Brigitte
31.01.2001, 15:27
* A late-session bout of month-end window dressing pulled Tokyo's
Nikkei Index out of negative terrain on Wednesday, although volume
was light as investors sat on the sidelines ahead of today's planned
US FOMC rate-cut decision. The Index gained 0.1% to finish at 13,844.
In Hong Kong, bank and property issues rebounded from losses in the
previous two sessions, though market turnover was subdued. The Hang
Seng climbed 1.3% to close at 16,102, surpassing the psychologically
important 16,000 mark.
* London's equity market is modestly lower at midday, as investors
cash in on recent profits in the bank and telecom sectors. The
FTSE100 has lost 0.6% at 6,295. In Frankfurt, mobile phone
manufacturer Siemens (SIEGN.DE) is providing upside to the DAX, after
the company released a positive quarterly report and offered an upbeat
outlook for 2001. The blue chip Index has edged ahead 0.2% to trade
at 6,753, recovering from a jaunt in negative territory. In Paris,
the CAC40 is also in the black, up 0.3% at 5,934.
* The S&P Futures are trading down 2.2 points, or roughly 1.9 points
below Fair Value, which is at minus 0.3 points. The negative bias
indicates a slightly lower open for US stocks.
* The 4Q Preliminary Gross Domestic Product (GDP) showed an expansion
rate of 1.4%, below both the Thomson IFR consensus estimate and the
previous month's 2.2% rise. The Chain Weighted Price Index came in
at 1.9%, compared with the 3Q figure of 2.0% and economists'
forecast of 1.9%. The PCE Price Index rose 2.2% in 4Q, after
climbing 1.8% in 3Q.
* The Chicago Association of Purchasing Managers will release their
January survey of manufacturing activity at 10:00 AM. The Thomson IFR
consensus estimate forecast an Index of 43.2, down slightly from
December's reading of 44.7. The report is considered a preview to
the National Association of Purchasing Manager's Index, which is
scheduled for release tomorrow.
* Also at 10:00 AM, the Bureau of the Census will release December's
new home sales figures. Economists expect sales to drop to 891,000
annualized units from last month's 909,000 units.
* The Federal Open Market Committee (FOMC) is expected to announce
its decision on the federal funds rate today at 2:15 PM. US Fed
Chairman Alan Greenspan's recent comments that the US economy is
"very close to zero" growth has led most experts to expect a 50bp cut.
Rumors of a 75bp have surfaced, though.
* On the IPO front, EXACT Sciences Corp. (EXAS) priced its 4 million-
share IPO at $14 per share, coming in at the bottom of the
anticipated range of $14-$16 per share.
Stocks to watch:
* Analyst Recommendation Revisions:
Prudential Securities lifted its rating, 2001 EPS and target prices
on several major oil firms following the group's recent
underperformance. The analysts lifted USX-Marathon Group (MRO),
Phillips Petroleum (P) and Conoco (COC'A, COC'B) to "Strong Buy"
ratings from "Hold" ratings. ExxonMobil (XOM), Royal Dutch (RD), and
Texaco (TX) were lifted by Prudential to "Accumulate" ratings from
"Hold."
First Union Securities cut Guidant Corp (GDT) to a "Market Perform"
rating from a "Buy" and reduced its 2001 EPS to $1.77 from $1.83 on
the firm, after Guidant again downwardly revised guidance.
CIBC World Markets lifted Applied Materials (AMAT) to a "Strong Buy"
from a "Buy" after the company preannounced 1Q results. The analysts
believe the warning will cause the Street to adjust expectations and
focus on the potential earnings growth in 2002.
Credit Suisse First Boston cut Ericsson (ERICY) to a "Buy" from a
"Strong Buy" on expectations that the company's investment in 3G
(third generation) capabilities will impact margins in the near-term.
Robinson Humphrey reduced its rating on Agile Software (AGIL) to a
"Neutral," on expectations that the stock will move in-line with
Ariba (ARBA), following ARBA's announced acquisition of AGIL.
