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Dow to watch Net, airlines
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February 9, 1999: 7:16 a.m. ET
Lycos, USA Networks announce deal, while airline labor woes mount
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NEW YORK (CNNfn) - Investors will be looking at a major Internet deal and labor unrest in the airline sector when Wall Street opens on Tuesday.
Early Tuesday, Lycos, the hotly pursued Internet portal, announced merger plans with USA Networks' Home Shopping Network, creating one of the Internet's largest e-commerce and portal entities.
Barry Diller, the head of USA Networks, will be chairman of the new company, and USA will control 61 percent of the combined company. USA also will contribute its majority-owned Ticketmaster Online-CitySearch Inc. (TMCS) unit and other Internet assets, to form a company that will be called USA/Lycos Interactive Networks Inc. Ticketmaster was up 5/8 at 57-3/8.
Meanwhile, the airline sector is seeing some turmoil. AMR Corp. (AMR), the holding company for American Airlines, has threatened to sue its pilots union if a sickout isn't called off by the President's Day holiday weekend. American said it canceled 22 percent of its scheduled departures Monday. AMR closed down 2-15/16 Monday at 57.
Also, federal mediators have declared an impasse in contract negotiations between America West Airlines and its flight attendants. The National Mediation Board have asked both sides to submit to binding arbitration. If either side rejects arbitration, a 30-day cooling off period will begin. If no agreement is reached by that time, the flight attendants have said they will go on strike. America West Holdings (AWA), the airline's holding company, was down ¼ at 21-11/16.
The Dow Jones industrial average closed 13.13 points off Monday at 9,291.11. Market breadth on the New York Stock Exchange was negative, with losers beating gainers 1,565 to 1,400 on trading volume of 709 million shares.
The Nasdaq Composite, which rallied in the first half-hour of trading and then had a brief foray in the minus column, finished 31.30 points, or 1.32 percent, higher at 2,404.92. The S&P 500 index rose 4.37 to 1,243.77.
On Tuesday, S&P futures were up 0.50, typically indicating a flat market opening.
(Click here for the latest S&P futures quote)
The benchmark 30-year Treasury bond was up 9/32 for a yield of 5.32 percent.
In other company news, SmithKline Beecham PLC (SBH)SmithKline Beecham confirmed Tuesday it will sell two U.S. subsidiaries for $2 billion in a strategic switch that will allow the company to focus on its core drugs business and will renew speculation about a major link-up. The Anglo-American pharmaceuticals giant also plans to cut 3,000 jobs, or just over 5 percent of its total global workforce of 58,000 by the end of 2002. SmithKline is planning to sell its pharmacy benefit business Diversified Pharmaceutical Services to Express Scripts, a U.S. rival in that field. SmithKline Beecham was down 7/16 at 66-3/16.
And Duane Reade Inc. (DRD) reported a better-than-expected profit in the fourth quarter. The drug store chain posted net income of $10.2 million, or 56 cents per diluted share, improving upon last year's loss of $549,000 or 5 cents per diluted share, for the same period. (Analysts had predicted a profit of 52 cents.) Duane Reade was up 1-1/16 Monday at 31-3/8.
Overseas, Hong Kong shares staged a late afternoon turnaround Tuesday to close more than 1 percent higher while Tokyo lost ground, pulled lower again by higher long-term bond yields. The Nikkei 225 index closed down 0.64 percent at 13,902.66.
In Hong Kong, the Hang Seng index staged a rally in late afternoon trade, closing up 1.15 percent to 9,244.49.
And European equity markets got off to a brisk, but cautious, start Tuesday as investors scouted out under-performing issues in some markets and homed in on a spate of earnings reports in Britain. London's FTSE index rose 0.47 percent, or 27.4 points, to 5,862.3 as investors looked for financial results from four blue chip companies and continued to focus on takeover talk in several sectors.
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