TheStreet.com's MIDDAY UPDATE
December 8, 1999
Market Data as of 12/8/99, 1:05 PM ET:
o Dow Jones Industrial Average: 11,097.78 down 8.87, -0.08%
o Nasdaq Composite Index: 3,601.64 up 14.72, 0.41%
o S&P 500: 1,410.23 up 1.06, 0.08%
o TSC Internet: 1,072.42 up 13.55, 1.28%
o Russell 2000: 467.18 up 1.48, 0.32%
o 30-Year Treasury: 98 25/32 down 6/32, yield 6.212%
In Today's Bulletin:
o Midday Musings: The Song Remains the Same -- Techs Rocking, Nasdaq Rolling
o Herb on TheStreet: More on Ancor and Checking Back on MedImmune
Also on TheStreet.com:
Wrong! Dispatches from the Front: No More Bristols for the Big Boys and Girls
Good news at companies like Bristol-Myers doesn't mean much for the institutions shedding old favorites.
Networking: Bandwidth and Bundling Have SDL, E-Tek Watchers Talking Deal
The companies won't comment on merger talk, but both want to expand in a hot area.
SiliconStreet.com: Waiting for the Cream to Rise
At a conference where start-ups can strut their stuff, picking the cream of the crop is a hit-or-miss affair.
Dear Dagen: Dear Dagen: How to Spot a Momentum Fund
Nowadays, any tech fund is a momentum fund. But some managers pursue the strategy no matter what sector is in favor.
Midday Musings: The Song Remains the Same -- Techs Rocking, Nasdaq Rolling
12/8/99 1:17 PM ET
Major proxies were on the upswing again, following the fearless lead of techs. The
Nasdaq Composite Index
was gunning for a fifth-consecutive record while the
Dow Jones Industrial Average
was looking to regain some of yesterday's lost ground.
was noticeably quieter today, down 9.5%, after the stock woke up with a mild hangover off yesterday's 24% jump in share price. The Internet media behemoth waltzed into the
with a whopping $91.6 billion market capitalization that scored it a 31st-place ranking compared with the market caps of the other 500 components -- $20 billion of that massive value was poured on yesterday when the stock jumped 67 1/4.
Even with a more than 30-point loss today, the stock is still in abnormally good shape and remains one of the most active issues on the
The Nasdaq Comp was up 23.91 to 3610.83, while
TheStreet.com Internet Sector
index was also on the rise, lately up 21.28 to 1080.15, despite the unusual, and increasingly unheard of, negative action in Yahoo!.
was picking up some of the slack, lifting 5%, after a double dose of good news including positive research rating and an agreement with
For more on the deal, take a look at the
story written this morning by
"Yahoo is coming off a bit, which is to be expected. But the techs are going to act well through year-end. It's not in any of their interests to see any kind of selloff," said Robert Harrington, co-head of block trading at
. Harrington concedes there is a correction "at some point," in the future. "I just don't see it happening in December. The money keeps chasing the top-line growth in Internet companies," he said.
But others see the increasing absence of breaks in the tech run up, and particularly in the Comp, as troublesome. In a research report today, Brian Belski, chief investment strategist at
George K. Baum
, described this past week's "backing and filling" in the Dow and S&P a trading pattern with "healthier implications," compared to the Nasdaq's continued upside extension. "If the current dislocation between the two factions (DJIA/SPX vs. COMP) continues to exist, the more likely that the COMP will indeed undergo a sharp pullback of its own," wrote Belski. He advised aggressive growth investors to do more "bottom fishing than new-high chasing."
Though it may seem otherwise these days, there actually is a life outside of tech companies in the stock market. The Dow, rising 10.40 to 11,117.05 was being helped along by a rise in paper stocks , with
up 3.2%. Component
was also helping out with a 1.3% gain.
Telecommunications stocks were showing some strength with the
Nasdaq Telecommunications Index
up 1.4%. The S&P 500 was inching up 2.99 to 1412.16, while the small-cap
was fighting to keep a grip on its 1.34 gain.
Oil prices were still sliding, following a weekly
American Petroleum Institute
report which showed an unexpected 8.7 million-barrel jump in stocks of gasoline. January crude oil futures fell more than 70 cents and were fighting to stay around $25.50 in mid-morning. The
American Stock Exchange Oil & Gas Index
was off 3.98.
The drop in oil prices was giving airline stocks and other transports a lift. The
American Stock Exchange Airline Index
was up 0.6%, while the
Dow Jones Transportation Average
was up 1.1%.
