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Closing Market NumbersDJIA 10349.93 -120.32 (-1.15%) S&P 500 1293.63 -8.02 (-0.62%) Nasdaq 2815.94 -0.58 (-0.02%) Russell 2000 417.76 -0.93 (-0.22%) 30-Year Bond 97 unch 6.35 Yield
Today's Market Movers:
For an extended list of today's earnings results, click here.
UPSInformation services provider EDS (NYSE: EDS) rose $2 1/16 to $52 5/8 after finalizing a two-way services outsourcing deal with MCI WorldCom (Nasdaq: WCOM) that was initially unveiled in February. Under the deal, MCI WorldCom will outsource $6.4 billion of information technology operations to EDS, and EDS will outsource $6 billion of network operations to MCI WorldCom.
Telecommunications equipment maker Lucent Technologies (NYSE: LU) gained $3 1/4 to $59 5/8 thanks to an A.G. Edwards upgrade to "buy" from "accumulate" prior to its fiscal Q4 earnings report tomorrow. Analysts are expecting the company to report EPS of $0.29 (excluding charges), according to First Call.
E-business network services company Digital Island (Nasdaq: ISLD) erupted for a $15 11/16 gain to $38 11/16 after agreeing to acquire privately held e-business content delivery firm Sandpiper Networks Inc. for about $630 million in stock. Among the combined company's stable of clients will be E*Trade Group (Nasdaq: EGRP), Cisco Systems (Nasdaq: CSCO), Intuit (Nasdaq; INTU), and Microsoft (Nasdaq: MSFT).
Trading card company Topps Co. (Nasdaq: TOPP) popped up $2 to $10 1/2 after saying strong sales of its first series of Pokemon trading cards have prompted the firm to expect that Pokemon-related sales could come in between $80 million and $100 million for the fiscal year ending Feb. 2000.
Radio and TV stations operator and magazine publisher Emmis Communications (Nasdaq: EMMS) advanced $6 13/16 to $63 5/16 after diversified media company Liberty Media Group (NYSE: LMG.A) agreed to make a $150 million equity investment in the company in order to gain exposure to the radio broadcasting business.
DOWNSSeveral banking and brokerage stocks fell today as Merrill Lynch analyst Judah Kraushaar cut his ratings and price targets for a trio of companies, calling their current valuations close to "fair value." Lehman Brothers (NYSE: LEH) dropped $2 5/16 to $65 5/8, Morgan Stanley Dean Witter (NYSE: MWD) shed $2 3/8 to $100 1/2, and Northern Trust (Nasdaq; NTRS) lost $1 5/16 to $91 1/16. Kraushaar's opinions did little to help his own employer's stock, as Merrill Lynch (NYSE: MER) slid $1 3/4 to $70 3/8.
Drugmaker Pfizer Inc. (NYSE: PFE) slipped $1 3/4 to $39 7/8 after PaineWebber analyst Jeff Chaffkin cut his rating on the firm to "neutral" from "buy," citing short-term disappointments and delays with some of the drugs in the company's development pipeline.
Enterprise data integration platform developer Informatica Corp. (Nasdaq: INFA) dropped $17 3/8 to $67 3/8 on worries of possible future insider selling after the company's 180-day lockup period related to its initial public offering expired on Friday.
Energy-related management consultant Navigant Consulting (NYSE: NCI) voyaged $3 1/8 lower to $30 7/8 as the most recent issue of Barron's took some shots at the company, alleging its earnings growth rate has been overstated by how the firm accounts for "immaterial" acquisitions.
Today's Top Stories:FOOL PLATE SPECIAL An Investment Opinion
Excite@Home Conquers BlueMountain.com
Dave Marino-Nachison (TMF Braden)
Frequent readers of Media Metrix's (Nasdaq: MMXI) Internet viewership data have probably long wondered how an insta-greeting card site with the odd moniker "bluemountain.com" was able to maintain a position among the most-visited sites on the World Wide Web month after month.
