Participants on May 20 included host Brenda Buttner, Herb Greenberg, Jim Seymour, Adam Lashinsky, Dave Kansas, Ben Holmes, and Brett Fromson. The transcript is unedited, and phonetic spellings are indicated with (ph).

BRENDA BUTTNER, HOST:

Up next, stock-market information you need before Monday's opening bell. One month since the April 14

Nasdaq

bloodbath, will we see another painful day anytime soon? Find out what to watch so you can get out of the way before the next big drop.

And the high-stakes wireless wars: Who will be the winners? And who will leave their shareholders with nothing but bad reception? You'll get the "Word on the Street."

All that, plus a new round of "Predictions" you can't afford to miss. But first, the headlines with "Fox News Live."

BUTTNER:

Hi, everyone. I'm Brenda Buttner, and you are connected to "TheStreet.com." April 14, a date I bet you remember. That was when the Nasdaq suffered its worst point drop ever.

Could we see such a free fall anytime soon? Let's get the word on the Street.

With us from

TheStreet.com

, editor-in-chief Dave Kansas, senior columnist Herb Greenberg, in San Francisco, Silicon Valley columnist Adam Lashinsky, and in Austin, columnist Jim Seymour.

Welcome, everybody.

Well, it seems like a lot longer. But it's only been about a month since the Nasdaq's stunning selloff, a plunge of about 10% in a single day. Since then, we've seen some big swings up and down like this past Friday, but nothing as scary.

Herb, the Nasdaq is only about 70 points from that fateful day. And it's about 200 points from what you would officially call a crash. Is it headed that way?

HERB GREENBERG, SENIOR COLUMNIST:

Right. Depends on timing here because here's the reality. The reality is that I think the wealth effect, the stock-market wealth effect, has been squeezed out of a certain part of this marketplace.

BUTTNER:

You think so?

GREENBERG:

I really...

BUTTNER:

People don't think they're still rich with their paper profits?

GREENBERG:

... I really think at the top level, I think a lot of people have deferred purchases and they're starting to cut back. Right now, you're going through the interest thing. And I think if the Fed does not raise interest rates for a while because we start seeing tepidness in this marketplace, the next time they do raise rates, whenever that happens, that will cause the next big plunge.

JIM SEYMOUR, COLUMNIST:

Herb, do you really think that will be as bad as April 14?

GREENBERG:

I think at that point in time if people are feeling as good as they were feeling back then, I think you might have that happen, Jim.

ADAM LASHINSKY, SILICON VALLEY COLUMNIST:

You know, Herb, it's funny. You're looking for anecdotal evidence of an impact on the wealth effect.

But instead, what we're seeing in

The Wall Street Journal

are stories about Silicon Valley companies giving away

BMW

s to recent MBA graduates. So I don't know. I'd like to see some more of an anecdotal evidence that there's been an impact on the wealth effect, which I really haven't seen yet.

BUTTNER:

Yeah, I'm not so sure either. Jim, what would you say? What signs would you say would signal a turnaround in this market? You have forecast that this is going to be a very, very tough summer?

SEYMOUR:

Brenda, I still think that. What I'm looking for are three or four episodes in a row of great earnings reports being treated with some respect in the market.

Last week, we had

Cisco

, which I'm long, which had a great quarter and got clobbered. This week, we had

Sycamore

, which I'm not long but probably should be, which had a great quarter and got clobbered as well.

We need some rationality back in the market again where when you report a great quarter, when the business is great, you get rewarded in the stock market, not killed.

BUTTNER:

Dave, you know, Herb seems to think that some of the excess has been squeezed out of that market. I'm not so sure. There's so much volatility. I mean, I think it's more violent than volatile these days...

DAVE KANSAS, EDITOR-IN-CHIEF:

I think Herb is right. But what we're not seeing is any other counteraction in that it's ¿ there's no volume. Everything seems very dead, which is worse, I think, than what anybody expected.

We've got kind of this funk that reminds people of the 1970s. And I think other than the April 14 thing, the thing that everyone is really worried about is: Is it all going to dry up? Is the fun over? Is everyone saying, "You know what? This is not fun. I'm going to go watch baseball instead of watch the stock market."

(CROSSTALK)

KANSAS:

I think that's part of the issue here.

