CNNfn market movers
Earnings, ratings sink Pfizer, Schick Tech, but casinos build on Circus gains
NEW YORK (CNNfn) - The gap between winners and losers sharpened Friday afternoon as Wall Street moved toward the close of a nerve-wracking week, torn between encouraging mergers and sliding profits.
Two fresh Internet companies followed that sector's proud tradition by leaping in their first afternoon of public trading. WebTrends (WEBT) soared 17-7/16 from its opening price of $13, while Vignette (VIGN) leapt 26-5/8 from a $19 starting block.
Coca-Cola (KO) shares overcame a flat opening to pick up 15/16 to 65-9/16 after announcing that it will launch a bottled water brand to compete with archrival PepsiCo's foothold in that fast-growing market.
Pepsi (PEP) boosters, however, seemingly ignored the challenge, lifting shares 2 to 39-9/16 in heavy trading as investors looked instead to news that influential Soros Fund Management had bought heavily into the company in fourth-quarter 1998.
Merrill Lynch (MER) jumped into the ranks of the e-brokers, confirming reports of a growing interest in Internet stock trading by buying the online trading unit of privately-held D.E. Shaw & Co.
Merrill shares climbed 2-7/8 to 72-3/4, but shares of already-established Web brokers were mixed. Ameritrade (AMTD) slid 1/2 to 85, but E*Trade (EGRP) welcomed the competition, gaining 1-9/16 to 40-3/4. Charles Schwab (SCH), which currently casts a giant Net shadow, was up 2-7/16 at 69-13/16.
Shares of Bank of Commerce (BCOM) benefited from another big financial transaction, gaining 1-13/16 to 18-7/8 after agreeing to a $314 million merger with U.S. Bancorp (USB). Based in San Diego, Bank of Commerce is best known as one of the largest U.S. small business lenders, while U.S. Bancorp is the 13th-largest domestic bank. U.S. Bancorp shares climbed 13/16 to 33-3/4.
Meanwhile, shoemaker Florsheim Group (FLSC) went looking for a merger, but shares slid 1-1/8 to 5-5/8 after the company said it has called in Bear Stearns to help evaluate its strategic options. Florsheim noted that no decisions have yet been made and "there is no assurance that any transaction may result."
Corporate relations of a very different type hurt shares of plastics maker Synetic (SNTC), which fell 1-1/2 to 45-1/8 after pharmaceutical giant Merck & Co. filed a breach-of-agreement complaint against the company. Merck (MRK) shares gained 15/16 to 79-3/16.
The agony of profit warnings
Several companies faced the Street's harsh medicine after reporting disappointing earnings or warning of sagging profits to come.
Applied Graphics (AGTX) was down 1/4 at 9-1/4 after a jagged session spent in both positive and negative territory as promises of plant closings and layoffs warred with disappointing fourth-quarter earnings in the hearts and minds of shareholders.
More straightforward was waste management company Waste Industries (WWIN), which fell 1-3/4 to 14-1/4 despite seemingly encouraging news of two acquisitions and two significant service contracts. Investors instead concentrated on a warning that fourth-quarter earnings will miss analysts' estimates.
Schick Technologies (SCHK) fell 7/8 to 4-3/8 on its own warning that "doubtful accounts" would contribute to a substantial operating loss when it reports fiscal third-quarter earnings next Monday. Wall Street had previously expected the maker of medical imaging systems to report a profit of 17 cents per share.
Dean Foods (DF) also alerted shareholders to disappointing fiscal third-quarter results ahead, driving shares down 1-3/8 to 34-1/16. The company attributed the unexpected weakness to "unprecedented" milk costs and declining butterfat prices.
Ratings call the tune
Several stocks built on encouraging words from Wall Street analysts, although others demonstrated that a harsh word from an influential firm can send shares falling just as easily.
Arch Coal (ACI) climbed 1-1/16 to 10-15/16 after Merrill Lynch recommended it as a "buy," while an "outperform" rating from Morgan Stanley boosted Arrow Electronics (ARW) shares 1-1/16 to 16-1/8.
No fewer than three Wall Street firms -- ING Barings, Morgan Stanley and Schroder & Co. -- had positive words for Granite Construction (GVA), with ING Barings weighing in with the most enthusiastic applause, a "strong buy." Granite shares rose 2 to 24-5/16.
On the down side, Pfizer (PFE) fell 1-13/16 to 129-5/16 after Merrill Lynch downgraded its stock to "near-term buy" from "accumulate."
The downgrade blues were also responsible for biotech firm Sepracor (SEPR) tumbling 16-1/4 to 121 despite reporting a slightly narrower loss than Wall Street had expected. Gruntal rescinded its "strong buy" rating on the stock, lowering its recommendation to "buy," but remained optimistic on the company's near-term profit prospects.
Casinos win big
One of the day's biggest reminders of the power that analysts can wield was Circus Circus Enterprises (CIR), which climbed 1-7/16 to 17-1/8 and sparked a rise in shares of several other hoteliers and casino operators.
Naomi Talish at Merrill Lynch expects Circus Circus to positively surprise shareholders with its earnings coming next Tuesday. She rated Circus Circus "accumulate" in the near term and "buy" in the long term.
Talish said the company's Mandalay Bay casino, in particular, could produce a better-than-expected return on investment when it opens March 2. CIBC Oppenheimer also rated Circus Circus a "buy."
Investors hoped the good luck could rub off, driving Harrahs Entertainment (HET) up 1-15/16 to 17-15/16, Mirage Resorts (MIR) up 1-1/8 to 18-3/4 and MGM Grand (MGG) up 2 to 35-3/4.