Amazon (AMZN) was dropped to a "Neutral" rating from a "Buy" by WR
Hambrecht, after the company guided 2001 revenues lower.
JP Morgan dropped its rating on LifeMinders.com (LFMN) to a "Market
Performer" from a "Long Term Buy," stating the firm hit a "revenue
wall" in 4Q and has little near-term visibility.
Morgan Stanley\DW reduced Cymer (CYMI) to an "Outperform" rating from
a "Strong Buy" on caution over the 2001 outlook. However, MS\DW
increased its 12-month price target to $40 from $35.
* Institutional Money Flows:
Proctor & Gamble (PG) led consumer product issues higher after
reporting solid quarterly results. PG advanced $4.25 to $71.10, G
tacked on $0.94 to $30.75, and AVP added $1.38 to $40.52. Biotechs
reversed the previous session's gains. IDPH fell $4 3/16 to $62 5/8,
HGSI shed $3 5/8 to $64 3/16, MEDI eased $2 7/8 to $41 9/16, and MLNM
gave up $2 7/8 to $52 7/8.
* Applied Materials (AMAT) announced it anticipates 1Q results will
fall below previous projections due to slowing semiconductor demand.
AMAT pegged 1Q revenue at $2.95 billion, below earlier estimates of
$2.9 billion. According to First Call, analysts had projected
revenues of just $2.8 billion and earnings of $0.74.
* Adobe Systems (ADBE) warned that slowing in some markets could hit
the company's revenues this quarter. Management said it is "spending
cautiously" in order to meet its bottom-line goals. The First Call/
Thomson Financial consensus estimate forecast 2Q operating earnings
of $0.30. In after hours trading last night, ADBE plunged to $44
1/4 after closing at $52 3/4.
* The largest US radio station owner Clear Channel (CCU) updated
investors' on 2001 earnings expectations. CCU projected a 1Q loss
of $0.47 on revenues of $1.54 million and a full-year 2001 loss of
$0.67 on $8.08 billion in revenues. According to First Call/Thomson
Financial, analysts had expected a loss of $0.28 and revenues of
$8.08 billion for the full-year 2001. On a cash flow basis, the firm
expects 2001 earnings of $3.16, which is in-line with the First Call/
Thomson Financial consensus estimate.
* America Online (AOL) stated FY01 2Q earnings of $0.15 on a stand-
alone basis, up from the year-ago profit of $0.09 and topping the
First Call/Thomson Financial consensus estimate of $0.14. The Time
Warner group booked a 4Q net income of $0.18, falling from last
year's net of $0.20. After the merger, AOL Time Warner, reported pro
forma cash earnings of $0.28 from last year's cash earnings of $0.24.
Including special items, the combined entity, AOL Time Warner
reported a loss of $0.25 versus the year-ago loss of $0.05.
* Comdisco (CDO) booked a FY01 1Q net income of $0.55, $0.19 ahead of
the FY00 1Q net. A First Call/Thomson Financial survey of 5 analysts
forecast earnings of $0.50. Revenues increased to $909 million from
$876 million.
* On-line retailer Amazon (AMZN) reported a 4Q loss of $0.25 compared
with the 4Q99 loss of $0.55. The results were a penny better than
the loss of $0.26 forecast by First Call/Thomson Financial consensus.
Sales rose to $972 million from $676 million. Revenues climbed to
$972 million from $676 million. The First Call consensus estimate
called for revenues of $994 million. Amazon announced plans to cut
15% of its workforce, or 1,300 jobs, resulting in a $150 million
restructuring charge and said it will close a distribution center in
Georgia and the customer service center in Seattle. The company
guided 2001 sales forecasts down to a growth rate of 20%-30%, from
previous expectations for a 40% growth rate. In pre-opening trade on
Instinet, AMZN has slipped to $17 3/4 after closing Tuesday's session
at $18 15/16.
