Publish date:

midday12-30-99

TheStreet.com's MIDDAY UPDATE

December 30, 1999

http://www.thestreet.com

Market Data as of 12/30/99, 1:04 PM ET:

o Dow Jones Industrial Average: 11,530.54 up 45.88, 0.40%

o Nasdaq Composite Index: 4,065.67 up 24.21, 0.60%

o S&P 500: 1,470.13 up 6.67, 0.46%

o TSC Internet: 1,166.12 up 3.90, 0.34%

o Russell 2000: 498.31 up 1.30, 0.26%

o 30-Year Treasury: 96 01/32 up 7/32, yield 6.423%

In Today's Bulletin:

o Midday Musings: Not Ready to Quit Yet, Wall Street Keeps Reveling in Buying Spree
o Wrong! Dispatches from the Front: It's Been a Long Time Since ...

"TheStreet.com" on

Fox News Channel

"THESTREET.COM" MILLENNIUM EDITION:

Special Times!

Jan. 1 at 6 p.m. ET and Jan. 2 at 11 a.m. ET

A special edition of "TheStreet.com" looks at investing in the new millennium. Special guests include

Ryan Jacob

, chief investment officer of the

Jacob Internet Fund

;

Gene Walden

, author of

The 100 Best Stocks to Own in America

; and

Ken Schapiro

from

Condor Capital Management

. Plus, Cramer and guests reveal their favorite stocks for the new millennium.

Also on TheStreet.com:

Wrong! Rear Echelon Revelations: It's Never Too Late to Admit Your Mistakes

Cramer's been receiving email from value managers desperate to confess their sins.

http://www.thestreet.com/comment/wrongrear/850959.html

Under the Hood: The Good, the Bad and the Ugly: A Year's Worth of Calls

A look at the stock and fund picks, right and wrong, from the past year's Under the Hood columns.

http://www.thestreet.com/funds/underthehood/850190.html

Technician's Take: Chart Parade: Those Rockin', Rollin' Retailers

What better time to visit your favorite stores?

http://www.thestreet.com/comment/techtake/850453.html

Mutual Funds: Standing Room Only in the Century Club

Also, the battle for No. 1 and four new Internet funds from Kinetics.

http://www.thestreet.com/funds/funds/850488.html

Midday Musings: Not Ready to Quit Yet, Wall Street Keeps Reveling in Buying Spree

By

Tara Murphy

Staff Reporter

12/30/99 1:12 PM ET

With Y2K only one trading session away, it's the same old fascinating story. Stocks are, for the most part, gaining across the board. So with the shopping spree that kicked off October still in full swing, only one question remains. When will it end?

"We expect the same activity to continue through the next day and a half unless something disastrous happens with Y2K," said Randy Billhardt, co-head of block trading at

PaineWebber

. "We're seeing some portfolio window-dressing at the year's end. People are continuing to buy the winners."

And in today's market, one word that rings synonymous with "winner" is technology. The tech darlings have been on fire since late October, with the tech-whipped

Nasdaq Composite Index

hitting a monumental new closing high of 4041.46 just

yesterday. And with the Comp up a record breaking 84% for the year, investors just can't get enough. So does all this buying warrant the old adage, "It's all fun and games until someone gets hurt"?

If you're a skeptic, the high valuations definitely lend cause for concern. "The last time this type of speculation showed up was in July 1997," said Brian Gilmartin, portfolio manager at

Trinity Asset Management

. "The Dow was up 10%, which was a lot at that time, and there were a lot of signs of excess. A typical sign of a frothy market is when poor companies are being bid up."

Even benign company announcements have sent stocks bouncing. "

Cendant

(CDT)

, which is not a bad company, made an announcement that moved its stock 15 to 26," said Gilmartin. "The news, which was an "Internet opportunity" with

Liberty Media

(LMG.A)

, did not warrant an almost doubling of the stock in the period that it occurred. With very little specifics, the stock went up."

Lately, the Nasdaq was steaming up 26, or 0.6%, to 4068. In Nasdaq trading, both

Yahoo!

(YHOO)

and

Intraware

(ITRA)

were both giving strong performances thanks to research kudos.

It was a mixed day for

TheStreet.com Internet Sector

index. Coming back from the loss column, the DOT was up 2 to 1164.

Amazon.com

(AMZN) - Get Report

and

CMGI

(CMGI)

were exerting negative pressure.

Despite its downturn in midday trading,

Qualcomm

(QCOM) - Get Report

has been tagged as Nasdaq's gem of the year. Yesterday, a PaineWebber initiation with a price target of 1,000 sent the stock soaring to another new record close, 659. (

TheStreet.com

covered the PaineWebber analyst's extraordinary move in

two

stories yesterday, and took a

look today at a company riding Qualcomm's coattails.)

