The Dow gains on tame employment data - UPDATE 20 06.06.2003 22:41 Headlines
NEW YORK (AFX) -- The Dow eked out a modest gain Friday as Wall Street eyed
a $5 billion hostile takeover bid from Oracle, a solid revenue forecast from
Intel and the latest U.S. employment data.
Volume on the Nasdaq and the New York Stock Exchange hit highs for the year, but
stocks cooled off later in the session to end mixed.
The S&P 500 broke through the 1,000 mark for the first time in a year before
falling back.
The Nasdaq ended lower as the tech-heavy index caught its breath after nearing
the 1,700 mark, a level not seen since May 2002.
Oracle offered $5.1 billion for business software firm PeopleSoft , which
spurned the bid late in the trading session.
Investors seemed to favor the latest U.S. jobs report, in which 17,000 people
lost jobs in May, fewer than the expected figure of 46,000. The nation's
unemployment rate rose to 6.1 percent, as expected. And April's originally
reported 48,000-payroll drop was revised to flat.
While the employment report revealed a still-sluggish job market, it came in
within expectations and did not disappoint market watchers, said Bryan
Piskorowski, market commentator at Prudential.
"Investors are now looking at the economic glass as half full and this has
fueled the market's gains of late," he said.
The Dow Jones Industrial Average rose 21 points, or 0.2 percent, to close at
9,062.
The S&P 500 fell 2, or 0.2 percent, to 987.
The Nasdaq headed down 18 points, or 1.1 percent, to 1,627.
Volume was heavy, with 1.8 billion shares changing hands on the Big Board, and
2.9 billion on the Nasdaq. Both exchanges set volume records for the year.
Advancers were in a dead heat with decliners on the New York Stock Exchange. On
the Nasdaq, decliners led advancers by 18 to 15.
In the bond market, the 10-year Treasury note ended flat with a yield of 3.34
percent.
Intel slid 0.4 percent to $21.76 as it cut the top end and raised the bottom
end of its second-quarter sales range. The company is poised to deliver on Wall
Street's expectations for its next financial period.
PeopleSoft rocked up 17.9 percent to $17.82. Oracle fell 27 cents to $13.09.
Oracle CEO Larry Ellison, discussing the company's takeover bid, said, "The
strong are getting stronger," in a consolidating industry. "PeopleSoft fits
perfectly," he added. Hear interview.
Richard Nash, chief market strategist at Victory Capital Management, sounded a
cautious note. He said Wall Street could face a near-term correction in the area
of 5- to 7 percent on the heels of recent gains. Hear interview.
Bullish flows data
Money is continuing to flow into stocks as the Dow and Nasdaq power to new highs
for the year.
Funds investing primarily in U.S. stocks took in $3.3 billion in new money
during the week ended Wednesday, as opposed to outflows of $300 million the week
before, estimates Trim Tabs director of research Carl Wittnebert.
Meanwhile, international funds had outflows of $1.9 billion during the latest
week, after taking in $2.8 billion the prior week, the mutual fund tracker said.
Bond funds had inflows of $2.2 billion, adding to inflows of $1.4 billion
Overseas Friday, stocks rallied in Hong Kong, Japan, Germany, France and the
U.K.
In individual action among the Dow stocks, McDonald's rocketed 9.2 percent to
$21.06 as the fast food giant said it'll spend $50 million to sell some of its
hefty real estate holdings. It also clocked a 6.3 percent gain in same-store
sales last month -- the biggest increase in four years.
The stock drew an upgrade to "sector performer" from "sector underperformer" at
CIBC World Markets. The broker cited improved near-term same-store sales
momentum, a possible fourth-quarter dividend hike, a projected second-half
recovery in returns on invested capital and fading "mad cow disease" concerns.
Analyst John Glass upped his price target to $22 from $18.
Other Dow movers include Boeing , up 3.5 percent; General Electric , up 1.7
percent and Disney , up 1.6 percent.
Johnson & Johnson lifted 1.4 percent after Raymond James upgraded the medical
products company to "market perform" from "underperform."
And 3M added 74 cents to $126.40 after Smith Barney upgraded the stock to an
"outperform" from "in line."
Microsoft lost 1.7 percent, IBM fell 2.3 percent and AT&T dropped 1.3
percent.
Sector action
In sector action, airlines rose 0.5 percent and biotech stocks eased 1.6
percent.
Internet stocks fell 3.2 percent. Financial stocks rose 1 percent. Internet
stocks shed 3.2 percent.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Retailers close higher, minus most of early gains - UPDATE 2 06.06.2003 22:46 Headlines
CHICAGO (AFX) -- Retail stocks closed slightly higher Friday, but news of
mediocre sales results helped shares fritter away gains from a promising start
to the session.
The S&P Retail Index finished up 0.3 percent at 327.64, but declining issues
outpaced advancers.
Among the few retailers left to report monthly results, Longs Drug Stores eased
14 cents to $15.76.
Circuit City retreated by 26 cents, or nearly 4 percent to $6.40, while Best
Buy lost 93 cents, or 2.2 percent, to $41.87.
Carmax also lost its early oomph, closing unchanged at $29.40. In intraday
trading, shares touched a fresh 52-week high of $30.86.
The used-car seller raised its fiscal first-quarter earnings forecast to 34
cents a share. Analysts surveyed by Thomson First Call produced a consensus
earnings target of 30 cents a share.
Total sales for the quarter ended in May rose 17 percent over the same period a
year ago to $1.17 billion, above analyst forecasts of $1.12 billion, while
Carmax saw its comparable-store sales increase 10 percent.
Among grocery operators, Albertson's stood out by stepping up 2 cents to $19.20
amid possible credit downgrade. Weak business trends prompted Standard's &
Poor's to put Albertson's credit ratings under review for possible downgrade,
citing the potential impact of soft consumer spending.
On Thursday, the nation's second-biggest chain reported a 0.9 percent drop in
sales of stores open longer than a year and reduced its full-year profit
projections by 18 percent.
Elsewhere, Deutsche Bank analyst Bill Dreher initiated coverage of certain
discount stores, warehouse clubs and department stores. Of the seven retailers
in his horizon, only two -- Target and Wal-Mart -- were launched with "buy"
recommendations.
