Monday, December 28, 1998

"Put not your trust in money, but put your money in trust." -- Oliver Wendell Holmes, Sr.

Latest Market Numbers

Holiday Shoppers Go Online

Online retailers, also known as "e-tailers," were the rising stars this holiday shopping season even as the retail industry overall had a less-than-stellar season. Although official figures won't be released until early January, the latest estimate shows a 3.5% increase in sales overall compared with a 4.7% rise last year, The Wall Street Journal reported. If it hadn't been for deflation of some product prices, the figures would've been roughly 5% this year, down from 5.3% last year.

Preholiday markdowns, which cut into profit margins, came earlier than ever, especially on cold-weather items in an unseasonably warm holiday season. Neiman Marcus (NYSE: NMG), for instance, started discounting by 30% to 40% in early December and slashed prices by 50% to 60% after Christmas. Discount chains such as Wal-Mart (NYSE: WMT) and Dayton Hudson's (NYSE: DH) Target Stores enjoyed strong sales as did high-end retailers and consumer electronics stores such as Best Buy (NYSE: BBY) and Circuit City Stores (NYSE: CC). Left in the cold were middle-priced department stores such as Sears (NYSE: S) and J.C. Penny (NYSE: JCP), which are expected to show paltry gains of 1% to 2%.

For Internet retailers, however, 'tis the season to be jolly. Analysts had predicted online sales to double this year to $2.3 billion, but according to Boston Consulting Group and e-tailer association shop.org, sales jumped 230% from a year ago based on figures from 17 major online merchants. Boston Consulting projects that Internet sales will reach $13 billion for all of this year. First-time shoppers flooded online stores this season. America Online (NYSE: AOL) said it saw more than 1 million first-time buyers this month. Still, Internet sales remain a small fraction of the estimated $174 billion in total holiday retail sales.

News to Go

DaimlerChrysler AG (NYSE: DCX) announced it expects 1998 revenues to increase by 13% to $148 billion and 1998 earnings to "reach a significantly higher level" than pro forma combined figures for 1997 for Daimler-Benz AG and Chrysler Corp. The newly combined automaker estimates unit sales will total 4.4 million vehicles this year, up from a combined 3.6 million last year and topping an earlier estimate of 4.2 million. The company expects to see "the first substantial positive effects of the merger" in 1999.

The Wall Street Journal reported that General Motors (NYSE: GM) will announce plans this week to develop hybrid diesel-electric transit buses. The world's largest automaker will deliver a test hybrid bus to New York City next year and expects to start making more vehicles with its bus-making partners the year after.

Trans World Airlines (NYSE: TWA) said its flight attendants staged a holiday weekend "sickout" that forced the airline to cancel some 200 flights, but the union representing the flight attendants denied the charge, saying the number of ill workers wasn't much higher than last year. The union and TWA have been negotiating a new contract since February 1997, and talks are set to resume in January. Flight attendants want a 39% pay increase -- to $39.86 per flight hour -- over two years, while TWA has offered a 21.6% raise through 2003.

Medical imaging drugs distributor Syncor International (Nasdaq: SCOR) estimates it may lose up to $15 million in revenue, or 4% of last year's top line, after losing part of an account for radiopharmaceuticals to a competitor.

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Yi-Hsin Chang (TMF Puck), Writer
Brian Bauer(TMF Hoops), Editor