UPS AND DOWNS
Intel, Varlen, Sabratek, Perot Systems and other movers of day... August 2, 1999
UPSTwo chipmakers' shares moved up today following announcements of new chips. Intel (Nasdaq: INTC) rose $2 5/16 to $71 5/16 as the company introduced its Pentium III 600 MHz and Celeron 500 MHz, while computer workstation maker Sun Microsystems (Nasdaq: SUNW) added $1 9/16 to $69 7/16 on news that it intends to unveil plans for a new computer chip designed to handle complex graphics, sound, and video at very high speeds using its Java programming language.
AMSTED Industries, which makes products for the rail, truck, and auto components industries, will acquire Varlen Corp. (Nasdaq: VRLN) in a cash deal valued at about $790 million, including $50 million in assumed debt. The $42 per share price represents an 11% premium over Varlen's closing price Friday and a 62% premium over the close on May 17, the day before AMSTED announced its intention to commence its tender offer. Varlen's shares rolled up $3 7/8 to $41 3/4 today.
Broadband Internet access company Redback Networks (Nasdaq: RBAK) moved up $10 7/32 to $164 31/32 after access, content, and multimedia services company DigitalSelect bought Redback's Subscriber Management System 1000.
McKesson HBOC (NYSE: MCK) moved up $1 15/16 to $33 today following reports in this week's issue of Barron's magazine that the interest of some portfolio managers in the troubled pharmaceutical supplier and healthcare software maker may indicate that the stock is a bargain for investors. The magazine said McKesson HBOC is trading at a discount to its competitors based on a price-to-book value comparison.
Web-based business resource management applications developer Clarus Corp. (Nasdaq: CLRS) advanced $1 1/2 to $12 1/4 on news that Internet service provider Lynxus Inc. will offer Clarus' E-Procurement business-to-business purchasing solutions to its corporate subscribers. Lynxus is expected to begin offering the program by year's end.
Housewares and crafts products marketer General Housewares Corp. (NYSE: GHW), which agreed to be bought by Corning Consumer Products for $28.75 per share in cash, rose $7 to $27 1/2. The $145 million deal represents a 40% premium over Friday's closing price of $20.50 per share for General Housewares stock. The merger is expected to close in Q4. Corning Consumer Products is an affiliate of Borden Inc.
Canadian wireless telephone company Rogers Cantel Mobile Communications (NYSE: RCN) plugged in $3 15/16 to $25 1/4 after two brokerages upgraded the stock. Morgan Stanley Dean Witter's Greg Macdonald boosted his rating to "strong buy" from "outperform," raising his share price target by a buck to $26. Bear, Stearns & Co.'s Gregory Lundberg upgraded the stock to "buy" from "attractive."
Property and casualty insurer Horace Mann Educators Corp. (NYSE: HMN) snagged $4 3/4 to $29 15/16 after the company said it hired Morgan Stanley Dean Witter and Credit Suisse First Boston to help explore "strategic alternatives."
DOWNSTherapeutic and diagnostic medical systems developer Sabratek Corp. (Nasdaq: SBTK) was whacked for a $6 3/16 loss to $14 9/16 after saying that its Q2 earnings will be "significantly lower" than the $0.07 per share analysts had been expecting. The company, which is transforming itself from a medical supplies and devices company to a clinical connectivity company, did not elaborate on the reason for the shortfall.
Information technology consulting company Perot Systems (NYSE: PER) lost $2 1/8 to $22 3/4 as corporate officers exercised their right to sell shares of the company following the end of its post-initial public offering lockup period this weekend, according to Dow Jones.
Oilfield services firm Baker Hughes (NYSE: BHI) was drilled for a $1 1/4 loss to $33 9/16 after saying "sharply reduced" client spending, lower rig and geophysicial activity, and "significant" pricing pressures resulted in Q2 EPS of $0.06 (excluding charges), down from last year's $0.36 and short of the First Call mean estimate of $0.10. The company expects revenues and profits will bottom out in the current quarter.
Business Web hosting company Digex (Nasdaq: DIGX) gave back $2 5/16 to $20 after rising 31% on Friday following its initial public offering of 10 million shares at a price of $17 per share. Parent Intermedia Communications (Nasdaq: ICIX), which has retained an 83% stake in the company, slid $2 13/16 to $24 3/4.
Copper and copper alloy tube maker Wolverine Tube (NYSE: WLV) was rolled for a $2 5/8 loss to $18 1/4 following a Prudential Securities downgrade to "sell" from "hold."
Natural gas and electricity distributor MCN Energy Group (NYSE: MCN) tanked $1 9/16 to $19 3/4 after posting a Q2 loss of $0.03 per share (excluding charges) compared with earnings of $0.10 per share a year ago due to its decision to keep its natural gas producing properties in Michigan. For the full year, the company said it is expecting EPS between $1.10 and $1.15, well shy of the First Call mean estimate of $1.47.
Pharmaceutical development services firm Applied Analytical Industries (Nasdaq: AAII) slipped $1 to $5 5/8 after staying true to its warning on Friday and reporting a Q2 loss of $0.17 per share due to lower licensing and U.S. fee-for-service revenues and higher selling, general, and administrative (SG&A) expenses. Prior to Friday's pre-announcement, analysts had been expecting earnings of $0.12 per share for the period. Both SG Cowen and Lehman Brothers cut their ratings on the firm today.
Oil and natural gas production and exploration firm Anadarko Petroleum Corp. (NYSE: APC) sank $1 9/16 to $36 5/8 after Merrill Lynch lowered its near-term rating on the firm to "accumulate" from "buy," citing flat production results over the past 18 months despite $1.1 billion in exploration and development spending by the company during the same time span.