TheStreet.com's MIDDAY UPDATE
December 2, 1999
Market Data as of 12/2/99, 1:05 PM ET:
o Dow Jones Industrial Average: 11,033.86 up 35.47, 0.32%
o Nasdaq Composite Index: 3,408.19 up 54.48, 1.62%
o S&P 500: 1,402.77 up 5.05, 0.36%
o TSC Internet: 959.91 up 34.62, 3.74%
o Russell 2000: 457.63 up 3.96, 0.87%
o 30-Year Treasury: 97 14/32 down 7/32, yield 6.314%
In Today's Bulletin:
o Midday Musings: Equity Market Eyes Bond Market as All Await Jobs Report
o Herb on TheStreet: How V-One May Have Stretched the Truth in Its Stock-Lifting Press Release
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Dear Dagen: Dear Dagen: Shareholders Reports Could Use More Plain Language, Honesty
As the SEC pursues its plain-English campaign, we review the good and the bad of fund reports.
Midday Musings: Equity Market Eyes Bond Market as All Await Jobs Report
12/2/99 1:13 PM ET
Things seemed pretty mellow at midsession as investors waited to see what's in store for tomorrow's November
. Anticipation of the figure, which is closely watched by the
, kept a lid on the tech rage and left other sectors simmering as insiders kept all eyes on the bond market.
"We're seeing chopping, drifting trading, with commitment from neither the bulls nor the bears, said James Maguire Jr.,
New York Stock Exchange
. "The market is marking time ahead of tomorrow's employment numbers."
Wall Street analyst consensus numbers are forecasting nonfarm payroll numbers to come in at 226,000 and the unemployment rate is seen at 4.1%, while average hourly earnings are seen rising 0.3%.
With the growing anticipation of tomorrow's numbers, the major indices were holding steady in positive territory. According to Allan Gillespie, director of research for
Gotham Capital Management
, the jobs report is keeping the bond market in the spotlight.
"There is not that much difference between the two-year note, which is at 6.04% and the 30-year, which is at 6.30%," Gillespie said. "Historically, that spread has been wider, so we're waiting to see the
jobs numbers." He added, "If the spread tightens, the potential for inversion is very high. If not, then the long bond will have to sell off."
Lately on the bond front, the benchmark 30-year Treasury was down 9/32 to 97 14/32, with its yield rising to 6.32%. (For more on the fixed-income market, see today's early
"I think the numbers will be significant in the context of analyzing possible future Fed moves," said Gillespie's colleague Ronny Kraft, CEO of Gotham Capital. "It is clear, however, that
the Fed won't do anything for at least the next three months."
Kraft said the bond market is not the only factor causing him concern. According to Kraft, the dollar's continued weakness against the yen is a another potential problem on the horizon. "If the dollar continues to get weak against the yen, in essence people are not just selling cash, they're selling stocks and bonds," he said. "The
Bank of Japan
has intervened twice, but the market does seem to be convinced that the Japan's intervention has put a bottom on the dollar/yen."
Kraft also was quick to note how a weakening dollar could lead to a turn toward inflationary woes. "Another problem with dollar weakness is the fact that the benefit of a strong dollar was the importation of deflation," he said. "Hence, the reversal of that condition to a weaker dollar would be the importation of inflation, assuming that the trade deficit numbers maintain their current direction."
Lately, the dollar was quoted at 102.65 yen, up 0.44.
Nasdaq Composite Index
was advancing 54, or 1.6%, to 3407 behind strength in its largest components.
TheStreet.com Internet Sector
index was having a nice run, jumping 34, or 3.7%, to 960, with
leading the way.
The Dow Jones Industrial Average
was up a more modest 35, or 0.3%, to 11,034, with
up 2 7/8, or 3%, to 99 3/8 and
bouncing 1 181/256, or 1.6%, to 105 3/16.
Other major indices were also in the green, with the broad
up 5, or 0.4%, to 1403, while the small-cap
was gaining 4, or 0.9%, to 458.