He urged clients to "hold" shares of BJ's Wholesale, J.C. Penney and Sears
Roebuck, while he suggested they "sell" shares of Costco and Kohl's.
Target closed up 24 cents to $37.79 but Wal-Mart dropped 80 cents, or 1.5
percent, to $53.82.
BJ's was off 34 cents, or 2.2 percent, to $15.32. Penney fell 12 cents to
$18.46 and Sears slipped 6 cents to $34.63.
Costco gave up $1.63, or 4.4 percent, to $35.30. The warehouse-club operator
reported same-store sales that were at the low end of expectations and tempered
projections for June at a 3 percent to 5 percent increase.
Kohl's backpedaled by $1.53, or 2.8 percent, to $53.39.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
ImClone plans Erbitux filing - UPDATE 3 06.06.2003 22:45 Headlines
BOSTON (AFX) -- Shares of ImClone Systems gave back impressive early gains
and finished modestly lower Friday amid questions about whether the stock has
run up too much in the wake of recent optimism about the Erbitux anti-cancer
drug.
ImClone shares closed off 14 cents to $38.39. At the opening of trading, the
stock had soared to $47.13, its highest level since January 2002.
Hopes about Erbitux have propelled ImClone shares this year and there was more
good news about the experimental cancer therapy late Thursday. Following a
meeting with Food and Drug Administration officials, ImClone and Bristol-Myers
Squibb , its pharmaceutical partner, said they would resubmit a marketing
application for Erbitux in the second half of this year.
But a number of analysts and fund managers have been wondering for some time if
investors are getting carried away about the potential for Erbitux. Analysts'
estimates about what the drug's peak sales could be range from $1 billion to
less than a third of that.
Frank DiLorenzo, S&P's biotech analyst, said ImClone shares "look fully valued"
based on an analysis of the sales potential for Erbitux.
The companies' decision to go for U.S. approval comes after newly released
clinical testing data appeared to confirm that Erbitux has potential as a colon
cancer therapy.
Bristol-Myers shares nudged up 3 cents to $26.93.
Separately, ImClone disclosed it would have to take a charge of $30.3 million
against earnings largely because of the failure of ousted CEO Sam Waksal to pay
taxes on the exercise of stock options. If employees fail to pay taxes on the
exercise of options, the company can be held liable.
ImClone is in the midst of trying to straighten out the financial mess created
by the failure of Waksal and apparently others to pay taxes owed on options.
The New York-based company has held off filing its financial statements and as a
consequence is at risk of having its shares dropped from Nasdaq. Nasdaq
officials have told the company it must file its statements within a few weeks
to avoid delisting.
ImClone and its Erbitux drug have been at the center of controversy for 18
months. In December 2001, the FDA refused to accept ImClone's initial Erbitux
marketing application, citing deficiencies in clinical data submitted by the
small biotech firm.
The rejection triggered a collapse in ImClone's stock and led to a major
insider-trading scandal. Waksal, ImClone's founder, allegedly tipped off
relatives about the FDA setback so that they could unload company stock before
the news became public.
Waksal faces sentencing on Tuesday on numerous charges, including insider
trading. Celebrity homemaking expert Martha Stewart, a friend of Waksal's, has
also been caught up in the scandal.
Stewart was indicted Wednesday on securities fraud charges that stemmed from an
investigation of her sale of ImClone shares just before the news about the FDA
disappointment was announced. She has pleaded innocent.
Amid all the tabloid headlines, however, hopes about the potential of Erbitux to
treat cancer have endured. ImClone's stock has rocketed more than 265 percent
this year because of resurgent optimism about the drug.
The drug's prospects got another lift on June 1, when ImClone's European
pharmaceutical partner, Merck KGaA, released long-awaited clinical trial data
that seemed to demonstrate Erbitux's promise as a cancer-fighter.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Oracle sets pace in after-hours trading - UPDATE 1 06.06.2003 22:48 Headlines
SAN FRANCISCO (AFX) -- Oracle was the most active stock in after-hours
trading Friday after the company launched a hostile cash bid for PeopleSoft
worth more than $5 billion.
The Nasdaq 100 After Hours Indicator was off 0.01 to 1,213.1
More than 1.69 million shares changed hands as Oracle shares fell 3 cents to
$13.06.
The No. 2 most active stock was Cirrus Logic , off 7 cents to $4.41 with 1.56
million shares changing hands. In the regular session, shares rose almost 7
percent to $4.48 on almost five times the average daily volume.
Software giant Microsoft was the No. 3 most active issue, up 3 cents to $23.70.
In late trading, PeopleSoft was unchanged at 3.04, or 20 percent, to $18.16 and
traded more than 100 million shares as the most active issue on the Nasdaq.
For the depressed mergers and acquisitions market, the prospect of more
corporate tie-ups has been driving investor interest in the sector.
In the regular session, the Nasdaq Composite closed down 19 points, or 1.1
percent, to 1,627. The Dow managed to hold on to a 21-point gain, or 0.2
percent, to 9,063 as the blue chip index maintained its grip on the
psychologically important 9,000 benchmark.
While little changed, Intel saw more than 500,000 shares change hands in late
trading after narrowing its revenue range during a midquarter financial update
on Thursday.
AT&T Wireless said that it will get a $511 million federal tax refund related
to taxes paid by parent AT&T . Shares weren't actively traded after the bell.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
PeopleSoft CEO pans Oracle offer - UPDATE 9 06.06.2003 22:48 Headlines
SAN FRANCISCO (AFX) -- PeopleSoft CEO Craig Conway slammed rival Oracle's
$5.1 billion hostile cash bid Friday, calling the move an attempt to disrupt his
effort to buy J.D. Edwards.
In a press release, Conway said Oracle is demonstrating "atrociously bad
behavior from a company with a history of atrociously bad behavior." Conway
dismissed Oracle's offer as a blatant try to derail PeopleSoft's plan, announced
Monday, to buy J.D. Edwards for $1.7 billion in stock.
"If anyone needed any further validation of the strength of the J.D. Edwards
acquisition, we heard it today from Oracle," Conway said.
