raised by the company's chief financial officer?! You
kind of a disclosure. Sabratek didn't offer any details, but let's just say that it doesn't take an MBA to realize it's not generally good news if it's the CFO who's blowing the whistle.
Will someone please shut Robert Earl up!
Earl is the CEO of
, and he's still up to his old tricks. The latest came late Monday night, after everybody had gone home and the newspapers had gone to bed, when the company announced in a statement that it will close nine stores and that, after a long wait, it'll file its bankruptcy petition Tuesday morning (which it did).
Then Earl had the nerve to crow, in the release, that "today is the first step in our plan to position Planet Hollywood for a return to long-term profitability and healthy growth." Nuff said.
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
firstname.lastname@example.org. Greenberg also writes a monthly column for Fortune.
Mark Martinez assisted with the reporting of this column.
Copyright 1999, TheStreet.com