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DJIA 11405.76 +202.16 (+1.80%) S&P 500 1458.34 +22.21 (+1.55%) Nasdaq 3969.44 +32.14 (+0.82%) Russell 2000 482.43 +4.49 (+0.94%) 30-Year Bond 95 8/32 -15/32 6.49 Yield
Today's Market Movers:
Networking software firm Novell (Nasdaq: NOVL) picked up $7 1/4 to $34 5/16 after signing a deal to license its Internet Caching System to Toshiba Corp., which will integrate the system into its MAGNIA CS10 Cache Server. The MAGNIA servers will start shipping to businesses in Japan in January, according to Toshiba. Yesterday, Novell management reportedly told analysts that business is going well, and its fiscal Q1 results are so far in line with expectations.
Wireless network operator Nextel Communications (Nasdaq: NXTL) advanced $8 7/16 to $105 after saying in a regulatory filing with the SEC that it is dropping its $8.3 billion bid for bankrupt NextWave Telecom and the firm's wireless spectrum licenses. The move comes a day after a federal appeals court ruling appeared to open up a way for the Federal Communications Commission to possibly reauction the licenses.
Radio Shack operator Tandy Corp. (NYSE: TAN) rose $3 5/8 to $46 1/8 after Merrill Lynch analyst Peter Caruso raised his near-term rating on the firm to "buy" from "accumulate," in effect reversing a downgrade from the same analyst last Friday. Over the past week, Tandy's shares had sold off for a 36% loss, which Caruso reportedly believes has been "overdone." If there was any doubt on Wall Street who the "ax" on Tandy is, Caruso's flip-flop appears to have settled the issue.
Electronic program guide company Gemstar International (Nasdaq: GMST) tacked on $9 5/16 to $74 15/16 on news that it will be added to the Nasdaq 100 index on Jan. 3.
Streaming media technologies firm RealNetworks (Nasdaq: RNWK) slid $19 3/4 to $133 9/16 today on rumors that portal Yahoo! (Nasdaq: YHOO) will stop using the company's RealAudio software in favor of Microsoft's (Nasdaq: MSFT) Windows Media technology. Both Yahoo! and RealNetworks denied the rumors, according to Bloomberg News.
Flat panel and rotary switches maker DuraSwitch Industries (AMEX: DRA) tumbled $1 1/4 to $6 3/8 after the company said telecom equipment firm Ericsson (Nasdaq: ERICY) has made a last-minute engineering change to its R250d PRO phone, which has led to the cancellation of an expected 300,000-unit order for DuraSwitch's custom-designed SnapRotor product.
Pan-European online auctioneer QXL.com PLC (Nasdaq: QXLC) sank $35 3/8 to $113 5/8 after agreeing to acquire a 50% stake in Amsterdam-based interactive software developer ibidlive NV for $9.5 million in stock.
Today's Top Stories:
FOOL PLATE SPECIAL An Investment Opinion
Registers Ring, Are You Listening?
Dave Marino-Nachison (TMF Braden)
You might think that, being Jewish, I could just sit back and observe the pre-Christmas shopping madness with bemusement served with a side dish of potato pancakes, applesauce, and sour cream.
But thanks to a mom nostalgic for her Catholic childhood days (long story), we've got two shopping seasons in the Nachison household -- and I was right there with the masses this week, praying to whomever might listen that the spoils of my e-shopping would arrive in time for our family's annual Christmas Day dinner.
By most accounts, the holiday shopping season has been a success. LJR Redbook Research's weekly sales report, released Tuesday, showed U.S. retail same-store sales (they measure sales at stores open at least a year, which leaves out openings and closings) up 3.7% from last year's levels for the week ended Dec. 18. For the month-to-date, sales were more than 4% ahead of the year-ago comparison.
More data? The National Retail Federation trade group thinks the final November/December total sales growth number will beat its 6.5% projection. Bank of Tokyo-Mitsubishi Ltd., which regularly publishes sales data, is looking for a rise of 5% to 5.5%, up from earlier forecasts of 4.5% to 5%. Shoppers, simply put, are smiling as a strong economy and low unemployment -- much like last year -- has meant more dollars to pull from pockets and put on credit cards. (Already feeling the sting of debt deferred? Click here.)
Goods have been racing out of the stores. Consumer electronics are hot; apparel is in; jewelry, housewares, and books are being wrapped faster than a Fu-Schnickens lyric; and Pok�mon is just going on being Pok�mon. (Incidentally, two Fools took on the Trainer mantle earlier this week to Duel over Pok�mon licensee 4Kids Entertainment (Nasdaq: KIDE).
It hasn't been all stars and popcorn strings, though. Retail bellwether Wal-Mart (NYSE: WMT) has seen sales trail off recently, though it still expects to hit holiday targets. Things are on target at J.C. Penney (NYSE: JCP), though sales are still seen coming in flat for the month. And at Radio Shack operator Tandy (NYSE: TAN), the company couldn't get enough of the season's hottest electronic trinkets and the stock took a dive as early-December sales disappointed.
Sales have also been strong in the online space, though the malls have reportedly been busier as the proverbial sleigh has flown nearer to the proverbial chimney. Over the past few days, some companies have been stung by bad publicity as word spread that the jolly red man might not make it in time: that sort of news is exactly what Toys 'R' Us (NYSE: TOY) didn't want to have to report, but the company nevertheless confirmed late-summer suspicions with the revelation that some Internet orders won't be home in time for Christmas.
The holiday shopping season is unique not only in terms of its sheer intensity and volume -- and I don't mean of the holiday Muzak -- but in that everyone who's in the stores and online has the same deadline.