While Conway's disdain for the bid was clear, PeopleSoft is advising its
shareholders to "take no immediate action" on Oracle's offer, saying the company
is required to review all cash takeover attempts before recommending an action.
The statement said PeopleSoft "will provide a definitive recommendation to
shareholders shortly thereafter."
Oracle's offer sent PeopleSoft up $2.71, or 18 percent, to close at $17.82
after Oracle CEO Larry Ellison offered $16 a share for the Pleasanton,
Calif.-based company. Oracle's bid represents a 5.9 percent premium over
PeopleSoft's stock price the day before the bid was announced.
If successful, Oracle's bid for PeopleSoft would give it a bigger slice of the
nearly $21 billion market for business software. According to AMR Research, SAP
commanded 35 percent of worldwide revenue for business-management software last
year. Oracle held a 13 percent share of the market, with PeopleSoft in third at
10 percent.
"This is a consolidating industry," Ellison said in an interview with
CBS.MarketWatch.com. "Only the strong get stronger. When shareholders look at
the alternative, they'll find us more attractive." Listen to the interview with
Ellison.
As for the possibility of Oracle having to raise its offering price, Ellison
said, "We think the deal is fairly valued; $16 (a share) is our price."
Ellison touted the proposal for its potential to make Redwood Shores,
Calif.-based Oracle "a credible No. 2" in the business-management software
market behind sector leader SAP of Germany.
If Oracle succeeds in buying PeopleSoft, it would mark the technology industry's
biggest acquisition since Hewlett-Packard completed its $19 billion takeover of
Compaq Computer in May 2002. It would also be Oracle's biggest corporate
acquisition since Ellison and two partners put up $2,000 to found Oracle in
1977.
For its part, SAP did not sound like it was likely to put forth a bid to counter
Oracle's offer for PeopleSoft.
"SAP's strategy of not acquiring customer base or market, share, but rather
adding technological expertise and know-how, is still valued and has been
successful," said Markus Berner, an SAP spokesman." It is not SAP policy to
comment on the business strategy of our competitors, but in general, hostile
takeovers have a tendency to disrupt hostile relationships."
Speculation crept up about IBM possibly making a run at PeopleSoft, but that
likelihood was shot down by industry analysts.
"IBM has been very vocal in its intention to not be in the application software
area," said Rich Petersen of WR Hambrecht. "It would be a big surprise if they
became a candidate for PeopleSoft."
Market reacts to a 'safer deal'
Ellison is betting that PeopleSoft will find a combination with Oracle and its
$5.1 billion in cash more attractive than the stock-swap deal with J.D. Edwards
.
"They've (PeopleSoft) identified $80 million in savings (in buying J.D. Edwards.
We think we can provide dramatically more than that," Ellison said.
"Financially, it's safer because it's a cash deal and we're very optimistic
about the future."
If its offer is accepted, Oracle said it would continue to support PeopleSoft
products and customers but would no longer market new software under that brand
name.
Oracle officials said they believe a deal with PeopleSoft could be completed by
early July. After that, Oracle would decide whether to "support" the
PeopleSoft-J.D. Edwards pact. Discuss Oracle's bid for PeopleSoft.
Combining with PeopleSoft could end up benefiting SAP, said John Bemudez, an
analyst at AMR Research. He said PeopleSoft customers would look to the company
as an alternative to Oracle.
"Oracle's strategy is to upgrade PeopleSoft customers to the next release of
Oracle," Bemudez said. "(That's) a task that isn't nearly as easy or painless as
Oracle is trying to make it sound. If I'm SAP, I love this because it puts every
PeopleSoft customer back in play."
U.S.-listed shares of SAP rose $1.32, or 4.5 percent, to close at $30.72, while
J.D. Edwards' issues climbed by 41 cents to $13.20. Oracle's shares, however,
slipped by 27 cents, or 2 percent, to close at $13.09.
The offer's announcement had a ripple effect throughout the software sector,
leading shares of large and small competitors to record big gains. Siebel
Systems rose 19 cents to $10.98, Manhattan Associates climbed $1.24 to $29.30,
JDA Software rose 51 cents to close at $13.26 and Business Objects added 79
cents to reach $24.68.
Slower growth affects options
Ellison said the idea to buy PeopleSoft was originally proposed about a year ago
by PeopleSoft's Conway. Ellison said that at that time, for various reasons, the
purchase was not feasible.
However, Steve Swasey, a PeopleSoft spokesman, said the discussions were about
the possibility of Oracle selling its application-software business to
PeopleSoft. "It was about Oracle exiting the applications business," Swasey
said.
Jeff Henley, Oracle's chief financial officer, said he expects the PeopleSoft
acquisition to increase earnings. Separately, Oracle also said it's on track to
hit Wall Street's fiscal fourth-quarter profit estimate of 14 cents a share.
Regardless of the offer's character, Richard Davis, managing director at Needham
& Co., said Oracle's move shows a recognition that software companies can no
longer significantly boost their revenue growth by competing better against
their rivals.
"It's really hard to grow because there's no reason for customers to switch
(software) vendors at this point," Davis said. "Big companies realize this, and
now investors are just starting to come out to that fact."
Industry analysts said the timing of Oracle's plans was likely hastened by
PeopleSoft's plans to buy J.D. Edwards.
"Oracle was considering the move, but the PeopleSoft move to buy J.D. Edwards
was the impetus," said Ian Campbell, CEO of industry research firm Nucleus
Research.
Some analysts suggested that while the three companies' technologies aren't
incompatible, there would be challenges integrating their operations. "The
cultures [of Oracle and PeopleSoft] are very dissimilar," said Bryan
Piskorowski, market commentator at Prudential.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Tech stocks fall away from highs - UPDATE 4 06.06.2003 22:49 Headlines
SAN FRANCISCO (AFX) -- Technology stocks faded into negative territory on
Friday after intense morning trading lifted many of the sector's largest issues
to levels not seen for more than a year.
Contributing to the market's early upbeat tone, Oracle made an unsolicited bid
to buy PeopleSoft , and Intel told investors its quarterly estimates are on
track.