GREENBERG:

I think we got rid of some of the zealots, because people realized they could lose money in the stock market. And I think that is something you have to consider.

Look, we saw these tepid inflationary numbers from April. And that suggested in that span of time things were starting to cool a little bit...

SEYMOUR:

One thing we need to...

GREENBERG:

... And I think it's very...

SEYMOUR:

... remember about these very low numbers we're seeing is that destructs the market. A statistically much smaller move can have a much bigger parrot effect on the market.

GREENBERG:

My sense tells me...

KANSAS:

I mean, I want to make a point on...

LASHINSKY:

... I'm sorry, my sense tells me that, Herb, we haven't gotten the -- I can't remember what you called them -- the crazy people out of the market yet at all. People are still very interested in the stock market. A two-month breather does not an absence...

GREENBERG:

Yeah, but Adam, I think if you look in your backyard at Silicon Valley, you'll start seeing that some realtors will start talking about a little bit of a slowdown and perhaps some deals that have come unglued. And that's certainly what I've found from some of my readers from around the country.

BUTTNER:

Dave, you had a response?

KANSAS:

Well, I was just saying to Herb that the inflation numbers are coming off some pretty scorching numbers. I think it's misleading to say that inflation is slowing down. I think the Fed is not done and is not going to be done for a while. They need to see more than anecdotes. They need to see real data, which is what Adam is talking about. I think that that's the big issue. The Fed isn't done.

BUTTNER:

Jim -- I'm sorry, Adam, Jim mentioned Sycamore and

Ciena

. They've got great earnings reports, bad for the stock. Do fundamentals matter in technology anymore?

LASHINSKY:

Well, it depends, Brenda, if you want to talk about trading or investing. I took at a look at Ciena: It took a big hit on Friday after reporting what every ¿ what beat Wall Street's expectations.

But let's look at what they did report. Their revenues were up 66% vs. the year-ago quarter. And they were profitable vs. not having been profitable the year before.

The stock before the fall was up by a multiple of five times from a year ago, still worth 4 1/2 times more. So it's gone up by 4 1/2X, and revenues have improved 66%.

It was obviously very expensive. And it still is. That's a trading issue, not an investing one.

BUTTNER:

Herb, Jim has said before that people might want to think about taking some cash, some money, off the table and putting it into cash. You always advise people to know their sector. But what other advice do you bring in this kind of an environment...

GREENBERG:

Well, in this kind of...

BUTTNER:

... to the investor, not the trader.

GREENBERG:

... No, to the investor, it's business as usual. To the person who's putting money into a 401(k) plan, you don't stop. But you still have to know what you own.

But I think this was such a great...

SEYMOUR:

Yes.

GREENBERG:

... environment to understand. This was a great experience for people to realize that this was an ¿ that there is an ability for this thing not to go up further.

(CROSSTALK)

SEYMOUR:

In addition to going into cash, at least in part, and staying there, I think it's important for the individual investor to remember he doesn't always have to always play the game. He doesn't have to trade every day.

I didn't trade once this week, this past week. You don't always have to be in there trading and churning. Sometimes you can sit on the sidelines, preserve capital, and make a lot more money in the end.

BUTTNER:

And a great chance to watch baseball too.

SEYMOUR:

Yes.

BUTTNER:

OK, hold on, don't go anywhere.

(CROSSTALK)

(LAUGHTER)

BUTTNER:

Everybody is coming back after this break to answer the question who will win the wireless wars, and how can you profit? You don't want to miss this. That's next on "TheStreet.com."

BUTTNER:

Welcome back.

Who will win the wireless wars? And what are your best stock-market plays in that arena?

Back with us to talk about that here in New York, Herb and Dave. And up on the satellite, Adam and Jim.

Gentlemen, again, the wireless wars, who will win, lose? Which are the companies with high quality and low cost?

Those are not easy questions to answer in a sector that has often defied prediction. But that doesn't stop up from asking.

Take a look at the top three in handset sales last year. Are these the companies to bet on? Or is there a better way to play this boom?

Jim Seymour, which way do you go?

SEYMOUR:

Brenda, you're right. It's always been tough to figure out how to make money in wireless. And it's in part because there are really three submarkets that constitute it.