New York Stock Exchange
, decliners were edging advancers 1,490 to 1,405 on 513 million shares, while on the
Nasdaq Stock Market
, leaders were ahead of laggards 1,979 to 1,830 on 821 million shares. New 52-week lows were topping new lows on the NYSE, 156 to 35, while on the Nasdaq, highs were beating out lows 137 to 44.
Thursday's Midday Watchlist
climbed 2 3/4 to 78 7/8 after it agreed to a three-year deal with
AOL Instant Messenger
users phone service over the Internet. Net2Phone rose 3 1/8, or 5.6%, to 58 5/8.
soared 34 9/16, or 36.8%, to 129 after its
unit entered into a four-year $100 million pact with America Online, in which Monster.com will exclusively supply AOL with job-hunting information.
started coverage of TMP Worldwide with a buy rating and set a price target of 145.
Mergers, acquisitions and joint ventures
lost 1 11/16 to 43 9/26 after
The Wall Street Journal
reported that it and
will soon unveil a spinoff of their agricultural chemical business, citing people familiar with the matter said. The article reported that the combined spinoff, which would be traded separately from its parent companies, would rank as the world's largest agrochemical business with sales of $8 billion and a possible stock market value of $15 billion to $20 billion.
fell 1 15/16 to 59 9/16 after saying it would offer greater concessions to federal antitrust enforcers in an attempt to save its uncertain $33.23 billion acquisition of
, according to
The Wall Street Journal
. Shares of Arco dropped 4 5/16 to 87 3/4.
Deutsche Banc Alex. Brown
downgraded shares of Arco to market perform from buy saying it believes the deal with BP Amoco could fall through.
Ben & Jerry's Homemade
jumped 6 3/8, or 31.5%, to 26 5/8, after it said it received indications of interest to buy the company. Though potential bidders were not identified, Ben & Jerry's said they would offer significantly more than yesterday's closing share price of 21, and that it was considering the interest.
rose 5/16 to 45 3/16 after it announced yesterday a surprise $1.7 billion cash tender offer for
, the parent of
Norwegian Cruise Line
. But NCL quickly responded that the so-far-unofficial offer was "inadequate." Shares of NCL gained 1/2 to 16.
it moved to make the tender offer, which expires Dec. 22, after NCL rebuffed an approach from Carnival earlier Wednesday.
Carnival said the deal would not be expected to dilute its 2000 earnings and that it could add to earnings in 2001. Earlier today, DLJ cut NCL Holding to a market perform from a buy. Check out additional
gained 2 9/16 to 60 5/8 after saying it agreed to a deal with
to supply Web content to wireless products. Shares of Ericsson rose 1 3/16 to 51 3/8.
fell 1/8 to 38 3/8 after it acquired
DSI International Management
, which manages $5 billion in assets. DSI will operate as a wholly owned subsidiary of the newly formed
PaineWebber Asset Management
Sweden-based construction company
has agreed to spend $3 billion to help Skanska build a fiber optic network. Shares of RCN slipped 1/4 to 45.
rose 3 13/16, or 5.7%, to 70 13/16 after it said CEO Jan Leschly would retire in April 2000, opening the door to possible merger negotiations with
rose 11/16 to 28 3/16 after it reached an agreement to buy 1,740
gas stations in the Northeast and Mid-Atlantic states. Tosco said it would pay about $860 million for Exxon's system from New York through Maine, and Mobil's system from New Jersey through Virginia as well as the rights to buy undeveloped sites and Mobil's Virginia distribution terminal.
Warburg Dillon Read
started coverage of Exxon Mobil with a buy rating and set a price target of 95. Earlier today, the company said savings from the merger are likely to top its initial annual estimate of $2.8 billion. Shares of Exxon Mobil slipped 3/8 to 82 1/16 despite the news.
