TSC Weekender is back and not a moment too soon. After an ugly week of alleged book-cooking (Tyco), earnings disappointments (Intel) and obsessive Fed-watching, everyone needs a breather. Read on for our cheeky summary of the top stories of the week, and be sure to check out Senior Writer Alex Berenson's account of his debut on the Fox News Channel in the
Cutting Room. Also, humorist Eugene Finerman returns to TSC with an account of the post-crash
blame game that was played after the stock market debacle of October, 1987. And, as always, be sure to tell us what you think.
Tyco Takes a Fall
Prudence has never looked so big, and well,
-- a big conglomerate that makes everything from disposable medical products and fire extinguishers to valves and pipes -- watched its stock tumble nearly 16% over Wednesday and Thursday after a report appeared in
Behind the Numbers
, a newsletter run by
Prudent Bear fund manager David Tice. It said Tyco was playing around with its accounting, a charge that has
spooked investors since
disclosed big accounting problems which blitzed its stock.
Granted, Tice's fund offers a perfect example of how not to invest in the midst of one of the biggest bull markets in history. But despite his fund's lousy returns, it seems folks
like Tice's reports. Furthermore, the report was written by Albert Meyer, an accounting expert who, as
The Wall Street Journal
pointed out, uncovered the big
charity scandal a few years back.
Tyco offered a shrill protest, insisting all the talk was "false and baseless." And sell-side analysts rushed to the company side -- shocker! -- saying the company's books hadn't been anywhere near the kitchen.
The ruckus does offer up one fine, ironic (prudent?) gem: Tice, who started all the trouble, didn't even short the stock.
Learning From Earnings
The tech sector giveth and the tech sector taketh away.
At least that's what it felt like this week, as
surprised on the upside and
failed to meet estimates for the second quarter in a row.
Freaked by Apple's warning last month of an earnings shortfall, analysts estimated the company would earn a mere 45 cents per share during its fiscal fourth quarter -- a number it ultimately beat by a full 6 cents. Investors got downright giddy when the news was announced on Wednesday evening; the stock skipped up nearly 7% in after-hours trading that night. By week's end, however, a wee worm poked its head out of the shiny Apple when the company announced a delay in its introduction of the 500-megahertz G-4. Customers who had already ordered the super-quick chip were bummed when Apple canceled their original order -- and then positively irate to hear that, if reordered, the chip would now cost them an additional $350. After, er,
(and voluminous) message-board invective, the company returned to Planet Earth Friday morning and reversed the unpopular policy. Apple ended the week up 1 3/8, or 2%, at 74 9/16.
Intel's earnings reports make investors
jumpy -- and for good reason. When the company disappointed on the downside Tuesday evening, the stock
yelped to the tune of 5 points immediately -- and ended the week at 70 7/8, down 7.6% from its closing price on Tuesday. Perhaps more ominous was the chipmaker's reluctance to give clear guidance for Q4, hardly a reassuring sign of things to come. The $1.6 billion
late in the week did little to cheer cranky investors; Intel ended the week down 2 15/32, or 3.37%, at 70 7/8.
Shhhh, You'll Disturb the Dow
Just in case you were worried, the market looks like it has all the strength of a
Crazy Al Greenspan mentioned that maybe, just maybe the market was a little out-of-control (not that he would ever use those words, of course). And then Friday morning, the
Producer Price Index
worse than expected.
The result: the
plunged 266.90, or 2.6%, to 10,019.71 after trading as low as 9998.18. For the week, the Dow lost more than 630 points, its biggest one-week point decline ever. The
didn't fare much better, falling 75.01, or 2.7%, to 2731.83 after trading as low as 2704.28.
Of course in the midst of all this doom there still was a touch of lunacy, Internet-style.
started trading Friday and finished the day up 85%.
Guess even the Dow can't keep a good dot-com down.
U.S. News Editor Erle Norton contributed to this story.