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  • The Internet infrastructure services industry has hit its bottom and is currently in a transition stage, according to a report issued today by Lehman Brothers.

    The report named Akamai Technologies ( AKAM), Digex ( DIGX), and Exodus Communications as investors' best bets in the field because of the companies' long-term appreciation potential.

    Lehman said "a large and growing market, recurring revenue stream, high margins and low capital intensity lead us to believe these are good business models." The report also indicated that the sector's fundamentals should begin improving late in 2001.

    Shares of Akamai closed up $1.13, or 4.7%, to $24.94; Digex was up 6 cents, or 0.3%, to $23.88; Exodus was down, though, lower by 81 cents, or 3.8%, to $20.81.

    Mergers, acquisitions and joint ventures

    Cordiant Communications ( CDA) agreed to acquire e-business consultant MicroArts for an initial consideration of $47.4 million in stock.

    That amount could increase to as much as $88.1 million depending on MicroArts' financial performance through the end of 2003, according to a published report. Cordiant, a British advertising firm, said about 45% of the shares issued will be restricted from sale for a year after completing the deal.

    Shares of Cordiant closed down 13 cents, or 0.6%, to $20.75.

    Chase Manhattan agreed to acquire Dai-Ichi Kangyo Trust's U.S. corporate trust and escrow business.

    Financial terms weren't disclosed. Chase, which expects to close the transaction in the first quarter of 2001, will take over the trust administration of about $5 billion of outstanding debt for which Dai-Ichi Kangyo now serves as the trustee or agent.

    The portfolio includes corporate debt, municipal revenue bonds, eurobonds, project and structured financing, medium-term notes, commercial paper and escrows.

    Chase also acquired the U.S.-based corporate trust business of Fuji Bank & Trust and the corporate and municipal trust business of First Tennessee National ( FTN) this year.

    Shares of Chase closed up 63 cents, or 1.4%, to $46.38; First Tennessee was up 13 cents, or 0.4%, to $29.06.

    Data Broadcasting is selling its 34.4% stake in MarketWatch.com to Pearson ( PSO) for about $26.9 million in cash.

    Pearson, which owns 60% of Data Broadcasting, paid a 25% premium above the average closing price of MarketWatch over the last 30 days. Data Broadcasting will distribute the proceeds to its shareholders in the form of a dividend payable on Jan. 16 to shareholders of record as of Jan. 8.

    Data Broadcasting, a securities pricing and financial information company based in Bedford, Mass., said the sale of the MarketWatch stake is part of an attempt to streamline its business and focus on supplying financial data to institutional and retail investors. The transaction will also return the company's pretax income to profitability by removing the equity loss and amortization associated with MarketWatch.

    Data Broadcasting will take a charge of about $90 million in the fourth quarter for the sale.

    Shares of Pearson closed up 63 cents, or 2.6%, to $24.38; MarketWatch gained 78 cents, or 35.2%, to $3, and Data Broadcasting rose 31 cents, or 10.2%, to $3.38 on the Nasdaq.
    After Tuesday's Close

    Beam this. Handspring said Tuesday it has agreed to acquire Bluelark Systems, a developer of wireless Internet software, for up to 450,000 shares of its common stock.

    Handspring, maker of handheld devices, said Bluelark's software and infrastructure for Web browsing would become a "key application" for its products.

    The deal is expected to close in the first quarter of 2001 and is subject to approval by Bluelark shareholders and other conditions. Handspring closed Wednesday up $5.81, or 16.2%, to $41.69.

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    Earnings/revenue reports and previews

    Concurrent Computer ( CCUR) plummeted today after the company said its second-quarter loss would be wider than previously expected because of a delay in orders from a major domestic cable operator.

    The shares closed down $3.94, or 49.6%, to $4.

    The computer systems, servers and software company now expects to post a loss of 7 cents to 8 cents a share, wider than its previous estimate of a loss of 4 cents a share. Both figures include a charge of 2 cents for severance. Eight analysts polled by First Call/Thomson Financial are calling for the company to lose 3 cents a share for the quarter. The company lost 5 cents in the year-ago period.


    After Tuesday's Close

    Business-to-business infrastructure provider eXcelon ( EXLN) said after the close Tuesday that fourth-quarter and full-year revenue and earnings would come in below expectations due to reduced capital spending by telecommunications and dot-com companies.

    Burlington, Mass.-based eXcelon said it expects to lose between 23 cents and 26 cents per share in the fourth quarter on revenue of $14.5 million to $15.5 million. The consensus of three analysts surveyed by First Call/Thomson Financial was for a loss of 4 cents a share. There was no consensus revenue estimate for the quarter.

    eXcelon also said it would lose 35 cents to 38 cents per share for the full year on revenue of $69 million to $71 million. Analysts were expected a loss of 17 cents per share.