By the afternoon, though, enthusiasm for these two events had mostly waned and
sellers took over from the buyers.
The Nasdaq Composite closed in on the 1,700 level for the first time in a year,
climbing as high as 1,684 before sliding into the red at 1,627.42, down 1.1
percent on the session. For 2003, the Nasdaq has added 25 percent.
"We have to remember not to fall back into what was going on in the late '90s,"
said Forbes Watson, portfolio manager of the RBC Mid-Cap Equity Fund .
"One thing investors forgot is that technology is a cyclical business," said
Watson, who manages about $400 million.
He's being cautious about where he puts money in the technology sector even
though he sees the economy improving. "The markets are always dangerous at the
cusp of change," Watson said.
He added that once stock prices get ahead of fundamentals one of two things will
happen: "Either earnings catch up or stocks take a breather while everything
else catches up."
Friday's main tech catalyst was Oracle's unsolicited $5.1 billion cash offer for
PeopleSoft, which called "atrociously bad behavior." Oracle's proposal comes
less than a week after PeopleSoft announced its intention to acquire rival J.D.
Edwards for $1.7 billion in stock.
Oracle shares dipped 2 percent to $13.09, but most other software shares gained.
PeopleSoft added 18 percent to $17.82 and J.D. Edwards gained 3.2 percent to
$13.20.
Shares of SAP, the world's largest enterprise software firm, gained 4.5 percent
to $30.72, while Check Point Software advanced 1.7 percent to $20.27 and Siebel
Systems added 1.8 percent to $10.98.
As an overall proxy for software stocks, the Goldman Sachs Software Index
advanced 0.8 percent to 131.23 -- a one-year high.
Meanwhile, the major index tracking the semiconductor industry advanced to a
one-year high before surrendering all of its gains. The Philadelphia
Semiconductor Index closed down 1.7 percent to 388.29.
Intel said late Thursday that its second quarter, which ends this month, is
proceeding as planned. Shares hit a peak of $22.92 but slid after to $21.76,
down 8 cents.
Analysts seemed pleased with Santa Clara, Calif.-based Intel's update, but they
offered a mixed outlook for the second half of the year.
Texas Instruments hung onto positive territory with a modest gain of 11 cents
to $20.95. Advanced Micro Devices , which jumped notably on Friday morning,
ended down 9 cents at $6.93.
Micron Technology held onto only 3 cents of a gain to trade at $12.50 -- off of
its intraday high of $13.80. The stock had benefited from continued momentum
from an executive presentation Thursday at an investor conference. The Boise,
Idaho-based company said expenses and R&D spending will be less than expected
for its fiscal fourth quarter, which closed last week.
The order flow elsewhere in the tech sector mimicked the order flow for
semiconductor stocks: strong buying early and strong selling later.
Cisco Systems climbed above $18 for the first time in 15 months but then
retreated to $17.36, a decline of a penny. The shares are up almost 30 percent
since mid-April.
Yahoo gained almost 9 percent but closed down 4.9 percent at $27.95.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Devisen: US-Arbeitsmarktdaten drücken Euro zeitweise unter 1,17 Dollar 06.06.2003 22:49 Headlines
NEW YORK (dpa-AFX) - Überraschend gut ausgefallene Arbeitsmarktdaten in den
USA haben den Euro am Devisenmarkt zeitweise bis auf 1,1627 Dollar gedrückt.
Zuletzt erholte sich die Gemeinschaftsdevise wieder auf 1,1702 Dollar. Die
Europäische Zentralbank (EZB) setzte den Referenzkurs auf 1,1813 (Donnerstag:
1,1775) Dollar fest. Der Dollar kostete damit 0,8465 (0,8493) Euro.
In den USA sind die Stundenlöhne im Mai stärker als von Volkswirten erwartet
gestiegen. Im Vergleich zum Vormonat legten sie um 0,3 Prozent zu. Die Zahl der
Beschäftigten außerhalb der Landwirtschaft ging zugleich weniger stark als
erwartet zurück. Sie sei um 17.000 zum Vormonat gesunken, teilte das
US-Arbeitsministerium am Freitag in Washington mit. Volkswirte hatten zuvor
einen deutlicheren Rückgang um 27.000 erwartet.
"Die Devisenmärkte belohnen den Dollar unter der Annahme, die Fed könnte den
Zins um mehr als 25 Basispunkte senken", sagte Analyst Ashraf Laidi von MG
Financial Group./so/she
Tide turns as sector ends week in red - UPDATE 2 06.06.2003 22:50 Headlines
NEW YORK (AFX) - Start with a bang, end with a whimper.
That was the story Friday in the telecommunications sector. Stocks jumped out of
the gate when the market opened, fueled in part by better-than-expected news on
. Yet by early afternoon, the sector's advances were rolled back.
The American Stock Exchange's Networking Index, for instance, went from a nearly
3 percent gain to a 2.2 percent loss.
All 15 index stocks initially headed higher, with six touching 52-week highs. By
the end of the day, however, 11 stocks had sustained reversals.
Comverse Technology , down 5.2 percent to $14.90, and Juniper Networks , off 4.4
percent to $13.82, were the sharpest decliners.
The more broadly based Nasdaq Telecommunications Index sagged 2.4 percent. Early
on, 18 of the 20 largest stocks rose. By the time the market had closed,
however, 16 stocks had plunged into the red.
Nextel Communications, down 5.6 percent to $14.26, sustained the stiffest loss
among index bellwethers.
Earlier Friday, a federal appeals court in Washington rejected an effort by
wireless phone companies to sidestep new government rules requiring them to let
customers keep their wireless phone numbers when they switch to rival services.
The Federal Communications Commission has ordered wireless phone companies to
begin allowing number portability by Nov. 24.
Wireless companies say the order poses costly technical hurdles and they fear it
will make it easier for customers to jump from plan to plan.
Amid an industrywide slowdown, wireless carriers are trying to reduce costs, in
part by keeping the customers they already have. It costs a lot of money to
acquire each new customer.