That means the season is all about fulfillment. If you're bricks-and-mortar, you've gotta have it in on the shelves when the people get there or they'll just go down the street. If you're online, you've gotta be absolutely, positively sure you can get it there on time, as ordered.
And if you're me, you've gotta be hoping my mom was waiting all year for a... She wouldn't be reading this, would she? Better not chance it.
Happy holidays, Fools.
Fool News, 12/17/99: "Tandy's Not-Quite-A-Warning"
Fool News, 8/27/99: "Nakasone Through Playing With Toys"
Special Feature, 1/5/99: How To Save $7 Billion
Orbital Bounds After Raising $75 Million
Richard McCaffery (TMF Gibson)
Faced with debt that has to be paid and the need for capital, space technology and satellite services company Orbital Sciences (NYSE: ORB) sold a minority stake in a subsidiary today and raised $75 million to boost liquidity.
The Dulles, Virginia company moved up nearly $3 in trading, or 21%, to about $16 after raising the capital in a move that eased investors' fears about a cash crunch. Orbital sold a 33% stake in its MacDonald Dettwiler & Associates subsidiary to an investor group led by private investment firm CAI Capital Partners.
Orbital will own the remaining 67% stake in the unit, which develops satellite ground stations, information systems and services, space robotic systems, and other equipment and services.
"This transaction substantially improves Orbital's liquidity and cash reserves," David Thompson, Orbital's chairman and chief executive officer said in a statement. "At the same time, it also reinforces the company's commitment to unlocking shareholder value by realizing the worth of businesses developed, built-up and expanded by Orbital."
So how bad is Orbital's cash position? A simple way to find out is to take a quick look at working capital, which is the difference between current assets and current liabilities. Since current liabilities represent claims against assets that must be settled in one year (or one operating cycle, whichever is longer), a company needs to maintain a nice cushion between the two.
According to its quarterly report filed November 22, the company had $386 million in current assets and $376 million in current liabilities. That's cutting it close. A closer look at those accounts shows Orbital has $55.6 million in debt and $67 million in accounts payable, but only $21 million in cash. The rest of its current assets are in restricted short-term investments, receivables, and inventory. That's a liquidity crunch.
It's been a tough year for Orbital, which has to be admired for its entrepreneurial spirit. In 1990 Orbital unveiled the world's first privately developed space launch vehicle, and in 1998 it shipped the world's first handheld satellite communications device. Its Orbcomm subsidiary operates a fleet of 28 small satellites that relay messages to handheld terminals. It's a business that's viewed as having enormous potential by industry observers, but it's a market the company is really creating from scratch. Since 1982 the company has built and launched at least 74 satellites.
But in October Orbital announced plans to restate its financial results at the recommendation of its new auditing firm, PricewaterhouseCoopers. The pending restatement stemmed from OrbImage, an affiliate that operates satellites used to take color pictures of the Earth's surface. While the restatement isn't expected to affect revenues, net income, or cash flows, it might increase losses related to affiliates and interest charges by $60 million. (For more on this click here.) The company said KPMG, Orbital's previous auditor, approved the accounting treatment of OrbImage but later changed its position.
The problem is that business units like Orbcomm are cash hungry since they don't yet have enough customers to pay for operations. Through the first nine months of the year, Orbital contributed $41.5 million in cash to Orbcomm and $101.3 million in other investments and capital expenditures, while generating just $53.2 million in cash from operations.
In its quarterly filing, the company said it has enough money to fund operations through early 2000 but that it must then raise additional capital from cash or debt. Right now its ability to do that is limited because of the pending restatement.
The $75 million raised from selling a piece of MacDonald should give the company much needed breathing room. With its Pegasus Rocket, the Orbcomm unit, and valuable NASA contracts, there's plenty of potential on the launch pad.
But, until its finances are put squarely in order, it's safer to watch from the sidelines.
More of Today's Best:FOOL ON THE HILL An Investment Opinion
It's a Wonderful Life
Bill Barker (TMF Max)
-- My wife had our first child late last night, which, all things considered, went pretty smoothly. She might beg to differ with that description, but I'm pretty sure that she's still on some powerful painkillers at the moment, and by the time she is coherent enough to be alerted to my descriptions of the occasion as "pretty smooth," I trust all will be forgiven. We shall see. Because of the timing of all this, we decided a little while ago that nothing we might buy from a store would be able to improve on the Christmas we would be celebrating. So we agreed to take the money we otherwise would have spent on presents for each other and give it to the charities in the Foolanthropy drive.
BREAKFAST WITH THE FOOL
Qualcomm Sells Handset Business to Kyocera
Richard McCaffery (TMF Gibson)
-- Digital wireless communications company Qualcomm (Nasdaq: QCOM) surprised Wall Street last night by selling its handset business to Kyocera (NYSE: KYO), an electronics components manufacturer that's the leading shareholder in DDI Corp., one of Japan's largest telecom carriers. Analysts had expected Qualcomm to sell its handset manufacturing business to one of the world's three leading cell phone companies -- Nokia (NYSE: NOK), Ericsson (Nasdaq: ERICY), or Motorola (NYSE: MOT). Shares of Qualcomm slipped in trading because many wanted to see such a blockbuster deal.
Brighter Days for Brightpoint?
Brian Graney (TMF Panic)
-- Mobile phone distributor Brightpoint (Nasdaq: CELL) got a boost this morning after announcing that it has extended its agreement with Nokia (NYSE: NOK) to be the Finnish handset maker's exclusive distributor in the U.S. through the end of 2001. The extension follows Brightpoint's success earlier this month in landing the exclusive rights to distribute Nextel (Nasdaq: NXTL) accessories in the U.S. The ongoing investor lovefest with all things wireless has certainly helped brighten the outlook for Brightpoint, whose share price was left for dead earlier this year.
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