According to Gilmartin, price targets may set the stage but don't always tell the story. "Brokerages put these targets on stocks to generate transactions," he said. "I ignore the price targets and concentrate on the fundamentals. Qualcomm's fundamentals have not changed enough to warrant that kind of move. However, it's still a great story."

Despite high interest rates, tech stocks are still flying high. So what will take the air out of tech's balloon? "The earnings growth is overriding the higher interest rates," Gilmartin said. "Even though you're seeing higher real interest rates, the depressing effect is that theses rates have been offset by very strong earnings growth and incredible fundamentals. I'd still be a buyer of the sector leaders, like

Cisco

(CSCO) - Get Report

,

Dell

(DELL) - Get Report

and

Oracle

(ORCL) - Get Report

, but you need a long-term horizon. Tech earnings and guidance during January's conference calls had better be very good, or it's going to get ugly." Trinity is a big holder of Cisco.

Those high interest rates were easing some in today's trading, with the 30-year Treasury up 7/32 to 96 1/32. Its yield was down to 6.43%. (For more on the fixed-income market, see today's early

Bond Focus.)

The

Dow Jones Industrial Average

, which has been cast in shadow of the hip, tech-laden Nasdaq, was jumping 51, or 0.4%, to 11,536. Ironically, tech heavyweights

Hewlett-Packard

(HWP)

and

Microsoft

(MSFT) - Get Report

were holding down the fort for the Dow, showing notable gains.

Unlike tech stocks, the financial sector has not been immune to higher interest rates. "There is no inflation and real interest rates are too high, which is what is keeping a lid on the financial services sector," said Gilmartin. Lately, the

American Stock Exchange Broker/Dealer Index

was unchanged at 444.

The broad

S&P 500

was gaining 7, or 0.5%, to 1470, while the small-cap

Russell 2000

was tacking on 1 to 498. Both were on pace for record closes.

Market Internals

Breadth was mixed and volume was heavy.

New York Stock Exchange:

1,724 advancers, 1,244 decliners, 325 million shares. 91 new 52-week highs, 99 new lows.

Nasdaq Stock Market:

1,988 advancers, 2,017 decliners, 674 million shares. 191 new highs, 63 new lows.

Thursday's Midday Watchlist

By Eileen Kinsella
Staff Reporter

In today's mostly quiet trading environment, the tech investors who haven't thrown in the year-end towel yet went looking for reasons to celebrate. They found some, however modest, in positive research actions.

Yahoo!

(YHOO)

jumped 11 3/16 to 414 13/16 after

Argus

upped its price target to 550 from 385.

Extreme Networks

(EXTR) - Get Report

also had reason to shout, adding on 9 7/16, or 12.9%, to 82 3/4 after

SG Cowen

upped its rating to strong buy from buy and raised its price target to 125.

Mergers, acquisitions and joint ventures

CommTouch Software

(CTCH)

TheStreet Recommends

popped 9 3/8, or 25%, after it said Microsoft had exercised warrants to purchase 707,694 CommTouch ordinary shares, representing about 4.7% of the shares outstanding. Shares of Microsoft added 1 to 118 15/16.

For more on this

story, check out additional coverage from

TheStreet.com/NYTimes.com's

joint newsroom.

Earnings/revenue reports and previews

(

Earnings estimates from First Call/Thomson Financial; earnings reported on a diluted basis unless otherwise specified.

)

Boyds Collection

(FOB)

fell 1/2, or 6.5%, to 7 1/4 after it warned investors it expects to post fourth-quarter pro forma earnings of 25 cents to 26 cents a share, missing the two-analyst estimate of 30 cents. The company also said it sees fiscal 1999 pro forma earnings of between $1.06 a share and $1.07, which also would miss the two-analyst estimate of $1.10.

CompUSA

(CPU)

slipped 1/2, or 8.7%, to 5 1/4 following its announcement after yesterday's close that second-quarter net sales fell 21% to $1.38 billion from $1.75 billion, while same-store sales fell 1.8% from a year ago. The company said a less promotional approach to selling computers hurt sales for the quarter ended Dec. 25, though profit margins set a new high of 16% as the company broadened its product assortment beyond personal computers. CompUSA said it plans to announce second-quarter operating results Feb. 2.

Analyst actions

PaineWebber initiated coverage of

Adelphia Communications

(ADLAC)

with an attractive rating. Shares moved up 1 3/8 to 65 3/8.

Lehman Brothers

upped its price target on

Agilent

(A) - Get Report

to 90 from 67. Shares added 3 5/16 to 75 3/8.