, parent of
, and a component of both indexes, was rising 1.8%.
Breadth was leaning to the negative side on the
New York Stock Exchange
, with laggards beating leaders 1,791 to 1,129 on 500 million shares. On the Nasdaq decliners were beating advancers 2,126 to 1,741 on 897 million shares. New 52-week lows trounced new highs 265 to 69 on the Big Board, while on the Nasdaq, new highs were the champs, leading new lows 248 to 80.
The benchmark 30-year Treasury was down 9/32 to 98 21/32, its yield at 6.215.
Wednesday's Midday Watchlist
Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.
Mergers, acquisitions and joint ventures
Amazon.com and Sprint PCS Group said they are offering online shopping at Amazon from Internet-ready Sprint PCS phones.
started coverage on Amazon with a strong buy rating. Shares of Amazon.com were climbing 4 9/16, or 5.3%, to 90 3/4, while Sprint PCS shares were jumping 5 1/16, or 5.3%, to 99 3/8.
said it will sell its Ohio cable operations to
for $1.53 billion. Cablevision said the deal will be composed of $990 million in cash and $540 million in Adelphia Class-A stock. Cablevision said it will continue to evaluate options for its Massachusetts and Kalamazoo, Mich., operations. Shares of Cablevision were adding 3/4 to 76 1/4, while Adelphia was falling 1 3/4 to 56 13/16.
agreed to form a joint venture called
, which they said will provide services for in part defined-contribution, pension and health and welfare plans. Shares of Citgroup were slipping 1 5/16 to 55 7/8.
announced a pact designed to accelerate Web site performance for consumers and e-business Web sites. Shares of Digital Island were soaring 55 1/8, or 79.4%, to 124 1/2, while Sun Micro was hopping 4 5/8, or 6.2%, to 76 11/16. Inktomi was bouncing 9 1/4, or 5.6%, to 172 7/8.
announced a strategic pact "to develop and market end-to-end solutions for the wireless Internet." The companies will form a joint company -- of which Ericsson will own a majority stake -- to market and deliver mobile e-mail solutions for network operators. Shares of Ericsson were lifting 7 1/2, 12.7%, to 66 1/4, while Microsoft was adding 3/16 to 93 3/16.
said it will acquire Fremont Financial from
for $765 million in cash, which includes debt. Finova said the deal would be accretive to its 2000 earnings. Finova shares were sliding 9/16 to 34 7/8, while Fremont General was tacking on 1/8 to 5 3/8.
said it has agreed to a $605 million merger with
. Media General shares were down 3 to 47 1/4.
will invest $850 million in the company in the form of convertible preferred stock. Nextlink said the investment represents 8% of its fully diluted shares. Shares of Nextlink were leaping 6 3/4, or 12%, to 62 9/16.
set a pact with
, an Internet service provider, to deliver an Internet appliance that will allow consumers to access the Internet without a computer. Customers using the Ravisent product will use their TV screens to surf the Net, read and send email, among other things. Under the terms of the deal, Ravisent will offer its Internet TV appliance at a "subsidized, competitive price" to those who subscribe to two years of MindSpring's service. Shares of Ravisent were adding on 7 13/16, or 31.3%, to 32 13/16, while MindSpring was gaining 1 3/4 to 38 1/8.
said it planned to sell its entire cable and fiber optic business to
for about $1.4 billion. Siemens said it would transfer business activities comprising 3,300 employees to Corning on Feb. 2, 2000. Shares of Corning were climbing 1 1/4 to 106 9/16.
said it entered into a three-year agreement with
in which Telescan will add its stock screening and portfolio analysis tools to AOL's personal finance channel. Shares of Telescan were advancing 1 to 29 5/8.
Earnings/revenue reports and previews
was losing 1/8 to 11 7/8 after it posted fourth-quarter earnings of 44 cents a share, beating the two-analyst estimate of 43 cents but down from the year-ago 62 cents a share.
Korn Ferry International
was mounting 3 1/2, or 14.5%, to 27 5/8 after it reported second-quarter earnings of 17 cents a share, beating the four-analyst estimate of 15 cents, and the year-ago loss of 1 cent a share.
Warburg Dillon Read
initiated coverage of Korn Ferry with a buy rating and a price target of 31.
was slipping 15 5/16, or 26.5%, to 42 7/16 after it said November same-store sales were down about 18%, a larger-than-expected decline.
has been following this
story. Jim Cramer also
weighed in on the company.