The news appeared to send a tremor throug industry stocks. Eight of the 13
equities in the Standard & Poor's Communications Services Index closed out
Friday's session with losses. At one point, though, every single index stock was
in the black.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
NEW YORK (AFX) -- The Dow eked out a modest gain Friday as Wall Street eyed
a $5 billion hostile takeover bid from Oracle, a solid revenue forecast from
Intel and the latest U.S. employment data.
Volume on the Nasdaq and the New York Stock Exchange hit highs for the year, but
stocks cooled off later in the session to end mixed.
The S&P 500 broke through the 1,000 mark for the first time in a year before
falling back.
The Nasdaq ended lower as the tech-heavy index caught its breath after nearing
the 1,700 mark, a level not seen since May 2002.
Oracle offered $5.1 billion for business software firm PeopleSoft , which
spurned the bid late in the trading session.
Investors seemed to favor the latest U.S. jobs report, in which 17,000 people
lost jobs in May, fewer than the expected figure of 46,000. The nation's
unemployment rate rose to 6.1 percent, as expected. And April's originally
reported 48,000-payroll drop was revised to flat.
While the employment report revealed a still-sluggish job market, it came in
within expectations and did not disappoint market watchers, said Bryan
Piskorowski, market commentator at Prudential.
"Investors are now looking at the economic glass as half full and this has
fueled the market's gains of late," he said.
The Dow Jones Industrial Average rose 21 points, or 0.2 percent, to close at
9,062.
The S&P 500 fell 2, or 0.2 percent, to 987.
The Nasdaq headed down 18 points, or 1.1 percent, to 1,627.
Volume was heavy, with 1.8 billion shares changing hands on the Big Board, and
2.9 billion on the Nasdaq. Both exchanges set volume records for the year.
Advancers were in a dead heat with decliners on the New York Stock Exchange. On
the Nasdaq, decliners led advancers by 18 to 15.
In the bond market, the 10-year Treasury note ended flat with a yield of 3.34
percent.
Intel slid 0.4 percent to $21.76 as it cut the top end and raised the bottom
end of its second-quarter sales range. The company is poised to deliver on Wall
Street's expectations for its next financial period.
PeopleSoft rocked up 17.9 percent to $17.82. Oracle fell 27 cents to $13.09.
Oracle CEO Larry Ellison, discussing the company's takeover bid, said, "The
strong are getting stronger," in a consolidating industry. "PeopleSoft fits
perfectly," he added. Hear interview.
Richard Nash, chief market strategist at Victory Capital Management, sounded a
cautious note. He said Wall Street could face a near-term correction in the area
of 5- to 7 percent on the heels of recent gains. Hear interview.
Bullish flows data
Money is continuing to flow into stocks as the Dow and Nasdaq power to new highs
for the year.
Funds investing primarily in U.S. stocks took in $3.3 billion in new money
during the week ended Wednesday, as opposed to outflows of $300 million the week
before, estimates Trim Tabs director of research Carl Wittnebert.
Meanwhile, international funds had outflows of $1.9 billion during the latest
week, after taking in $2.8 billion the prior week, the mutual fund tracker said.
Bond funds had inflows of $2.2 billion, adding to inflows of $1.4 billion
Overseas Friday, stocks rallied in Hong Kong, Japan, Germany, France and the
U.K.
In individual action among the Dow stocks, McDonald's rocketed 9.2 percent to
$21.06 as the fast food giant said it'll spend $50 million to sell some of its
hefty real estate holdings. It also clocked a 6.3 percent gain in same-store
sales last month -- the biggest increase in four years.
The stock drew an upgrade to "sector performer" from "sector underperformer" at
CIBC World Markets. The broker cited improved near-term same-store sales
momentum, a possible fourth-quarter dividend hike, a projected second-half
recovery in returns on invested capital and fading "mad cow disease" concerns.
Analyst John Glass upped his price target to $22 from $18.
Other Dow movers include Boeing , up 3.5 percent; General Electric , up 1.7
percent and Disney , up 1.6 percent.
Johnson & Johnson lifted 1.4 percent after Raymond James upgraded the medical
products company to "market perform" from "underperform."
And 3M added 74 cents to $126.40 after Smith Barney upgraded the stock to an
"outperform" from "in line."
Microsoft lost 1.7 percent, IBM fell 2.3 percent and AT&T dropped 1.3
percent.
Sector action
In sector action, airlines rose 0.5 percent and biotech stocks eased 1.6
percent.
Internet stocks fell 3.2 percent. Financial stocks rose 1 percent. Internet
stocks shed 3.2 percent.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Retailers close higher, minus most of early gains - UPDATE 2 06.06.2003 22:46 Headlines
CHICAGO (AFX) -- Retail stocks closed slightly higher Friday, but news of
mediocre sales results helped shares fritter away gains from a promising start
to the session.
The S&P Retail Index finished up 0.3 percent at 327.64, but declining issues
outpaced advancers.
Among the few retailers left to report monthly results, Longs Drug Stores eased
14 cents to $15.76.
Circuit City retreated by 26 cents, or nearly 4 percent to $6.40, while Best
Buy lost 93 cents, or 2.2 percent, to $41.87.
Carmax also lost its early oomph, closing unchanged at $29.40. In intraday
trading, shares touched a fresh 52-week high of $30.86.
The used-car seller raised its fiscal first-quarter earnings forecast to 34
cents a share. Analysts surveyed by Thomson First Call produced a consensus
earnings target of 30 cents a share.
Total sales for the quarter ended in May rose 17 percent over the same period a
year ago to $1.17 billion, above analyst forecasts of $1.12 billion, while
Carmax saw its comparable-store sales increase 10 percent.
Among grocery operators, Albertson's stood out by stepping up 2 cents to $19.20
amid possible credit downgrade. Weak business trends prompted Standard's &
Poor's to put Albertson's credit ratings under review for possible downgrade,
citing the potential impact of soft consumer spending.
On Thursday, the nation's second-biggest chain reported a 0.9 percent drop in
sales of stores open longer than a year and reduced its full-year profit
projections by 18 percent.
Elsewhere, Deutsche Bank analyst Bill Dreher initiated coverage of certain
discount stores, warehouse clubs and department stores. Of the seven retailers
in his horizon, only two -- Target and Wal-Mart -- were launched with "buy"
recommendations.