The first, as you suggest, are the handset makers, where I think that

Nokia

especially, then

Ericsson

are especially going to dominate that. Secondly, I think we have the software people,

Phone.com

,

Symbion

(ph), and certainly

Qualcomm

for the intellectual-property play.

But third and toughest, we have the service providers. I think the service provider who is going to make the most money is going to be the new one,

Verizon

, the combination we saw merge in the past couple of weeks. But it's going to be tough to see a lot of money made in the service provider business in the next 18-24 months.

LASHINSKY:

Yeah, I would sort of agree with you on the service provider's part because, even if we look, and maybe this is a leap of faith. But if you look at what happened to long-distance carriers, Jim, and you just look in general at what ultimately will happen to rates.

And what is happening to rates is they're giving this stuff away.

AT&T

is making it free to make a long-distance call.

SEYMOUR:

In fact, it's hard for some of these vendors to decide what should be free. We've seen

Qwest

play games. Do people want to have free Internet access? Do they want to have free wired long distance? Do they want to have free local and long distance in the wireless market? What do people want for free?

LASHINSKY:

Actually, Jim, let me make a suggestion. I'll try to give a slightly rosier view of the services market. And this would focus on in the United States especially companies like

Sprint

and

Nextel Communications

.

They're going to be introducing new data services. This isn't about voice. It's about data. Now if you're a believer that they'll be able to make money from that, some analysts are saying that could boost the average bill by anywhere from $9 to $10.

That doesn't sound like a lot of money. But if the average bill is around $50 now, that's a huge incremental increase for service providers. And that all goes straight to the bottom line.

BUTTNER:

Dave, one of the problems with the sector has been that it's been priced for perfection. The P/Es are astronomical. But many of the stocks have come down. Does that make them cheap enough for bargains?

KANSAS:

I think so. We're talking about who are the winners here. I don't know if it's the saunas or the long winters, but I like the Finnish Nokia. I like the Finns. It's the strangest thing in the world. You've got these odd...

BUTTNER:

But the Scandinavian background.

KANSAS:

... You know, they do this strange snow-winter sauna deal, and make great phones. I think Nokia is the best position in this space. There are questions about service providers, questions about I think even some of the software people. But I think Nokia has just got a great...

GREENBERG:

You're telling me

Motorola

...

(CROSSTALK)

SEYMOUR:

You're exactly right. Nokia is going to come out on top. I should also say I'm long Nokia. But let's not ignore Ericsson, which is a great number two play.

GREENBERG:

... And you're saying that Motorola can't wake up one day and suddenly come back and gain its old number one spot from Nokia?

SEYMOUR:

It's really hard, Herb, for me to imagine that Nokia is going to wake up again.

GREENBERG:

Well, maybe that's a good sign.

BUTTNER:

Is this a short-term play? Or is this really for the long-term investor because it is a sector that's very difficult to navigate, Jim?

SEYMOUR:

I think it's a great long-term play. In fact, if you can view it long term, I think jumping into service providers,

WorldCom

, which I'm long, certainly also Verizon getting in their merger, that makes some sense. Certainly, Nokia and Ericsson are good plays.

I think Phone.com and, when you can buy it, Symbion (ph) will be great plays. And you can buy Qualcomm right now. And it's strictly an intellectual-property play because they sold their handset business...

BUTTNER:

Yes.

SEYMOUR:

... to

Kiaserra

(ph) in December. I think if you're an investor, it's a good play. If you're a trader, you're going to get killed.

GREENBERG:

One interesting part here, especially when you talk about the hardware guys, Jim, is isn't there a point where eventually they become like the PC makers where the growth starts really slowing? And it is a commodity product, after all. What do you think?

BUTTNER:

Jim.

LASHINSKY:

Well, Herb, let me riff on that a little bit. There's something interesting that came out of the

Yahoo!

analysts' meeting this past week.

Yahoo! said that the majority of new Internet users are going to be coming from wireless. That's where the growth is going to be coming, Herb. The handset makers may become a commodity. But lots of growth elsewhere.

BUTTNER:

OK, we...

SEYMOUR:

Adam, that's a great point. In fact, I think that Yahoo! is a great wireless play because of what they're going to do with their wireless...

