TheStreet.com's MIDDAY UPDATE
November 11, 1999
Market Data as of 11/11/99, 1:21 PM ET:
o Dow Jones Industrial Average: 10,547.89 down 49.85, -0.47%
o Nasdaq Composite Index: 3,173.98 up 18.02, 0.57%
o S&P 500: 1,373.02 down 0.44, -0.03%
o TSC Internet: 823.71 down 10.89, -1.30%
o Russell 2000: 447.45 down 1.27, -0.28%
o 30-Year Treasury: 100 15/32 unchanged , yield 6.090%
In Today's Bulletin:
o Midday Musings: Nasdaq Hasn't Had Enough of Records, While Other Indices Drift
o Herb on TheStreet: Can't Wait to See the Next Chapter in the Unfolding Mattel Saga
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Midday Musings: Nasdaq Hasn't Had Enough of Records, While Other Indices Drift
11/11/99 1:32 PM ET
Once again, the tech sector was leading the pack, pumping the
Nasdaq Composite Index
into a new record high during midday trading. With fading Y2K woes and some last-minute earnings rejuvenation from
, the tech darlings continue to gain momentum, leaving the other sectors green with envy.
"Momentum in the tech sector should remain," said Tim Hayes, senior equity strategist at
Ned Davis Research
in Nokomis, Fla. "But our market position is underweight equities because we're not seeing beyond tech.
"We would need the breadth to break out, which would require us to see that a downtrend in interest rates has started, but that does not appear likely," added Hayes. "On the NYSE, we are seeing 120 new highs. We really need to see 150 new highs, which would be a good level to watch."
With e-commerce attracting more and more consumers to the Internet, tech stocks are "riding the wave of the future," as the popular
commercial goes. Even stocks that are somehow related to e-commerce, such as IPO heavyweight
, are benefiting from the trend.
"Certainly, technology rules," said Gary Campbell, chief investment officer of
The Commerce Funds
. "It is what is driving the market. Major corporations are using Internet and e-commerce to improve productivity and profit margins, and this effort is partly driven by pressures we see in the job market.
"This is why this group is doing well," added Campbell. "We're essentially rewiring the world. It's a whole new way of doing business -- it's revolutionary."
According to Campbell, Y2K is only a temporary glitch for tech. "I think the whole Y2K lockdown is overdone," he said. "After the beginning of the year and these concerns are behind us, the basic fundamental story remains in place."
The Nasdaq Composite Index was advancing 20, or 0.6%, to 3176. In Nasdaq trading, online drug research marketer
, was soaring 15 1/16, or 26.8%, to 71 5/16 on news that it inked a deal with
Positive comments form
had the semiconductor stocks gaining ground. The
Philadelphia Stock Exchange Semiconductor Index
was up 1.3%, with
both faring well.
Dow Jones Industrial Average
was down 51, or 0.5%, to 10,547. Bucking the trend were
, up 1 1/4 to 60 13/16, and new addition
, up 1 9/16 to 88 5/8 despite the uncertainty surrounding its antitrust lawsuit.
New York Stock Exchange
, UPS continued its gains after yesterday's trading debut, hopping 6 5/8, or 9.7%, to 73 7/8, while retailers were buoying up the Big Board with
, up 4 3/16, or 6.4%, to 69 3/8, and
, popping 4, or 8.3%, to 52 1/2.
Other major indices were also lower, with the broad
down a fraction to 1373 while the small-cap
was off 1 to 448.
TheStreet.com Internet Sector
index was falling 10, or 1.2%, to 825.
On the Big Board, decliners were leading advancers 1,654 to 1,198 on 566 million shares, while on the Nasdaq, laggards were edging out leaders 1,899 to 1,829 on 866 million shares. New 52-week lows were ahead of new highs on the NYSE, 100 to 67, while on the Nasdaq, highs were beating out lows 210 to 64.
Thursday's Midday Watchlist
Mergers, acquisitions and joint ventures
said it was extending the expiration of its offer for
through Friday, saying it now has an 89.5% stake in the company. Shares of Asarco fell 3/16 to 29 9/16.
slipped 1/16 to 22 15/16 after saying it received regulatory approval for its $560 million acquisition of the commercial services unit of
, lately up 1/16 to 24 3/8.
CNN News Group
, a unit of
, said it plans to buy a $20 million minority equity stake in
, a provider of software and services to broadcast over the Internet. Time Warner climbed 1 1/16 to 68 3/4, while InterVu popped 8 3/8, or 13.2%, to 71 7/8.
Kaufmann & Broad
inched up 3/16 to 23 1/2 after saying it hired an advisor to explore the sale of its affordable housing unit.
slipped 3/8 to 16 5/8 after saying it would buy
Morgan Grenfell Private Equity's
for $640 million.