Even those who have taken the trip over to the Blue Mountain Arts site probably think it's basically just "neat." Users can instantly send friends, family, and associates customizable e-greetings for every occasion imaginable free of charge. (There's still time to send cards this month to commemorate Peace, Friendship and Goodwill Week, Juliette Gordon Low's Birthday, and Samhain.)
What's a "neat" site worth? Quite a bit, apparently. Cable Internet access company and Rule Breaker Portfolio holding Excite@Home (Nasdaq: ATHM) today said it will buy the site for 11 million shares of its stock -- worth about $430 million as of Friday's close -- and $350 million in cash.
There's the possibility of another $270 million in Excite@Home stock on the way if bluemountain.com meets certain traffic, reach, and other performance targets this holiday season.
OK -- so that's $1.05 billion for online greeting cards? Would it really have cost Excite@Home that much to set up their own Mother's Day mailing service with page design that's beginner-level at best?
Of course it wouldn't have.
What Excite@Home is paying for is the eyeballs and their respective owners' propensity to shop online; the company justified the price it paid with a lengthy list of figures, including 9 million -- as in 9 million unique monthly users.
Excite@Home believes bluemountain.com, which has a gift recommendation service built into its website -- along with marketing relationships with various flower, candy, and other merchants -- provides considerable e-commerce opportunities; the site claims to service upwards of 1 million gift-related transactions daily. It also wants to use its newfound access to bluemountain.com's users to market its own Internet access service.
For all of bluemountain.com's vaunted usership, though, one number Excite@Home left out of its rather wordy press release is revenue: how this very sizable purchase will affect its top and bottom line isn't known and investors are probably more than a bit curious.
By the same token, it should be interesting to get a look under the hood of bluemountain.com once more information about its workings becomes known through Excite@Home. Operating solely on word-of-mouth-and-card marketing, page views, and transaction fees, it may eventually earn itself a chapter in the textbook of online business development.
Some, however, seem relieved to see the closely held story come to an end.
"As Blue Mountain started down the public road," the site's founders said in an online statement, "we found ourselves in a fickle world where we did not feel at all comfortable.... After the merger closes in December, we will be able to get back to creative pursuits, and with the proceeds we receive, we plan to support world health, hunger relief, and peace."
Honorable indeed -- and their newfound fortune could buy quite a few Thanksgiving turkeys.
AT&T Sales Up, Earnings Down
Richard McCaffery (TMF Gibson)
Long distance telecommunications carrier AT&T (NYSE: T) reported earnings from continuing operations of $0.50 per diluted share today, down from $0.78 per share a year ago and shy of the mark analysts expected by $0.04 per share. The country's largest phone company reported income from continuing operations of $1.63 billion, down from $2.1 billion a year ago.
Earnings fell, in part, as a result of increased pricing pressure in the long distance services market and weak results in the company's consumer services division, which reported revenues of $5.6 billion, down 4.7% from a year ago.
It's not surprising to see AT&T lose revenue in its long distance consumer services division, which faces stiff competition from multiple carriers. AT&T has about 60% market share in this area, and it's very difficult to grow such a large customer base.
Instead, many investors were looking for AT&T to make solid gains in growth areas such as its Internet strategy, wireless services, and outsourcing business. On this front, the company did well, which may be why the company's stock price climbed more than $1 to $44 1/16 in trading this morning.
Pro forma total sales of $16.3 billion (including acquisitions) grew 5.6% from $15.4 billion a year ago. Revenue growth was driven by increased business services, which grew 5% to $6.3 billion, as well as wireless services, which grew (adjusted for sales and acquisitions) 41%. AT&T Broadband and Internet Services grew (excluding closed cable partnerships and Excite@Home) 6.7% to $1.4 billion.
It's the third consecutive quarter the wireless services division has achieved 40% sales growth, and the seventh consecutive quarter of overall revenue growth.
In addition, the company continued improving efficiency. AT&T Chairman Michael Armstrong, who repositioned Ma Bell to offer Internet access, cable, and telephony services through its purchase of cable company TeleCommunications Inc. and the pending acquisition of MediaOne (NYSE: UMG), plans to cut $2 billion in annual operating costs by 2001.