* RealNetworks (RNWK) reported an in-line 4Q pro forma net income of
$0.02, falling from year-ago net of
Nikkei Index out of negative terrain on Wednesday, although volume
was light as investors sat on the sidelines ahead of today's planned
US FOMC rate-cut decision. The Index gained 0.1% to finish at 13,844.
In Hong Kong, bank and property issues rebounded from losses in the
previous two sessions, though market turnover was subdued. The Hang
Seng climbed 1.3% to close at 16,102, surpassing the psychologically
important 16,000 mark.
* London's equity market is modestly lower at midday, as investors
cash in on recent profits in the bank and telecom sectors. The
FTSE100 has lost 0.6% at 6,295. In Frankfurt, mobile phone
manufacturer Siemens (SIEGN.DE) is providing upside to the DAX, after
the company released a positive quarterly report and offered an upbeat
outlook for 2001. The blue chip Index has edged ahead 0.2% to trade
at 6,753, recovering from a jaunt in negative territory. In Paris,
the CAC40 is also in the black, up 0.3% at 5,934.
* The S&P Futures are trading down 2.2 points, or roughly 1.9 points
below Fair Value, which is at minus 0.3 points. The negative bias
indicates a slightly lower open for US stocks.
* The 4Q Preliminary Gross Domestic Product (GDP) showed an expansion
rate of 1.4%, below both the Thomson IFR consensus estimate and the
previous month's 2.2% rise. The Chain Weighted Price Index came in
at 1.9%, compared with the 3Q figure of 2.0% and economists'
forecast of 1.9%. The PCE Price Index rose 2.2% in 4Q, after
climbing 1.8% in 3Q.
* The Chicago Association of Purchasing Managers will release their
January survey of manufacturing activity at 10:00 AM. The Thomson IFR
consensus estimate forecast an Index of 43.2, down slightly from
December's reading of 44.7. The report is considered a preview to
the National Association of Purchasing Manager's Index, which is
scheduled for release tomorrow.
* Also at 10:00 AM, the Bureau of the Census will release December's
new home sales figures. Economists expect sales to drop to 891,000
annualized units from last month's 909,000 units.
* The Federal Open Market Committee (FOMC) is expected to announce
its decision on the federal funds rate today at 2:15 PM. US Fed
Chairman Alan Greenspan's recent comments that the US economy is
"very close to zero" growth has led most experts to expect a 50bp cut.
Rumors of a 75bp have surfaced, though.
* On the IPO front, EXACT Sciences Corp. (EXAS) priced its 4 million-
share IPO at $14 per share, coming in at the bottom of the
anticipated range of $14-$16 per share.
Stocks to watch:
* Analyst Recommendation Revisions:
Prudential Securities lifted its rating, 2001 EPS and target prices
on several major oil firms following the group's recent
underperformance. The analysts lifted USX-Marathon Group (MRO),
Phillips Petroleum (P) and Conoco (COC'A, COC'B) to "Strong Buy"
ratings from "Hold" ratings. ExxonMobil (XOM), Royal Dutch (RD), and
Texaco (TX) were lifted by Prudential to "Accumulate" ratings from
"Hold."
First Union Securities cut Guidant Corp (GDT) to a "Market Perform"
rating from a "Buy" and reduced its 2001 EPS to $1.77 from $1.83 on
the firm, after Guidant again downwardly revised guidance.
CIBC World Markets lifted Applied Materials (AMAT) to a "Strong Buy"
from a "Buy" after the company preannounced 1Q results. The analysts
believe the warning will cause the Street to adjust expectations and
focus on the potential earnings growth in 2002.
Credit Suisse First Boston cut Ericsson (ERICY) to a "Buy" from a
"Strong Buy" on expectations that the company's investment in 3G
(third generation) capabilities will impact margins in the near-term.
Robinson Humphrey reduced its rating on Agile Software (AGIL) to a
"Neutral," on expectations that the stock will move in-line with
Ariba (ARBA), following ARBA's announced acquisition of AGIL.