New York Times
was rising 4 3/8, or 10.4%, to 46 1/8 after it said it was comfortable with the current consensus earnings estimate. The 12-analyst estimate for 1999 currently calls for earnings of $1.72 a share.
Offerings and stock actions
was gaining 3/8 to 47 7/8 after it said its set a $500 million offering in convertible preferred stock.
was adding 1 3/16 to 67 7/8 after it said its board approved a $2 billion increase in its share-buyback plan.
was climbing 13/16 to 53 after its board approved a 2-for-1 stock split.
was bouncing 1 to 33 after it declared a 3-for-2 stock split.
was gaining 2 7/16 to 68 1/2 after it said its board approved a 3-for-2 stock split. Pegasus's transfer agent will distribute the additional shares on or about January 7, 2000, to shareholders of record at the close of business on December 20, 1999.
Deutsche Banc Alex. Brown
cut its rating on
AK Steel Holding
to buy from strong buy. Shares of AK Steel Holding were slipping 1 1/16, or 5.8%, to 17 3/16.
Donaldson Lufkin & Jenrette
started coverage of
as a market performer. Shares of BancWest was losing 1/8 to 43 1/16.
upped its rating on
to significant outperformer from outperformer and set a 12-month price target of 76. Shares of Coke were advancing 1 5/16 to 60 5/16.
to a top pick from a buy. Shares of Cigna were mounting 3/8 to 79 1/2.
Warburg started coverage of
with a buy rating and set a price target of 16. CVC shares were climbing 11/16, or 5.4%, to 13 5/16.
raised its rating on
to trading buy from market outperform. Shares of Dollar Thrifty were bouncing 9/16 to 21 13/16.
Henry Blodget initiated coverage of
with an intermediate-term buy rating and put a 200 price objective on the stock. The long-term rating is also buy. Shares of Exodus were soaring 22 13/16, or 15.9%, to 167 3/4.
cut its earnings estimate on
to $2.43 from $2.60 per share. Shares of Fort James were slipping 3/16 to 27 1/2.
Alex. Brown cut its rating on
to market perform from buy. General Motors was adding 1 1/18 to 73 3/4.
rolled out coverage of
with a buy rating. Shares of Ebookers.com were losing 1 1/2, or 6.75, to 20 3/4.
to buy from accumulate. Shares of Knight/Trimark were skidding 1 1/4 to 43 13/16.
Morgan Stanley Dean Witter
to strong buy from outperform. Shares of Sealed Air were gaining 3 1/16, or 6.7%, to 48 3/16.
Goldman Sachs sliced its rating on
to market outperform, removing the stock from its recommended list. Millennium was stumbling 5 1/2 to 105 1/8.
Merrill Lynch upped its intermediate-term rating on
to buy from accumulate. Shares of Stillwater were moving up 1 7/8, or 7.8%, to 25 5/8.
Warburg initiated coverage of
with a buy rating and set a price target of 75 on the stock. Shares of Temple-Inland were popping 1 1/8 to 62 1/16.
Lehman Brothers started coverage of
as a buy. Shares of VISX were advancing 4 15/16, or 9.5%, to 56 15/16.
climbed 2 to 46 15/16 after it said it has tapped COO Kevin Sharer to replace the retiring Gordon Binder as CEO in May. Binder also plans to leave his role as the company's chairman.
rose 1 5/8 after
The Wall Street Journal
reported it is expected to release results today of an experimental cholesterol-lowering agent that it believes will be more potent than
Lipitor. Shares of Warner-Lambert lost 1 3/4 to 83 3/16.
Lehman Brothers said it further cut its health care sector weighting in its model portfolio to position it for 2000, and increased its weighting in capital goods, communications services and technology. Lehman said its sold its entire position in
and cut its position in Warner-Lambert. Pfizer gained 3/8 to 34 3/16. Lehman said it is reinvesting the proceeds by adding to its positions in General Electric, which rose 1 11/16 to 141 11/16,
. Primus gained 1 11/16, or 5.2%, to 34 3/8, while Applied Materials rose 2 5/8 to 114.
said that General Electric has won a $1.98 billion U.S. defense contract to contribute to a jet-engine improvement program for certain
planes through 2014. The program, which will be launched in January, will include power plants for F-16 fighters and A-10 attack jets, B-1 and B-2 bombers, KC-135 refueling tankers, C-5 cargo planes and T-38 trainers.