Earnings/revenue reports and previews
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.
dropped 5, or 7.5%, to 61 1/12 despite posting a 9.2% increase in third-quarter same-store sales.
slipped 7/8 to 36 1/2 after it said November same-store sales rose 7%.
dropped 3 13/16 to 91 5/8 after it posted an 8% rise in November same-store sales.
dropped 1 1/4, or 5.6%, to 21 3/16 after saying it saw an 8.7% hike in November same-store sales.
was unchanged at 9 3/4 after it said its November same-store sales, which rose only 1.4%, were hurt by continued warm weather.
lost 1/4 to 38 7/16 after it posted third-quarter earnings of 27 cents a share, beating the eight-analyst estimate of 21 cents a share and up from the year-ago 10 cents a share.
dropped 1 1/16 to 49 7/8 after it posted a 7.9% rise in November same-store sales.
fell 1 42/128 to 57 1/4 after it said November same-store sales were up 6.4%.
Offerings and stock actions
, the Internet unit of Germany's number three wireless phone company,
, priced its initial public offering at 29 euros a share today. The more than 4 million shares, which will start trading tomorrow, will raise around $117 million for the company to fund further growth. The offering was more than 50 times oversubscribed and shares reportedly already have fetched over 50 euros in prelisting trading.
previewed the offering in a
story last week.
jumped 6 1/8, or 7.3%, to 90 after it set a 2-for-1 stock split.
United Healthcare Management
rose 7/8 to 19 3/8 after it said it added 8 million shares to its existing repurchasing program.
upped its price target on
to 91 from 60 and raised its 2000 estimates to $2.01 a share from $1.56. Analog gained 2 15/16 to 63 7/16.
Donaldson Lufkin & Jenrette
started coverage of
with a market performance rating. Agco gained 1/8 to 13 1/8.
Banc of America Securities
sliced its rating on
to market performer from strong buy. Shares dropped 8 11/16, or 14.9%, to 49 5/8.
DLJ today starts coverage of
with a buy rating. Shares inched up 7/8 to 47 13/16.
DLJ initiated coverage of
with a market performance rating. CNH fell 1/4 to 13 1/2.
Credit Suisse First Boston
upped its rating on
Cadence Design Systems
to a buy from a hold. Cadence edged up 7/8 to 18 1/2.
Morgan Stanley Dean Witter
raised its rating on
to outperform from neutral. Eastman rose 1 1/2 to 40 5/16.
Credit Suisse First Boston analyst Tim Mahon upgraded shares of
to strong buy from buy and its price target to 65 from 35. Lattice lifted 2 5/8, or 5.8%, to 48 1/18.
DLJ sliced its ratings on
to market performance from buy. Pepsi Bottling dropped 1 1/8, or 6.1%, to 17 3/8, while Coca-Cola Enterprises slipped 3/4 to 20 5/16.
raised its rating on
to buy from outperform. Reynolds gained 2 11/16 to 65 11/16.
initiated coverage of
with intermediate-term accumulate and long-term buy ratings. Scient gained 4 3/4 to 146 5/8, while Viant rose 4 to 89 1/4.
Herb on TheStreet: How V-One May Have Stretched the Truth in Its Stock-Lifting Press Release
12/2/99 6:30 AM ET
A single press release on Tuesday was all it took for
stock to lift 279% in a single day. While it gave up part of that gain Wednesday, investors continue to believe it has something really hot with a new virtual private networking (VPN) software that V-One touts is "the first ... to ship with both client and server support" for the Linux operating system.
Just one problem -- one that afflicts all too many public companies under pressure to please Wall Street: V-One's press release went a little overboard with the hype. Specifically, V-One
the first company to ship a VPN software product that supports both clients and servers. Just ask Stacey Lum, president and founder of
, of Los Altos, Calif. He says his company has been shipping a similar product to Fortune 500 companies for more than a year, and he calls the claim in V-One's news release "an absolute lie. And there's nothing they can add to that that makes it truthful."