Amazon (AMZN) was dropped to a "Neutral" rating from a "Buy" by WR
Hambrecht, after the company guided 2001 revenues lower.
JP Morgan dropped its rating on LifeMinders.com (LFMN) to a "Market
Performer" from a "Long Term Buy," stating the firm hit a "revenue
wall" in 4Q and has little near-term visibility.
Morgan Stanley\DW reduced Cymer (CYMI) to an "Outperform" rating from
a "Strong Buy" on caution over the 2001 outlook. However, MS\DW
increased its 12-month price target to $40 from $35.
* Institutional Money Flows:
Proctor & Gamble (PG) led consumer product issues higher after
reporting solid quarterly results. PG advanced $4.25 to $71.10, G
tacked on $0.94 to $30.75, and AVP added $1.38 to $40.52. Biotechs
reversed the previous session's gains. IDPH fell $4 3/16 to $62 5/8,
HGSI shed $3 5/8 to $64 3/16, MEDI eased $2 7/8 to $41 9/16, and MLNM
gave up $2 7/8 to $52 7/8.
* Applied Materials (AMAT) announced it anticipates 1Q results will
fall below previous projections due to slowing semiconductor demand.
AMAT pegged 1Q revenue at $2.95 billion, below earlier estimates of
$2.9 billion. According to First Call, analysts had projected
revenues of just $2.8 billion and earnings of $0.74.
* Adobe Systems (ADBE) warned that slowing in some markets could hit
the company's revenues this quarter. Management said it is "spending
cautiously" in order to meet its bottom-line goals. The First Call/
Thomson Financial consensus estimate forecast 2Q operating earnings
of $0.30. In after hours trading last night, ADBE plunged to $44
1/4 after closing at $52 3/4.
* The largest US radio station owner Clear Channel (CCU) updated
investors' on 2001 earnings expectations. CCU projected a 1Q loss
of $0.47 on revenues of $1.54 million and a full-year 2001 loss of
$0.67 on $8.08 billion in revenues. According to First Call/Thomson
Financial, analysts had expected a loss of $0.28 and revenues of
$8.08 billion for the full-year 2001. On a cash flow basis, the firm
expects 2001 earnings of $3.16, which is in-line with the First Call/
Thomson Financial consensus estimate.
* America Online (AOL) stated FY01 2Q earnings of $0.15 on a stand-
alone basis, up from the year-ago profit of $0.09 and topping the
First Call/Thomson Financial consensus estimate of $0.14. The Time
Warner group booked a 4Q net income of $0.18, falling from last
year's net of $0.20. After the merger, AOL Time Warner, reported pro
forma cash earnings of $0.28 from last year's cash earnings of $0.24.
Including special items, the combined entity, AOL Time Warner
reported a loss of $0.25 versus the year-ago loss of $0.05.
* Comdisco (CDO) booked a FY01 1Q net income of $0.55, $0.19 ahead of
the FY00 1Q net. A First Call/Thomson Financial survey of 5 analysts
forecast earnings of $0.50. Revenues increased to $909 million from
$876 million.
* On-line retailer Amazon (AMZN) reported a 4Q loss of $0.25 compared
with the 4Q99 loss of $0.55. The results were a penny better than
the loss of $0.26 forecast by First Call/Thomson Financial consensus.
Sales rose to $972 million from $676 million. Revenues climbed to
$972 million from $676 million. The First Call consensus estimate
called for revenues of $994 million. Amazon announced plans to cut
15% of its workforce, or 1,300 jobs, resulting in a $150 million
restructuring charge and said it will close a distribution center in
Georgia and the customer service center in Seattle. The company
guided 2001 sales forecasts down to a growth rate of 20%-30%, from
previous expectations for a 40% growth rate. In pre-opening trade on
Instinet, AMZN has slipped to $17 3/4 after closing Tuesday's session
at $18 15/16.
* RealNetworks (RNWK) reported an in-line 4Q pro forma net income of
$0.02, falling from year-ago net of