For the latest quarter, sales, general, and administrative (SG&A) expenses fell to 21.2% of total revenue, compared to 22.1% in the second quarter and 23% in the third quarter last year. This is solid improvement over SG&A costs that stood at 30% of total revenue in 1997. AT&T's operating margin (excluding broadband and Internet services and global network services), rose 3.7 percentage points to 24.5%.
For the company to continue its rebirth as a broad-based provider of communications services, investors should look for AT&T to continue broadening its nationwide wireless network as it competes against rivals such as Bell Atlantic (NYSE: BEL), Vodafone AirTouch (NYSE: VOD), SBC Communications (NYSE: SBC), Nextel (Nasdaq: NXTL), and VoiceStream Wireless (Nasdaq: VSTR). Recent moves such as its joint $2.3 billion purchase of American Cellular should help. (Click here to read more.)
In addition, investors should pay close attention to the company's progress regarding high-speed Internet access service offerings. Last month, AT&T rolled out a suite of cable Internet and digital subscriber line services for businesses. The company offered its DSL services in 17 markets and planned to quickly expand to more than 100 markets in the fourth quarter.
Since the ability to offer services such as this is the main reason AT&T spent billions acquiring TCI and MediaOne, investors should keep a watchful eye on growth in these areas.
More of Today's Best:BREAKFAST WITH THE FOOL
Berkshire Hathaway Buys Majority Stake in Electric Utility
Richard McCaffery (TMF Gibson)
-- World famous value investor Warren Buffett has taken the plunge into the utility business as part of a group that's buying MidAmerican Energy Holdings (NYSE: MEC) for about $9 billion in cash and assumed debt. Now investors have to add electric utilities to the list of diversified businesses under Buffett's Berkshire Hathaway (NYSE: BRK.A) corporate umbrella, which includes property and casualty insurance firms, shoe stores, jewelry stores, and candy stores. Under the deal, Berkshire will pay about $35.05 per share in cash, a 29% premium to MidAmerican's closing price of $27.25 on Friday.
FULL STORY >>
FOOL ON THE HILL An Investment Opinion
The Trouble With Options
Bill Mann (TMF Otter)
-- Many prestigious investment banks in the country have reported rising difficulty in attracting the best and brightest coming out of the nation's top universities. The reason is simple: the attraction to companies offering potentially lucrative stock options. The explosive wealth generated by Internet companies and legends of Silicon Valley secretaries holding millions in stock is a powerful enticement. In a free market economy, people whose efforts create wealth for their companies should rightly derive direct personal benefit. Options are valuable, a powerful incentive to management and employees since they are encouraged to align their best interests with the shareholders'. But just like every other tool, options have the potential for abuse.
FULL STORY >>
Exxon: Same Oil-ed, Same Oil-ed
Brian Graney (TMF Panic)
-- Integrated oil and gas giant Exxon Corp. (NYSE: XON) posted its third quarter results this morning, beating the First Call mean earnings estimate by $0.02 with EPS of $0.61 versus $0.58 a year ago. Despite the slight surprise, Exxon's shares lost some ground as investors may have been relying on the tiger to turn in even higher figures for the period thanks to rising oil prices. Upstream functional earnings were up a strong 114% in the U.S. and 105% internationally. However, those gains weren't adequate enough to offset a slide in downstream earnings, which fell 17% in the U.S. and a startling 96% internationally.
FULL STORY >>
Cambridge Technology Trying to Maintain Momentum
Dave Marino-Nachison (TMF Braden)
-- "Simply put," reads the text of computer consulting firm Cambridge Technology Partners' (Nasdaq: CATP) website, "we get it. We're doing it. And we won't let you fail." That's a note to customers, not investors -- which is too bad, since the latter group could probably use a little propping up after a simply dismal 1999. It didn't come today, as the company reported third-quarter earnings, discussed its near-term outlook, and issued an update about the state of its ongoing restructuring efforts.
FULL STORY >>