Tandy jumped 4 3/8, or 6.7%, to 69 9/16 after it said its
unit has a strategic pact with Microsoft. Microsoft will make a $100 million investment in the new
Earnings/revenue reports and previews
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.
fell 1/8 to 34 1/2 after saying yesterday it is slicing its fiscal 1999 earnings outlook to $3.45-$3.55 a share from $3.60-$3.65 as a result of slowness at its
credit-card division. The company also announced the postponement of its Nov. 15 analyst meeting. Today,
cut shares of Bank One to long-term accumulate from buy, while
maintained its rating of market perform.
Banc of America Securities
cut Bank One's earnings-per-share estimates and price target, while
also cut its EPS estimates and said it continues to be cautious.
joint newsroom covered the Bank One news in a
story last night, and
also analyzed the
climbed 1/4 to 31 1/18 after it posted first-quarter earnings of 54 cents a share, well above the two-analyst estimate of 44 cents and the year-ago 38 cents a share.
fell 1 1/8, or 5.4%, to 19 7/8 after it posted third-quarter earnings of 25 cents a share, in line with the eight-analyst estimate and the year-ago 25 cents a share.
was unchanged at 34 3/16 after it reported third-quarter earnings of 35 cents a share, a penny better than the 22-analyst estimate and up from a year-ago 27 cents a share. Gap's CFO said the company was on track for a strong fourth quarter and is well positioned for a record year next year.
joint newsroom wrote about the report in a
sank 27 5/16, or 32.7%, to 56 after it posted third-quarter earnings of 28 cents a share, beating the eight-analyst estimate of 25 cents a share and the year-ago 1 cent a share.
joint newsroom covered Lands' End
earnings in a story today.
rose 1/16 to 2 13/16 after it reported a third-quarter loss of 21 cents a share, narrower than the single-analyst estimate of 24 cents and the year-ago loss of 33 cents.
climbed 5/8 to 14 after it reported fourth-quarter earnings of 55 cents a share, beating the five-analyst estimate of 49 cents and the year-ago 46 cents a share.
Offerings and stock actions
gained 7/8 to 45 5/8 after it said it added 10 million shares to its repurchase authorization.
fell 1 3/16 to 34 7/8 after it said 2.13 million shares were tendered in a Dutch auction.
jumped 4 1/2 to 106 3/4 after it said its board set a 2-for-1 stock split.
Merrill Lynch said a three- to five-year upturn in the semiconductor market is beginning now and upped the industry's 2000 estimated revenue growth to 21.5%, from 18.6%. Twelve-month price targets were increased for these companies:
- Analog Devices (ADI) - Get Report was upped to 71 from 53. Shares were jumping 3, or 5.1%, to 62.
Applied Micro Circuits (AMCC) was upped to 102 from 83. The stock was rising 3 3/4 to 89 1/16.
Broadcom (BRCM) hopped 7 3/16, to 175 11/16, after its target was increased to 205 from 180.
Conexant (CNXT) - Get Report rose 3 5/8, or 6.2%, to 62 5/16 after its price target was lifted to 70 from 44.
Linear Technology (LLTC) lost 3/8 to 74 11/16 despite being bumped up to 90 from 70.
LSI Logic (LSI) - Get Report lifted 3 1/2, or 5.8%, to 64 1/16 after its target was upped to 73 from 62.
PMC-Sierra (PMCS) gained 13/16 to 107 1/4 after its price target was raised to 130 from 120.
Texas Instruments (TXN) - Get Report tacked on 3 7/16 to 100 13/16 after its goal was set at 125, up from 110.
Vitesse Semiconductor (VTSS) gained 3 7/8, or 8.1%, to 51 7/8 after its target was lifted to 58 from 45.
Credit Suisse First Boston
raised its price target on
to 107. BEA bounced up 7 3/4, or 11.7%, to 73 7/8.
Credit Suisse downgraded
to hold from buy, citing recent management turnover as well as Amazon.com's announcement it will enter the software market. Meanwhile
started shares of Amazon.com at market outperform. Shares of Beyond fell 1 5/16, or 12.8%, to 8 15/16. Amazon was rising 1/2 to 72 7/16.
Salomon Smith Barney
reiterated a buy rating on
and a price target of 60. Shares of Dell gained 1 1/8 to 42 9/16.
Salomon Smith Barney started coverage of
with a neutral rating. General Motors slipped 9/16 to 70 3/8.
Warburg Dillon Read
at buy and set a price target of 27. Kroger was unchanged at 22 1/2.
upped its price target on
to 50 from 45. Shares of Liberty were edging up 9/16 to 39 1/16.
cut its rating on shares of
to outperform from buy, saying the chipmaker was nearing a seasonal slowdown. Micron moved down 1 1/4 to 76 5/8.
Warburg Dillon Read started
at strong buy and set a price target of 51. Safeway lost 3/16 to 37 1/16.
Morgan Stanley Dean Witter
started coverage of
at neutral. Shares rose 1/8 to 52 1/8.
