Stocks to Watch: AOL Drops, Novell Bolts Higher

The Day's Winners

  • Borders Group ( BGP) was adding 2.2% to $18.71 after the bookseller said second-quarter earnings rose sharply from a year ago and edged out analysts' expectations. The company also raised its full-year earnings estimate, citing cost-cutting moves.

    Novell ( NOVL) edged past Wall Street's earnings estimates for the third quarter, saying it benefited from better-than-expected business in Europe and several large licenses in North America, and investors rewarded the stock with a gain of 28% to $2.67. The software and services company earned $9.9 million, or 3 cents a share in the quarter ended July 31, compared with a loss of $19.3 million, or 6 cents a share, in the same period a year ago. Excluding a charge in the latest quarter, Novell earned 4 cents. Revenue rose to $282 million from $249 million.

  • TiVo ( TIVO) was climbing 12% to $4.68 a day after the company posted a narrower-than-expected loss and boosted its revenue guidance. The company also said it found an accounting error, but investors were shrugging that off. TiVo lost $3 million, or 6 cents a share, in its second quarter, compared with a loss of $34.5 million, or 82 cents a share, last year. The loss was far narrower than analysts' 18-cent prediction. Revenue was $23.9 million, compared with $4.1 million last year.

    The Day's Losers

  • AOL Time Warner ( AOL) was dropping 6% to $13.18 as its ties to bankrupt WorldCom and optimistic revenue forecasts by stock-selling executives last year drew new scrutiny. London's Financial Times reported that the Securities and Exchange Commission plans to investigate positive comments made by AOL executives last year during a period when stock sales by 15 company insiders produced some $500 million in profits. There was no suggestion that the executives didn't believe the outlooks when they gave them. Separately, The Wall Street Journal raised questions about AOL's relationship with WorldCom. A WorldCom representative said it had nothing but legitimate business dealings with AOL.

  • AT&T ( T) was lower by 1.5% to $12.20 following a report that New York Attorney General Eliot Spitzer is investigating whether former Salomon Smith Barney analyst Jack Grubman upgraded the phone company to a buy in April 2000 in an effort to get a lucrative investment banking deal for the Citigroup ( C) unit. According to The Wall Street Journal, Spitzer also wants to know what role, if any, Citigroup Chairman Sanford Weill, an AT&T director, had in influencing Grubman's review of AT&T.

  • McAfee.com's ( MCAF) board and advisers have decided that Network Associates' ( NET) latest offer for the company's shares is fair, and they asked stockholders to accept the acquisition terms. Network Associates has been trying since March to acquire the 25% of stock in McAfee, an antivirus software maker, it doesn't already own. The company recently raised its offer to $8 in cash plus 0.675 of a share of Network Associates for each share of McAfee. Shares of McAfee were down 3.4% to $17.77, and Network was lower by almost 5% to $14.77.

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