He urged clients to "hold" shares of BJ's Wholesale, J.C. Penney and Sears
Roebuck, while he suggested they "sell" shares of Costco and Kohl's.
Target closed up 24 cents to $37.79 but Wal-Mart dropped 80 cents, or 1.5
percent, to $53.82.
BJ's was off 34 cents, or 2.2 percent, to $15.32. Penney fell 12 cents to
$18.46 and Sears slipped 6 cents to $34.63.
Costco gave up $1.63, or 4.4 percent, to $35.30. The warehouse-club operator
reported same-store sales that were at the low end of expectations and tempered
projections for June at a 3 percent to 5 percent increase.
Kohl's backpedaled by $1.53, or 2.8 percent, to $53.39.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
ImClone plans Erbitux filing - UPDATE 3 06.06.2003 22:45 Headlines
BOSTON (AFX) -- Shares of ImClone Systems gave back impressive early gains
and finished modestly lower Friday amid questions about whether the stock has
run up too much in the wake of recent optimism about the Erbitux anti-cancer
drug.
ImClone shares closed off 14 cents to $38.39. At the opening of trading, the
stock had soared to $47.13, its highest level since January 2002.
Hopes about Erbitux have propelled ImClone shares this year and there was more
good news about the experimental cancer therapy late Thursday. Following a
meeting with Food and Drug Administration officials, ImClone and Bristol-Myers
Squibb , its pharmaceutical partner, said they would resubmit a marketing
application for Erbitux in the second half of this year.
But a number of analysts and fund managers have been wondering for some time if
investors are getting carried away about the potential for Erbitux. Analysts'
estimates about what the drug's peak sales could be range from $1 billion to
less than a third of that.
Frank DiLorenzo, S&P's biotech analyst, said ImClone shares "look fully valued"
based on an analysis of the sales potential for Erbitux.
The companies' decision to go for U.S. approval comes after newly released
clinical testing data appeared to confirm that Erbitux has potential as a colon
cancer therapy.
Bristol-Myers shares nudged up 3 cents to $26.93.
Separately, ImClone disclosed it would have to take a charge of $30.3 million
against earnings largely because of the failure of ousted CEO Sam Waksal to pay
taxes on the exercise of stock options. If employees fail to pay taxes on the
exercise of options, the company can be held liable.
ImClone is in the midst of trying to straighten out the financial mess created
by the failure of Waksal and apparently others to pay taxes owed on options.
The New York-based company has held off filing its financial statements and as a
consequence is at risk of having its shares dropped from Nasdaq. Nasdaq
officials have told the company it must file its statements within a few weeks
to avoid delisting.
ImClone and its Erbitux drug have been at the center of controversy for 18
months. In December 2001, the FDA refused to accept ImClone's initial Erbitux
marketing application, citing deficiencies in clinical data submitted by the
small biotech firm.
The rejection triggered a collapse in ImClone's stock and led to a major
insider-trading scandal. Waksal, ImClone's founder, allegedly tipped off
relatives about the FDA setback so that they could unload company stock before
the news became public.
Waksal faces sentencing on Tuesday on numerous charges, including insider
trading. Celebrity homemaking expert Martha Stewart, a friend of Waksal's, has
also been caught up in the scandal.
Stewart was indicted Wednesday on securities fraud charges that stemmed from an
investigation of her sale of ImClone shares just before the news about the FDA
disappointment was announced. She has pleaded innocent.
Amid all the tabloid headlines, however, hopes about the potential of Erbitux to
treat cancer have endured. ImClone's stock has rocketed more than 265 percent
this year because of resurgent optimism about the drug.
The drug's prospects got another lift on June 1, when ImClone's European
pharmaceutical partner, Merck KGaA, released long-awaited clinical trial data
that seemed to demonstrate Erbitux's promise as a cancer-fighter.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Oracle sets pace in after-hours trading - UPDATE 1 06.06.2003 22:48 Headlines
SAN FRANCISCO (AFX) -- Oracle was the most active stock in after-hours
trading Friday after the company launched a hostile cash bid for PeopleSoft
worth more than $5 billion.
The Nasdaq 100 After Hours Indicator was off 0.01 to 1,213.1
More than 1.69 million shares changed hands as Oracle shares fell 3 cents to
$13.06.
The No. 2 most active stock was Cirrus Logic , off 7 cents to $4.41 with 1.56
million shares changing hands. In the regular session, shares rose almost 7
percent to $4.48 on almost five times the average daily volume.
Software giant Microsoft was the No. 3 most active issue, up 3 cents to $23.70.
In late trading, PeopleSoft was unchanged at 3.04, or 20 percent, to $18.16 and
traded more than 100 million shares as the most active issue on the Nasdaq.
For the depressed mergers and acquisitions market, the prospect of more
corporate tie-ups has been driving investor interest in the sector.
In the regular session, the Nasdaq Composite closed down 19 points, or 1.1
percent, to 1,627. The Dow managed to hold on to a 21-point gain, or 0.2
percent, to 9,063 as the blue chip index maintained its grip on the
psychologically important 9,000 benchmark.
While little changed, Intel saw more than 500,000 shares change hands in late
trading after narrowing its revenue range during a midquarter financial update
on Thursday.
AT&T Wireless said that it will get a $511 million federal tax refund related
to taxes paid by parent AT&T . Shares weren't actively traded after the bell.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
PeopleSoft CEO pans Oracle offer - UPDATE 9 06.06.2003 22:48 Headlines
SAN FRANCISCO (AFX) -- PeopleSoft CEO Craig Conway slammed rival Oracle's
$5.1 billion hostile cash bid Friday, calling the move an attempt to disrupt his
effort to buy J.D. Edwards.
In a press release, Conway said Oracle is demonstrating "atrociously bad
behavior from a company with a history of atrociously bad behavior." Conway
dismissed Oracle's offer as a blatant try to derail PeopleSoft's plan, announced
Monday, to buy J.D. Edwards for $1.7 billion in stock.
"If anyone needed any further validation of the strength of the J.D. Edwards
acquisition, we heard it today from Oracle," Conway said.