Morgan Stanley Dean Witter started coverage of
at outperform. Shares were jumping 1 13/16, or 9.7%, to 20 7/16.
The Heard on the Street column in
The Wall Street Journal
takes a look at Internet companies' fondness for press releases and the often-volatile effect it can have on a company's stock. For instance, the story points out Amazon.com shares jumped 20%, when the company
announced Monday it would make an announcement Tuesday. Shares then slid 9.2% on Tuesday when the less-than-stunning
news turned out to be its acquisition of a tool catalog company and entry into new markets.
Herb on TheStreet: Can't Wait to See the Next Chapter in the Unfolding Mattel Saga
11/11/99 6:30 AM ET
disclosed earnings trouble related to its
The Learning Company
sub. A few weeks later it said
everything was OK. Then, on Wednesday, it announced that the two guys who ran TLC, Michael Perik and Kevin O'Leary, had "left." Left! Nothing more, nothing less. What
happened? A company spokesman was mum, but this much is certain: It's generally
a good sign when top execs abruptly leave after bad news with no explanation. Suggests some skeletons popped out of some closet.
Or maybe a bunch of unsold software that nobody ever knew existed?
Expect this to be just the start of yet another chapter in this saga.
, which is scheduled to go public as early as this week, was the focus of a blistering (albeit entertaining)
several months ago by
, who focused on the company's IPO prospectus -- specifically, pay for CEO Chris Whittle and other execs.
But wait -- there's more: Here's a company supposedly in the biz of running public schools, but rather than relying on tried-and-true math to count the number of schools it operates, it has come up with a new math of its own. Rather than counting each facility as a school, as is common in education, Edison discloses that it counts each grouping of kindergarten through fifth grade, sixth grade through eighth grade and ninth grade through 12th grade as a separate school, even if those groupings are in the same building. Even if there's just one grade in each group, that counts as a separate school.
Herb's Latest: Join the discussion on
The upshot: For public consumption, Edison claims it operates 79 schools. Sounds impressive until you do the
math and realize the company really operates only 38 schools. (That's confirmed in the fine print of the prospectus, where the company says it has 38 principals overseeing all of the Edison "schools" on each campus.) Thirty-eight schools, all of them losing money. The accumulated deficit since 1996 has jumped to $78.9 million, and the company pretty much confesses that it has no idea when and if it will ever make money.
And that doesn't even take into account a strike by teachers' unions, which the company lists as one of its lead risks.
For that, with just $133 million in revenue, Edison could wind up with a market value approaching $1 billion (including debt, convertible preferreds and warrants, etc.), and it's not even a dot-com. The gall!
One final point: Edison has five underwriters. You know this column's rule of thumb: More than three suggests the company needs as many bankers as possible to sell its stock, not to mention guaranteeing five buy ratings after the deal is done.
Edison officials didn't return my call.
Back in May,
Web site, which it set up as a new company that it planned to take public. On the same day, it also announced it hired Stephen Fields from
to be the CEO of the new entity. Field's hiring was a big enough deal to warrant a story in the
San Francisco Chronicle
, as well as mentions in
The Wall Street Journal
Yet, two months ago, when Fields was demoted to a new position in "strategic planning," the company didn't say a word. Why? According to Macromedia CEO Rob Burgess, it was "not material." Not material? You do an announcement when a guy is hired, especially as CEO, you should do the same when he loses that job. Makes you wonder what else the company's hiding. (Say this for Macromedia, though: When it realized Fields wasn't the right guy, it moved swiftly before any damage was done. Can't fault it for that.)
: Boy, seen that
lately? Up about 75% in the past two weeks. Guess who was selling during the rise? Try
, whose filing with the
Wednesday shows that its Ancor ownership dropped to 7.2% from 12.4% in August. No reason was given.
Regarding my swipe
bidding for grocery service, reader
writes that, based on his experience, I couldn't be more off the mark(et). "In exchange for filling out some relatively painless surveys, I can collect points into a house account that guarantees 50%-off pricing on items I select," he says. "I agree there isn't a lot to choose from, but using the service solely for high-ticket items (in NYC that appears to be meat and batteries, don't ask me what the correlation is) really does pay off." Thanks, Bryan.
On the other hand, no thanks to reader
, who was agitated by yesterday's item regarding confusion in the investment community between
Integrated Device Technology
. I had suggested Integrated Device change its name.
Enter Bloch: "I visit the
site daily and without fail I find your column to be of a 'holier-than-thou-nature,'" he writes. "Your most recent feedback to the woman who indicated that there was confusion about IDT Corp. and Integrated Device Technology was unfair. It is your responsibility as a journalist to clarify what needs to be clarified. Would you like to be confused with H. Greenberg the mass murderer? How about Herb Greenburg the embezzler? Step back and take a look at yourself."
It's Greenberg, with an "e."
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
email@example.com. Greenberg also writes a monthly column for Fortune.
Mark Martinez assisted with the reporting of this column.
Copyright 1999, TheStreet.com