The Heard on the Street column in the
takes a look at
efforts to maintain its large online brokerage market share in the face of increasing competition from cheaper dot.coms as well as more traditional rivals such as
Morgan Stanley Dean Witter
Schwab lost 1 3/8 to 37 3/8, Merrill lost 1 15/16 to 80 1/16 and Morgan Stanley slipped 5/8 to 131.
Herb on TheStreet: More on Ancor and Checking Back on MedImmune
12/8/99 6:30 AM ET
All in a day's hype, er, work:
A $14.8 million investment by
market cap grow by about $650 million in this wacky, fundamentals-don't-mean-anything kinda market. Nothing changed at the company.
Nothing but the receipt of an investment from Intel regarding a so-called InfiniBand product that, if developed, is two years out. Yet Ancor's stock zoomed on the news, and as you might guess, the
was spinning outta control in the wake of yesterday's Ancor
item. (Actually, it was also spinning because of the
item, but that's another story.)
Oh, and by the way,
analyst Mark Kelleher, an Ancor bull, lowered his rating on the company to attractive long term from strong buy for three sensible reasons.
The first was the most obvious: valuation. "While we continue to believe the company's prospects are strong, driven by the growth of the (fiber channel) market," he wrote in a report to clients, "we believe most of the good news is now priced into Ancor's stock, and the risks ... now outweigh the possibility of continued strong stock price appreciation."
The second was also obvious: The Intel investment does not call for Intel to take any product or generate any revenue.
His final point -- something that has been pointed out
here (from the dose-of-reality department): Kelleher noted that the higher Ancor's stock price goes, the less Ancor makes on its much-heralded order from
. Sun, you'll recall, has warrants in Ancor stock that translate into a discount for Sun as Ancor's stock appreciates. The higher the stock, the steeper the discount. His bottom line: When Ancor's stock reaches 74 1/2, the Sun deal actually generates negative revenue under generally accepted accounting practices. Ancor closed yesterday at 85 7/8.
Of course, there was a time when investors were bidding up
. Speaking of which...
Hooray for Hollywood:
Many people were hoping that "The Prince" --
Prince Alwaleed bin Talal
-- would bail out Planet Hollywood. In fact, in Andy Serwer's excellent story on adventures of the prince in the Dec. 6 issue of
, the prince says he's convinced Planet Hollywood will rebound. Maybe, but according to an amended 13-D filed yesterday by the prince, from Nov. 8 to Dec. 3, he sold 3.4 million Planet Hollywood shares at prices ranging from 22 cents to 8 cents. Of course, he still owns 12.8 million shares, and he
the prince, so who's to quibble?
Herb's Latest: Join the discussion on
TSC message boards.
What, me bullish?
Who started this rumor, anyway? Some comment I made on our
Fox News Channel
TV show a few weeks ago, I suppose, saying I thought the
would go higher. What a lucky guess! Now
, not the state) is
writing, "Greenberg finds himself inexplicably bullish. Capitulation on Herb's part?" No. No capitulation! The market
come unglued here, I just don't know when and I'm not stupid enough to stand in front of a speeding locomotive. I just wait for Ancors to land on my head. For a full explanation on why you could never say I've capitulated, go back and read my
Monday column, or take a look at my personal email box or the
message boards and some of the hostile reactions I received from investors in Ancor and MedImmune.
I wasn't alerted to this by MedImmune, which still hasn't returned my calls, but by some guy who posted it on my message boards on
. Yesterday, in an item about MedImmune, I said one shot of
costs $5,000. Make that one course of treatment, which equals five shots.
While on the topic of message boards:
boards should allow anonymous posts. Sorry, Jim, I'm agin' it. While the veil of anonymity may give insiders the freedom to post pertinent info, anonymity also encourages pump-and-dumpsters and other rah-rahs to spread misinformation without fear of reprisal. I realize anonymity would help page views, but it will erode the very qualities that are supposed to make
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.
the place for great market commentary, but did you know it's also the place for intelligent investing discussion? Whether it's Cramer's commentary or breaking news, each day we'll be bringing the conversation straight to you. Check out our message boards in the Community section:
Jim Seymour: Net Consolidation Speeds Up, Based on Its Own Curious Logic
Ben Holmes: This Week in IPOs
*Community Hot Boards*: TSC's Top 25
TSC Tax Forum
Copyright 1999, TheStreet.com