BUTTNER:

Sorry, Jim, we've got to get out of this right now. But when does a strong buy mean you shouldn't take out your wallet? We'll be right back after this.

BUTTNER:

You've no doubt heard the recommendations from hold to buy to even strong buy. Analysts rate the stocks. But maybe you shouldn't pay too much attention. Sometimes calling a stock a strong buy is actually the kiss of death.

Let's find out how with an eye on IPOs. From the IPO pros Web site, Ben Holmes. And here in New York,

TheStreet's

chief markets writer, Brett Fromson.

Ben, there's this thing called the quiet period with IPOs, meaning that for 25 days after a stock first goes public, no one involved with the stock can talk about it. But on the 26th day, watch out, right?

BEN HOLMES, IPOPROS.COM:

That's right. What we've seen across the board are the underwriters coming out with buy recommendations on the stock. We look back at the beginning of Q2, 54 deals have come out of their quiet periods. Everyone has resulted in a buy recommendation, a strong buy right away, all the underwriters.

BUTTNER:

And then what happens?

HOLMES:

Let me give you an example.

Saba

Software came out of their quiet period on 5-2. Same day,

Goldman Sachs

,

Merrill Lynch

,

Banc of America Securities

all put buy recommendations on the stock. The stock went out at 27 1/8 that day. A week later,

Robbie Stevens

(ph) follows with their own buy recommendations. The stock closed today at 15 3/8. That's a 43% give-up.

BUTTNER:

Brett, these brokerage firms have a lot at stake...

BRETT FROMSON, CHIEF MARKETS WRITER:

Sure.

BUTTNER:

... which means you may not necessarily just want to just take their strong buy without a grain of salt.

FROMSON:

No. You really want to watch and see what they do, not what they say. That old adage is still true.

And you know, these analysts are all arms of the investment-banking units. And that's where the big money is. And if they were really to consistently go negative on a lot of the offerings from their firm, they wouldn't have a job for very long.

BUTTNER:

In fact, I don't think I've ever seen a sell on a stock.

FROMSON:

No, the Wall Street equivalent of sell is hold.

BUTTNER:

Yes. Yes.

FROMSON:

Yeah. But I was talking to a broker, a long-time broker at Goldman Sachs the other day. And he said to me honestly, he said that if they had analysts who consistently were negative on some of the offerings, they just wouldn't be around very long.

BUTTNER:

All right, Ben, take a look at some of the stocks coming out of their quiet periods soon.

HOLMES:

Well, the next chunk of stock coming out will be this weekend. The 21st of this month, we see

Metawave

, we see

Praecis Pharmaceuticals

.

And if you look on the Web site, I do a piece every Friday. It lists all the deals coming out for the week. So it's a pretty good heads-up.

BUTTNER:

All right, both Ben and Brett, thanks so much. And there's more information that you can use when investing. Ben's Web site is Ipopros.com, as he mentioned. And that's part of

TheStreet.com

network.

And up next, a huge telecom merger in jeopardy. What will happen when "TheStreet.com" returns?

BUTTNER:

Welcome back. It's time now for "Predictions."

Back with us are Herb, Dave, Adam and Jim.

Herb, first up. Give it to us.

GREENBERG:

All right,

Dell Computer

, I've mentioned it here before...

BUTTNER:

Just...

GREENBERG:

... And they recently reported earnings, which were tepid, to put it kindly. And a number of the short sellers I talked to believe this company is very likely to guide analysts on Wall Street lower before they report this quarter's earnings going forward at some point, or at least report something that is lower than analysts expect. And it sounds like a plan to me.

BUTTNER:

And what does that mean for the stock?

GREENBERG:

That would not be good for the stock, Brenda...

(LAUGHTER)

GREENBERG:

... This stock currently trades at about 50 times expected earnings. And the short sellers think this -- as I said many months ago -- will ultimately be a stock that trades in the thirties. It's currently in the forties.

BUTTNER:

Now is this because of the investment income? I think you call it wompom (ph)...

GREENBERG:

No, the wompom -- and that's actually Bill Fleckenstein (ph) uses the word wompom. He's a short seller. But the wompom is investment gains. And people have been trying to factor this into it. No. It's just because the company's growth is slowing. The earnings...

BUTTNER:

Adam...