    Shares of eXcelon fell $1.41, or 52.3%, to $1.28 at the close Wednesday.

    Network Associates said Tuesday it expected to post a fourth-quarter loss of between $130 million and $140 million due to reduced orders and a slowing economy.

    The company also announced that CEO and Chairman William Larson, President Peter Watkins and CFO Prabhat Goyal were stepping down. Edwin Harper, a director of the company, will take over as chairman. Larson said he would stay until a new CEO is announced, and Goyal will stay until a replacement is found.

    The Santa Clara, Calif.-based provider of software security systems did not provide earnings-per-share figures. Eleven analysts polled by First Call/Thomson Financial were calling for the company to earn 31 cents a share for the quarter. The company earned 20 cents in the year-ago period.

    Network Associates says it expects fourth-quarter revenues of $55 million to $65 million. Analysts were expecting revenue of $241.9 million. The revised numbers were caused by the decision of key distributors to dramatically reduce their inventory levels and by a reduction in fourth-quarter demand induced by a slowing overall economy, the company said in a statement.

    Network Associates closed Wednesday down $7.25, or 61.7%, to $4.50.

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    Analyst Actions

    This morning, Goldman Sachs recommended that investors overweight their exposure to beverage stocks, including such bellwethers as Coca-Cola ( KO) and PepsiCo ( PEP).

    Goldman said that improving fundamentals in the sector make these stocks more attractive. Coke closed up 56 cents, or 0.9%, to $60.56; PepsiCo was flat at $48.88.

    Upgrades

    Medtronic ( MDT): price target UP to $65 from $55 at Lehman Brothers. Medtronic closed up $2, or 3.4%, to $61.

    Downgrades

    La-Z-Boy ( LZB): intermediate-term rating DOWN to hold from accumulate at Merrill Lynch. La-Z-Boy closed up 88 cents, or 5.9%, to $15.75.

    Magic Software ( MGIC): 12-month price target DOWN to $4 from $13 at UBS Warburg. Magic Software closed down 13 cents, or 5%, to $2.38.

    Netro ( NTRO): DOWN to market performer from buy at Robertson Stephens. Netro closed down 16 cents, or 2.3%, to $6.66.

    Visx ( EYE): rating under review from buy at Roberson Stephens. Visx closed up 69 cents, or 7.4%, to $10.

    Initiations

    Alliance Fiber Optics ( AFOP): NEW buy at Wit Soundview; price target: $11. Alliance closed up $1, or 20.5%, to $5.88.

    Maytag : NEW hold at Credit Suisse First Boston. Maytag closed up 50 cents, or 1.6%, to $31.31.

    Whirlpool ( WHR): NEW hold at CSFB. Whirlpool closed up 38 cents, or 0.8%, to $47.25.

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    Miscellany

    FedEx Express, a unit of FedEx ( FDX), will increase its rates by an average of 4.9% for shipments within the U.S. and 2.9% elsewhere starting Feb. 1.

    The company said the increase is the first since last year. The express shipping company said customers can get customized rates quotes on its rate guide Web site. FedEx ended the day up 64 cents, or 1.7%, to $38.79.

    Quepasa.com a Web content provider targeting Hispanics, said today that it plans to liquidate its business, sell its assets and give the proceeds to shareholders.

    Included in the company assets are the quepasa.com Web site and three subsidiaries, RealEstateEspanol.com, Etrato.com and Credito.com, as well as company furniture, fixtures and equipment. The liquidation is subject to shareholders' approval, and the company said it expects to have a shareholders meeting to address the issue in three to four months.

    Last month, the company cut 38 jobs, or about two-thirds of its work force, and said it was exploring strategic alternatives, including the sale of the company. The company said it would reduce its current work force of 20 throughout the liquidation process and pay a $880,000 restructuring charge in the fiscal fourth quarter.

    Last week, the Phoenix-based company said it had gotten a delisting notice from the Nasdaq because its stock didn't stay at the minimum $1 over the previous consecutive 30 trading days as required by Nasdaq rules.

    Shares of Quepasa closed today and yesterday at 13 cents.


    After Tuesday's Close

    Bradlees ( BRAD) said postclose Tuesday that it has filed for Chapter 11 bankruptcy protection and will sell its inventory to a consortium led by Boston-based Gordon Brothers Retail Partners.

    Bradlees shares ended the day at 22 cents. Nasdaq halted trading on the announcement.

    The troubled, Braintree, Mass.-based retail chain had been in talks with lenders, and published reports had indicated the company was considering bankruptcy and liquidation.

    Bradlees said it would begin phasing out its headquarters and distribution functions this week. The company operates 105 stores and three distribution centers in seven Northeast states with 9,800 employees and sales of $1.5 billion in 1999.

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