PaineWebber initiated coverage of

Alltel

(AT) - Get Report

with a neutral rating and a price target of 87. Alltel climbed 2 3/4 to 82 9/16.

Morgan Stanley Dean Witter

raised its price target on

Computer Associates

(CA) - Get Report

to 80 from 62. Shares rose 1 3/4 to 68.

ABN Amro

said it initiated coverage of

Cordant Technologies

(CDD)

with an outperform rating. Cordant inched up 5/8 to 32 15/16.

Prudential Securities

initiated coverage of

Delco Remy

(RMY)

at accumulate and set a price target of 10. Delco Remy inched up 1/4 to 8 3/8.

PaineWebber started coverage on

Heinz

(HNZ)

with a neutral rating and a price target of 47. Heinz slipped 3/16 to 39 15/16.

National Equipment

(NSV)

slipped 7/8, or 12.5%, to 6 1/8 after it was cut to neutral from buy by

Salomon Smith Barney

.

PaineWebber started coverage of

Storage Technology

(STK) - Get Report

with an attractive rating and a price target of 20. StorageTek added moved up 7/8, or 5.1%, to 17 15/16.

Lehman Brothers

rolled out coverage of

Triton PCS

(TPCS)

with an outperformer rating and a 2001 price target of 51. Triton tacked on 3 7/16, or 8.3%, to 45 1/8.

Miscellany

AIG

(AIG) - Get Report

slipped 3/16 to 108 1/8 after

The Wall Street Journal

reported it has brought a lawsuit against

Ace's

(ACL)

INA

insurance division, pushing the Ace unit to acknowledge certain pollution claims that were moved into a separate company. Ace lost 5/16 to 16 7/16.

Boeing

(BA) - Get Report

climbed 7/16 to 41 7/16 after it said it set a record for commercial jet delivery in 1999, with 620 jetliners. The company said the previous record had been set in 1998 with delivery of 558 jetliners.

FDX

(FDX) - Get Report

fell 5/8 to 41 13/16 after its

Federal Express

unit said it would hike its fuel surcharge on most domestic and international services by 3% as of Feb. 1.

A federal judge put a temporary restraining order on some

AMR's

(AMR)

American Airlines

unit maintenance employees who took part in a "work slowdown" that stalled operations. The disagreement involved pay premiums to nonmanagement workers who need to be away from their "home base" during the New Year's weekend. Shares of AMR popped 2 5/16 to 67 13/16.

Fruit of the Loom

(FTL)

was off 7/16, or 40% to 13/16 following its announcement after yesterday's close that it filed for Chapter 11 bankruptcy protection. The company, which makes

BVD

, Fruit of the Loom and

Gitano

products, has struggled with manufacturing and inventory problems. In the first half of the year, shipping difficulties hurt sales and profits.

Mylan Laboratories

(MYL) - Get Report

was unchanged at 25 3/16 after it said the

Food and Drug Administration

has given its approval to a generic form of

Glaxo Wellcome's

(GLX)

drug

Imuran

, which stops rejection after kidney transplants. Glaxo gained 1 5/16 to 55 7/8.

An

Old Republic

(ORI) - Get Report

subsidiary is facing a federal lawsuit claiming that it offered some mortgage lenders rewards in exchange for their business. Old Republic was unchanged at 13 7/16. The suit, which asks for class-action status, alleges that

Republic Mortgage

gave pool insurance and other perks to mortgage lenders at below-market rates for their business.

Wrong! Dispatches from the Front: It's Been a Long Time Since ...

By

James J. Cramer

12/30/99 10:08 AM ET

"Sell 200 shares of

Qualcomm

(QCOM) - Get Report

!" Yep, that's me, trading in lots of 200, something I haven't done since 1981 when I took down 200 shares of

Piezo Electronics

. Holy cow, how the mighty have round-tripped!

Why the small increments? Cause it is so crazy, so nuts, that I can't stand being 30 or 40 points wrong within minutes of when I get a report. And because I am almost out of my delicious Qualcomm ammunition.

Join the discussion on

TSC

Message Boards.

Oh, but what a high-quality problem. Can you imagine having to chose between

General Mills

(GIS) - Get Report

or

Kellogg

(K) - Get Report

? Or between

Firstar

(FSR)

or

Wells Fargo

(WFC) - Get Report

? Could it get any crazier though?

Oh, as I prepare to send that, some guy is on TV saying that the

NDX

will lag next year. Oh, wow, get me that crystal ball! Mine only sees

Auntie Em

crying -- because someone has broken her heart.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of the original publication, his fund was long Qualcomm. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.

Copyright 1999, TheStreet.com