Of course, who was to know? InfoExpress is a private company that tends to keep a very low profile outside of its own industry. (Which is the case with many private companies that get big-footed by a public competitor.) It was started without venture capital backing in 1993 by Lum, an engineer, and didn't get into the VPN space until 1996. Without venture capitalists breathing down its neck, it has been under no pressure to prematurely go public or sell itself. That has left Lum and his colleagues time to concentrate on developing and selling what they believe is software that is superior to V-One's. In fact, Lum says, he believes one of his customers currently has one of the largest VPN deployments anywhere.
Herb's Latest: Join the discussion on
TSC message boards.
Imagine his surprise when he saw V-One's press release and the market value of its stock. The hoopla surrounding V-One prompted him to check out V-One's financials, "and we were shocked to see that our run rate is equal to theirs." InfoExpress's revenue, he says, has tripled in each of the past three years. (V-One's, which was $932,000 last quarter, has been falling this year.) What's more, Lum says, "We make money." (As of the third quarter, V-One had an accumulated deficit of $36.7 million.)
Lum, meanwhile, is taking it in stride. "The marketplace knows the difference," he says. "The stock market probably doesn't."
The ultimate in understatements.
P.S.: I received a call Wednesday from someone at V-One, claiming that Tuesday's column contained factual errors. However, that person left a voice mail at my New York office, even though the message on
voice mail encourages all callers to call my New Jersey office, where I often work. (Why some people don't follow through is beyond me! I'd say, "Can't they read," but, well ... that's why I check the office voice mail once or twice a day.) After hearing the V-One message, I put in a call to V-One and the person, whoever she was, didn't call back. And I left her the same message I left earlier in the day with the company's anointed spokesperson -- the person whose name is at the bottom of all V-One press releases -- wondering why V-One said it was the first company to ship a client/server VPN software, when it really wasn't. So far, no response. If and when I get one, I'll share it with you.
That's what any shareholders who bought into
existing stock must be thinking of themselves now that Boston Chicken is being bought by
. I say "featherbrain" because no matter how many times this column harps on it, hope still springs eternal with speculators who believe the stock of a bankrupt company is a bargain and that -- best case -- if the company is bought they'll get bailed out. (
investors, who keep thinking
company will get acquired, take note!)
, a reporter for the joint
newsroom, wrote yesterday in an excellent
piece: The purchase price of $173.5 million is barely enough to cover what the company owes its senior creditors. Junior creditors and stockholders will be left with what on Wall Street is often called a bagel, for its shape. (Ironically, Boston Chicken's stake in
won't be included in the deal, but with its stock now trading at under 1 it's getting perilously close to looking like the product it sells.)
In reaction to
Tuesday's Extra column on
writes that "once again," I:
... seem to ignore the facts and report only developments that seem to support your short-selling sources on Conseco. Of all the analysts who follow Conseco, only Salomon Smith Barney's Colin Devine thinks the company is in trouble. He had only one non-biased supporter at Moody's (a very good friend of his by the way) and even that supporter is now gone as Moody's announced they would upgrade Conseco to investment grade following the closing of this transaction and keep it on positive watch for future upgrades. How can you defend your position of one-sided reporting on this company when only one analyst (who doesn't even have access to the company anymore) agrees with you and every other analyst on the street, including analysts from both of the major rating agencies, see a rapidly improving credit story? What do you have to gain from such lopsided and blatantly biased reporting? The truth is that all of the moves you have criticized the company for making in the past year have each resulted in either a ratings upgrades or ratings being placed on positive watch. Hardly how you would expect the rating agencies to react to desperate measures and a deteriorating cash-flow situation as you suggest. As a reader of your column, it would be nice to hear all of the facts reported including those that don't support the profit motives of your short-selling sources.
I understand your concerns, but those short-selling sources, and Devine, have been the
ones on Wall Street to get this story right.
Calling all questions:
Have a personal finance question? Don't hesitate to send it our way to firstname.lastname@example.org. Our only request: Include your name. And, sorry, because of volume, we can't guarantee personal replies to questions that aren't answered in the column. And, please, no questions regarding brokerage disputes, or seeking advice or opinions regarding individual stocks.
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