While Conway's disdain for the bid was clear, PeopleSoft is advising its
shareholders to "take no immediate action" on Oracle's offer, saying the company
is required to review all cash takeover attempts before recommending an action.
The statement said PeopleSoft "will provide a definitive recommendation to
shareholders shortly thereafter."
Oracle's offer sent PeopleSoft up $2.71, or 18 percent, to close at $17.82
after Oracle CEO Larry Ellison offered $16 a share for the Pleasanton,
Calif.-based company. Oracle's bid represents a 5.9 percent premium over
PeopleSoft's stock price the day before the bid was announced.
If successful, Oracle's bid for PeopleSoft would give it a bigger slice of the
nearly $21 billion market for business software. According to AMR Research, SAP
commanded 35 percent of worldwide revenue for business-management software last
year. Oracle held a 13 percent share of the market, with PeopleSoft in third at
10 percent.
"This is a consolidating industry," Ellison said in an interview with
CBS.MarketWatch.com. "Only the strong get stronger. When shareholders look at
the alternative, they'll find us more attractive." Listen to the interview with
Ellison.
As for the possibility of Oracle having to raise its offering price, Ellison
said, "We think the deal is fairly valued; $16 (a share) is our price."
Ellison touted the proposal for its potential to make Redwood Shores,
Calif.-based Oracle "a credible No. 2" in the business-management software
market behind sector leader SAP of Germany.
If Oracle succeeds in buying PeopleSoft, it would mark the technology industry's
biggest acquisition since Hewlett-Packard completed its $19 billion takeover of
Compaq Computer in May 2002. It would also be Oracle's biggest corporate
acquisition since Ellison and two partners put up $2,000 to found Oracle in
1977.
For its part, SAP did not sound like it was likely to put forth a bid to counter
Oracle's offer for PeopleSoft.
"SAP's strategy of not acquiring customer base or market, share, but rather
adding technological expertise and know-how, is still valued and has been
successful," said Markus Berner, an SAP spokesman." It is not SAP policy to
comment on the business strategy of our competitors, but in general, hostile
takeovers have a tendency to disrupt hostile relationships."
Speculation crept up about IBM possibly making a run at PeopleSoft, but that
likelihood was shot down by industry analysts.
"IBM has been very vocal in its intention to not be in the application software
area," said Rich Petersen of WR Hambrecht. "It would be a big surprise if they
became a candidate for PeopleSoft."
Market reacts to a 'safer deal'
Ellison is betting that PeopleSoft will find a combination with Oracle and its
$5.1 billion in cash more attractive than the stock-swap deal with J.D. Edwards
.
"They've (PeopleSoft) identified $80 million in savings (in buying J.D. Edwards.
We think we can provide dramatically more than that," Ellison said.
"Financially, it's safer because it's a cash deal and we're very optimistic
about the future."
If its offer is accepted, Oracle said it would continue to support PeopleSoft
products and customers but would no longer market new software under that brand
name.
Oracle officials said they believe a deal with PeopleSoft could be completed by
early July. After that, Oracle would decide whether to "support" the
PeopleSoft-J.D. Edwards pact. Discuss Oracle's bid for PeopleSoft.
Combining with PeopleSoft could end up benefiting SAP, said John Bemudez, an
analyst at AMR Research. He said PeopleSoft customers would look to the company
as an alternative to Oracle.
"Oracle's strategy is to upgrade PeopleSoft customers to the next release of
Oracle," Bemudez said. "(That's) a task that isn't nearly as easy or painless as
Oracle is trying to make it sound. If I'm SAP, I love this because it puts every
PeopleSoft customer back in play."
U.S.-listed shares of SAP rose $1.32, or 4.5 percent, to close at $30.72, while
J.D. Edwards' issues climbed by 41 cents to $13.20. Oracle's shares, however,
slipped by 27 cents, or 2 percent, to close at $13.09.
The offer's announcement had a ripple effect throughout the software sector,
leading shares of large and small competitors to record big gains. Siebel
Systems rose 19 cents to $10.98, Manhattan Associates climbed $1.24 to $29.30,
JDA Software rose 51 cents to close at $13.26 and Business Objects added 79
cents to reach $24.68.
Slower growth affects options
Ellison said the idea to buy PeopleSoft was originally proposed about a year ago
by PeopleSoft's Conway. Ellison said that at that time, for various reasons, the
purchase was not feasible.
However, Steve Swasey, a PeopleSoft spokesman, said the discussions were about
the possibility of Oracle selling its application-software business to
PeopleSoft. "It was about Oracle exiting the applications business," Swasey
said.
Jeff Henley, Oracle's chief financial officer, said he expects the PeopleSoft
acquisition to increase earnings. Separately, Oracle also said it's on track to
hit Wall Street's fiscal fourth-quarter profit estimate of 14 cents a share.
Regardless of the offer's character, Richard Davis, managing director at Needham
& Co., said Oracle's move shows a recognition that software companies can no
longer significantly boost their revenue growth by competing better against
their rivals.
"It's really hard to grow because there's no reason for customers to switch
(software) vendors at this point," Davis said. "Big companies realize this, and
now investors are just starting to come out to that fact."
Industry analysts said the timing of Oracle's plans was likely hastened by
PeopleSoft's plans to buy J.D. Edwards.
"Oracle was considering the move, but the PeopleSoft move to buy J.D. Edwards
was the impetus," said Ian Campbell, CEO of industry research firm Nucleus
Research.
Some analysts suggested that while the three companies' technologies aren't
incompatible, there would be challenges integrating their operations. "The
cultures [of Oracle and PeopleSoft] are very dissimilar," said Bryan
Piskorowski, market commentator at Prudential.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Tech stocks fall away from highs - UPDATE 4 06.06.2003 22:49 Headlines
SAN FRANCISCO (AFX) -- Technology stocks faded into negative territory on
Friday after intense morning trading lifted many of the sector's largest issues
to levels not seen for more than a year.
Contributing to the market's early upbeat tone, Oracle made an unsolicited bid
to buy PeopleSoft , and Intel told investors its quarterly estimates are on
track.
By the afternoon, though, enthusiasm for these two events had mostly waned and
sellers took over from the buyers.
