At the market luau this week, the Dow limboed ever lower, yet nobody really cheered. You'd think how everybody loves debating when the bear market will occur, what's going to set it off, how you can tell and so on, that they'd be happy to see a little dip. Ah, well. Take your mind off the whole thing by checking out the top stories of the week below, exercise your funny bone with our commentary feature on what the poor need and be sure and and check out Brenda Buttner's debut Cutting Room. Also, tune in Sunday for JJC's State of the Web piece. And don't forget to get some golf in.
Mr. Softee Takes a Hard Look in the Mirror
Investors ran for the hills, or at least for the bonds, Thursday after
comments about tech in general and Microsoft in particular being overvalued. As
tells it, several attendees at the
Society of American Business Editors and Writers
bolted to the telephones.
fell 3.8% Thursday, and shares of Microsoft fell 4 7/8 to 91 3/16, losing some $24.9 billion in value. Friday, the Nasdaq ended 0.3% down and Microsoft slipped 1/4, or 0.27%, to 90 15/16.
But as many point out, Microsoft's Chief Financial Officer
himself have been saying the company's stock could stand to go on a diet for awhile. At the same time, Microsoft has decided to exploit the "gold rush" mentality by spinning off its
division with an IPO expected to raise more than $75 million.
So why all the hoopla? The markets, jumpy over a possible rate hike and hardly self-confident these days, were probably looking for a reason to sell off. The teapot calling itself -- as well as the rest of the tech kettle -- black did the trick nicely. Meanwhile, the Nasdaq's still up 25% for the year, leaving investors to bite their nails all the way to the bank.
ISPs in Love
Virtual wedding bells were pealing this week, as Internet service providers
shack up together in Atlanta under a single EarthLink brand name. The $1.4 billion stock swap appears to make good sense for both companies, giving the similarly positioned "no-frills" ISPs a clear advantage over smaller competitors and a better -- if still long -- shot at challenging the leviathan industry leader, AOL.
On Friday, MindSpring closed up 2 11/16, or 9.82%, at 30 1/16, EarthLink ended the day up 5 3/16, or 12.24%, at 47 9/16 and AOL finished up 9 13/16, or 11.21%, at 97 5/16. Morgan Stanley Dean Witter raised its rating on EarthLink to strong buy from outperform and on MindSpring to outperform from neutral. Morgan Stanley has not performed any underwriting for the companies.
The merger may grant the new EarthLink the resources necessary to attract a different kind of Web user, namely the newbies who have been flocking to AOL in droves. EarthLink and MindSpring mostly have had to content themselves with more intrepid Netizens who can manage to navigate by themselves.
But the combined new company will have the marketing dollars to beef up EarthLink's name recognition and already vaunted customer service. Given AOL's current 17.5-plus million users (compared with the new company's 2.5 million), it's still easy to see why Mike McQuary, who will be president of the new entity, acknowleged that the
crowd isn't exactly "wetting its pants" over the deal.
A Cure for Cancer Sticks
Boy, the tobacco industry can't catch a break these days. After a five-year criminal investigation ended without any indictments, now
et alibi face the government's civil lawsuit charging conspiracy to defraud and mislead the public about smoking's effects since the bobby soxers started lighting up.
Seeking damages that exceed $20 billion a year and Medicare expenses not covered by the $246 billion in settlements with states, the government's suit could put a serious dent in the profitability of selling menthol 100s. For their part, tobacco companies will call for immediate dismissal, with legal counsel for MO calling the action "politically correct extortion." Tobacco stocks popped early Thursday after Wednesday's selloff, then wafted away.
It will probably be late next year before the case goes to trial, meaning that high schoolers wanting to sue the companies because smoking didn't make them
cool after all will just have to wait.