SAN FRANCISCO -- There's good and bad news in the PC industry, another downgrade of
, a merger and enough split news to make the most avid gymnastics fan happy.
was suspended at the opening pending news.
The Wall Street Journal
reported today that H-P will split into at least two publicly traded companies. H-P officials could not be reached for comment, though an announcement was anticipated this morning.
The negative news came from
, which announced late yesterday that it expects second-quarter earnings and sales to fall short of first-quarter figures because of slower PC sales. The 15-analyst
outlook called for earnings of 14 cents a share vs. the year-ago loss of 23 cents.
reported that both
NationsBanc Montgomery Securities
downgraded the stock. Prudential lowered its rating to accumulate from strong buy, while NationsBanc downgraded it to hold from buy. Micron Electronics was trading 2 7/16 lower or 17% at 12.
Intel is trading lower again after NationsBanc Montgomery downgraded the stock to hold from buy while reducing its target price to 120 from 150 with downside risk to 100. It follows a downgrade by
Donaldson, Lufkin and Jenrette
on Monday. Intel was 3 1/16 lower or 2.6% at 114.
NationsBanc Montgomery cut earnings estimates in the first quarter to $1.05 from $1.11 and for 1999 to $4.45 from $4.80. For 2000, the company is cutting its estimate to $5.05 from $5.75. According to First Call, Intel is expected to earn $1.10 for the first quarter and $4.70 for 1999.
In the report, analyst Jonathan Joseph notes that "processor demand for the March quarter continues to soften, with prospects for the June quarter to be flat, at best."
"The problems are manifold, including double-ordering in the December quarter, further competition from
a unit of
at the lower end, and a slow transition to the Pentium III," Joseph writes. "We believe Intel has received some cancellations in the U.S. market recently and that further cancellations are on the way, with accelerated price cuts likely soon."
On the merger front, French telecommunications company
has announced it is buying
, which makes switches to connect computers to corporate networks. Alcatel is expected to buy Xylan for $2 billion, or $37 a share, a huge premium over Monday's 26 15/16 close. Xylan was trading 9 3/16 higher or 34% at 36 1/8.
As far as splits,
board declared a 2-for-1 stock split.
Credit Suisse First Boston
initiated coverage of the company with a buy rating. @Home was trading 12 3/4 higher or 12% at 119 7/8.
announced a 2-for-1 split to take effect March 25 for shareholders of record March 17. It was trading up 3 1/8 or 3.8% at 81 3/4.
is also trading higher following its 3-for-1 split. eBay was trading 12 1/16 higher or 11% at 119 3/4.
is trading higher following some kind words from
Morgan Stanley Dean Witter
. Morgan Stanley reiterated a strong buy rating on the company and said that Sun "should be able to do 19% to 20% top line year-over-year growth, at or above our estimate."
Morgan Stanley Dean Witter set a price target of $132. It was trading 3 1/4 higher of 3% at 100 1/2.
Baan Not Partying in 1999
Shares of software company
are lower after the company said it expects 1999 to be a "difficult year for the industry," according to Reuters. Baan reported a latest fourth-quarter loss of $295 million, or $1.45 a share.