(CROSSTALK)

LASHINSKY:

Excuse me, last week,

Hewlett-Packard

said that things were looking pretty peachy in similar markets that Dell is in. What do your short sellers say about that?

GREENBERG:

Well, maybe Hewlett Packard is coming off a lower base, Dave. And maybe it wasn't growing -- I mean Adam -- and maybe it wasn't growing at the rate that that Dell was. And Dell is coming off great growth. Dell is a great company. But after a while, the numbers catch up to that company.

BUTTNER:

Jim, chime in here. I know you have some opinions about Dell.

SEYMOUR:

Well, I think we have to be careful not to ignore the explosive growth that Dell is seeing in servers. As a percentage of total units sold, it's not huge. But in terms of the margins because the margins are big on servers, that's the big play for Dell.

And I think we may have a quarter of downward guidance. But later in the year, towards the end of the year, I think Dell is going up.

BUTTNER:

All right, Dave, your "Prediction," please.

KANSAS:

I think more sharp bad news ahead, Nasdaq going down hard, down to 3,000 by the end of this month. I think that will be kind of a wash-out bottom. We're going to see kind of a dramatic bottom coming into Memorial Day, the end of the month there.

BUTTNER:

About 400 points in the next couple of weeks.

KANSAS:

A little less than a couple of weeks. But it's going to be quicker than people think I think.

(CROSSTALK)

KANSAS:

I don't think we need anything to cause it, bleeding. I mean, what do we need? It's just everybody feels bad. They're just going to keep selling. Who wants to buy? It's a horrible market, Herb. It's something you should love.

BUTTNER:

Oh, gosh, you guys...

KANSAS:

I'd say, look...

GREENBERG:

You're more bearish than I was.

(CROSSTALK)

BUTTNER:

You're separated at birth here.

KANSAS:

Herb, you brainwashed me, Herb. I can no longer think straight.

BUTTNER:

Adam.

LASHINSKY:

OK,

Lucent Technologies

sometime this summer will announce that it's going to spin off its microelectronics division. That's the division that makes communications semiconductors, number two to

JDS Uniphase

in its market, number two to

Texas Instruments

in digital-signal processors. Of course the stock will go up in the short term when they make that announcement.

GREENBERG:

That's right. And then after that, Adam, this company is pulling every trick out of its hip pocket to try to make people...

BUTTNER:

It's spun off everything...

LASHINSKY:

That's why...

BUTTNER:

... What's left?

LASHINSKY:

... That's right. Well, what's left is their old boring business. And that's the truth.

BUTTNER:

Jim, did you want to jump in?

SEYMOUR:

I think Lucent is going to do a little better. I think Lucent ought to do this spinoff. I'm long Lucent. And I'm staying long, but with a small position because I have some hope for the core.

But clearly,

Northern Telecom

, for example,

Nortel

, makes more sense as a big optical player. Now if you think that's Lucent's game...

BUTTNER:

And Jim, your prediction.

SEYMOUR:

Well, I think, Brenda, that despite the rumblings, the protests we're hearing from the

Department of Justice's

antitrust division people, especially Joel Klein, and from the European Union and from the U.S.

Federal Communications Commission

, I think the WorldCom merger with Sprint is going to go through.

And it's going to make. It's going to jell maybe at the end of this year. I should say that I'm long WorldCom.

I think this deal is going to go through. The protests about its impact on the long-distance market in the U.S., the other protests, just don't hold up when you look at the numbers.

BUTTNER:

All right...

LASHINSKY:

So Jim, have the stocks been light? And can they go up, Jim?

SEYMOUR:

I think actually we're going to see WorldCom, which fell about 13% this week when it closed yesterday, Friday afternoon, is going to be up into the fifties by about midsummer.

I don't think it's going to go for the moon. I don't think we're going to shoot over 100. There's nothing crazy like that that I see in the near future. But I think a WorldCom with the addition of the Sprint assets is going to be an important player.

BUTTNER:

OK, guys, thank you.

And what do you think about these "Predictions"? Do you agree, disagree? Let us know by logging onto

TheStreet.com

Web site and going to our TV page. Once you're there, you can rate the "Predictions" and also send us a comment or a question.

And thanks for joining us. We'll see you here again next time. Until then, we hope that you invest wisely.

END

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