The Nasdaq Composite closed in on the 1,700 level for the first time in a year,
climbing as high as 1,684 before sliding into the red at 1,627.42, down 1.1
percent on the session. For 2003, the Nasdaq has added 25 percent.
"We have to remember not to fall back into what was going on in the late '90s,"
said Forbes Watson, portfolio manager of the RBC Mid-Cap Equity Fund .
"One thing investors forgot is that technology is a cyclical business," said
Watson, who manages about $400 million.
He's being cautious about where he puts money in the technology sector even
though he sees the economy improving. "The markets are always dangerous at the
cusp of change," Watson said.
He added that once stock prices get ahead of fundamentals one of two things will
happen: "Either earnings catch up or stocks take a breather while everything
else catches up."
Friday's main tech catalyst was Oracle's unsolicited $5.1 billion cash offer for
PeopleSoft, which called "atrociously bad behavior." Oracle's proposal comes
less than a week after PeopleSoft announced its intention to acquire rival J.D.
Edwards for $1.7 billion in stock.
Oracle shares dipped 2 percent to $13.09, but most other software shares gained.
PeopleSoft added 18 percent to $17.82 and J.D. Edwards gained 3.2 percent to
$13.20.
Shares of SAP, the world's largest enterprise software firm, gained 4.5 percent
to $30.72, while Check Point Software advanced 1.7 percent to $20.27 and Siebel
Systems added 1.8 percent to $10.98.
As an overall proxy for software stocks, the Goldman Sachs Software Index
advanced 0.8 percent to 131.23 -- a one-year high.
Meanwhile, the major index tracking the semiconductor industry advanced to a
one-year high before surrendering all of its gains. The Philadelphia
Semiconductor Index closed down 1.7 percent to 388.29.
Intel said late Thursday that its second quarter, which ends this month, is
proceeding as planned. Shares hit a peak of $22.92 but slid after to $21.76,
down 8 cents.
Analysts seemed pleased with Santa Clara, Calif.-based Intel's update, but they
offered a mixed outlook for the second half of the year.
Texas Instruments hung onto positive territory with a modest gain of 11 cents
to $20.95. Advanced Micro Devices , which jumped notably on Friday morning,
ended down 9 cents at $6.93.
Micron Technology held onto only 3 cents of a gain to trade at $12.50 -- off of
its intraday high of $13.80. The stock had benefited from continued momentum
from an executive presentation Thursday at an investor conference. The Boise,
Idaho-based company said expenses and R&D spending will be less than expected
for its fiscal fourth quarter, which closed last week.
The order flow elsewhere in the tech sector mimicked the order flow for
semiconductor stocks: strong buying early and strong selling later.
Cisco Systems climbed above $18 for the first time in 15 months but then
retreated to $17.36, a decline of a penny. The shares are up almost 30 percent
since mid-April.
Yahoo gained almost 9 percent but closed down 4.9 percent at $27.95.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
Devisen: US-Arbeitsmarktdaten drücken Euro zeitweise unter 1,17 Dollar 06.06.2003 22:49 Headlines
NEW YORK (dpa-AFX) - Überraschend gut ausgefallene Arbeitsmarktdaten in den
USA haben den Euro am Devisenmarkt zeitweise bis auf 1,1627 Dollar gedrückt.
Zuletzt erholte sich die Gemeinschaftsdevise wieder auf 1,1702 Dollar. Die
Europäische Zentralbank (EZB) setzte den Referenzkurs auf 1,1813 (Donnerstag:
1,1775) Dollar fest. Der Dollar kostete damit 0,8465 (0,8493) Euro.
In den USA sind die Stundenlöhne im Mai stärker als von Volkswirten erwartet
gestiegen. Im Vergleich zum Vormonat legten sie um 0,3 Prozent zu. Die Zahl der
Beschäftigten außerhalb der Landwirtschaft ging zugleich weniger stark als
erwartet zurück. Sie sei um 17.000 zum Vormonat gesunken, teilte das
US-Arbeitsministerium am Freitag in Washington mit. Volkswirte hatten zuvor
einen deutlicheren Rückgang um 27.000 erwartet.
"Die Devisenmärkte belohnen den Dollar unter der Annahme, die Fed könnte den
Zins um mehr als 25 Basispunkte senken", sagte Analyst Ashraf Laidi von MG
Financial Group./so/she
Tide turns as sector ends week in red - UPDATE 2 06.06.2003 22:50 Headlines
NEW YORK (AFX) - Start with a bang, end with a whimper.
That was the story Friday in the telecommunications sector. Stocks jumped out of
the gate when the market opened, fueled in part by better-than-expected news on
. Yet by early afternoon, the sector's advances were rolled back.
The American Stock Exchange's Networking Index, for instance, went from a nearly
3 percent gain to a 2.2 percent loss.
All 15 index stocks initially headed higher, with six touching 52-week highs. By
the end of the day, however, 11 stocks had sustained reversals.
Comverse Technology , down 5.2 percent to $14.90, and Juniper Networks , off 4.4
percent to $13.82, were the sharpest decliners.
The more broadly based Nasdaq Telecommunications Index sagged 2.4 percent. Early
on, 18 of the 20 largest stocks rose. By the time the market had closed,
however, 16 stocks had plunged into the red.
Nextel Communications, down 5.6 percent to $14.26, sustained the stiffest loss
among index bellwethers.
Earlier Friday, a federal appeals court in Washington rejected an effort by
wireless phone companies to sidestep new government rules requiring them to let
customers keep their wireless phone numbers when they switch to rival services.
The Federal Communications Commission has ordered wireless phone companies to
begin allowing number portability by Nov. 24.
Wireless companies say the order poses costly technical hurdles and they fear it
will make it easier for customers to jump from plan to plan.
Amid an industrywide slowdown, wireless carriers are trying to reduce costs, in
part by keeping the customers they already have. It costs a lot of money to
acquire each new customer.
The news appeared to send a tremor throug industry stocks. Eight of the 13
equities in the Standard & Poor's Communications Services Index closed out
Friday's session with losses. At one point, though, every single index stock was
in the black.
This story was supplied by CBSMarketWatch. For further information see
www.cbsmarketwatch.com.
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