DJIA: 8853.12 -53.31 (-0.60%) S&P 500: 1097.99 -1.17 (-0.11%) Nasdaq: 1792.87 +3.71 (+0.21%) Value Line ndx 970.42 +0.94 (+0.10%) 30-Year Bond 103 12/32 unch. 5.88% Yield
Lunchtime News | |
Related Items | |
|
FOOL PLATE SPECIAL
An Investment Opinion by Dale Wettlaufer
Oil Producers Cut Back
Oil stocks were all the talk this weekend as founding Organization of Petroleum Exporting Countries (OPEC) members Venezuela and Saudi Arabia, along with Mexico, announced pledges to cut their oil production by 1.1 million barrels of oil per day by the beginning of April. The countries' oil ministers called on other major producers to cut back on their production by an additional 900,000 barrels per day. Other OPEC members chimed in with their responses, with other Persian Gulf nations pledging to chip in more than a quarter of the targeted production cut. Over the last year, prices have come down precipitously as producers could not resist the temptation to cash in on higher per-barrel oil prices as measured in dollars. The double-whammy effect of the dollar appreciating against other major world currencies increased the purchasing power of those petro-dollars, too, further increasing the temptation to increase output. For countries with imploding currencies and capital outflows, such as Indonesia, increasing oil production had been a no-brainer.
The production agreement lit a fire under oil prices, with May 1998 light crude oil rising more than 14.5%, to $16.75 per barrel in NYMEX trading. The agreement and the goose to oil prices is now working its way through capital markets around the globe. While bonds remained largely ambivalent to the action, stocks of companies where energy prices are a key moving part in their cash flow certainly were not as ambivalent. Airlines took the news as a downer, though most are hedged to the extent that $13 per barrel oil was not going to drop straight to their bottom line. UAL Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UAL)") else Response.Write("(NYSE: UAL)") end if %>, parent of United Airlines, lost $1 7/8 to $88, Southwest Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LUV)") else Response.Write("(NYSE: LUV)") end if %> shed $2 1/2 to $27 5/8, US Airways Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: U)") else Response.Write("(NYSE: U)") end if %> fell $2 3/4 to $70 11/16, and American Airlines parent AMR Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMR)") else Response.Write("(NYSE: AMR)") end if %> dipped $3 1/16 to $136 3/4.
On the upside, integrated oil companies surged. Mobil Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOB)") else Response.Write("(NYSE: MOB)") end if %> jumped $2 7/8 to $81 7/16, Exxon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XON)") else Response.Write("(NYSE: XON)") end if %> added $2 1/8 to $69 1/4, Atlantic Richfied <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARC)") else Response.Write("(NYSE: ARC)") end if %> gained $2 13/16 to $83 3/16, Texaco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TX)") else Response.Write("(NYSE: TX)") end if %> drove $2 1/8 higher to $63 7/16, Amoco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AN)") else Response.Write("(NYSE: AN)") end if %> bounced $2 1/4 to $88 7/8, Royal Dutch Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RD)") else Response.Write("(NYSE: RD)") end if %> added $1 9/16 to $58 9/16, and Amerada Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AHC)") else Response.Write("(NYSE: AHC)") end if %> rose $1 1/8 to $60 5/8. Oil production & exploration companies and marketers also gained, with Penzoil <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PZL)") else Response.Write("(NYSE: PZL)") end if %> up $1 7/8 to $67 5/16, Benton Oil & Gas <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BNO)") else Response.Write("(NYSE: BNO)") end if %> up $3/4 to $12 11/16, Enron Oil & Gas Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EOG)") else Response.Write("(NYSE: EOG)") end if %> $1 7/16 higher at $23 3/4, and Talisman Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLM)") else Response.Write("(NYSE: TLM)") end if %> up $ 1 11/16 to $31 5/16.
Rounding out the stocks moving today, oil drillers and energy services companies gained ground on what could be more a psychological turning point for investors than an economic turning point for the industry. Diamond Offshore <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DO)") else Response.Write("(NYSE: DO)") end if %> ascended $2 5/16 to $49 3/8, R&B Falcon <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLC)") else Response.Write("(NYSE: FLC)") end if %> gained $2 5/16 to $32 1/8, Global Marine <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLM)") else Response.Write("(NYSE: GLM)") end if %> added $1 5/8 to $26 1/8, Marine Drilling Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MDCO)") else Response.Write("(Nasdaq: MDCO)") end if %> gushed $1 15/16 to $23 1/4, Ensco International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ESV)") else Response.Write("(NYSE: ESV)") end if %> rose $2 1/2 to $30 1/2, Halliburton <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HAL)") else Response.Write("(NYSE: HAL)") end if %> surged $3 7/8 to $52, and Schlumberger <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLB)") else Response.Write("(NYSE: SLB)") end if %> looked magnifique, gaining $4 5/16 to $77 7/8. Equipment and services company EVI Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EVI)") else Response.Write("(NYSE: EVI)") end if %> tacked on $3 7/8 to $46 7/8, and Smith International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SII)") else Response.Write("(NYSE: SII)") end if %> rose $5 1/4 to $58 7/8.
Plastic container maker Ultra Pac Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UPAC)") else Response.Write("(Nasdaq: UPAC)") end if %> picked up $8 3/16 to $14 7/8 after agreeing to merge with specialty packaging products maker Ivex Packaging Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IXX)") else Response.Write("(NYSE: IXX)") end if %>. Under the deal, Ivex will launch a cash tender offer for all of the outstanding shares of Ultra Pac at $15.50 per share.
Appliance manufacturer Maytag Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MYG)") else Response.Write("(NYSE: MYG)") end if %> gained $1 1/16 to $48 13/16 after saying its fiscal Q1 EPS will be "much better" than the $0.61 expected by analysts surveyed by First Call. Sales are expected to rise by as much as 25% from their year-ago levels due to strong demand for new products introduced last year and improved operating margins.
Great Lakes Chemical Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLK)") else Response.Write("(NYSE: GLK)") end if %> traded $2 11/16 higher to $52 3/8 after Morgan Stanley raised its rating on the company to "strong buy" from "outperform." The specialty chemical company also named Mark Bulriss as its new president and CEO following the retirement of Robert McDonald.
Home healthcare provider American HomePatient <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AHOM)") else Response.Write("(Nasdaq: AHOM)") end if %> added $1 1/8 to $20 1/2 on reporting Q4 EPS of $0.31 versus $0.30 a year ago, which was below the Street estimate of $0.37. Revenues were up 33% in the quarter to $105.3 million, while cash flow (earnings before interest, taxes, depreciation, and amortization) rose 34% to $21.9 million.
Fort Bend Holding Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FBHC)") else Response.Write("(Nasdaq: FBHC)") end if %>, the holding company for Rosenberg, Texas-based Fort Bend Savings and Loan Association, jumped $7 3/4 to $28 1/2 after receiving an unsolicited buyout offer of $28 to $32 per share in cash from Millers Mutual Fire Insurance Co. The bid represents a 35% to 54% premium to the company's closing price of $20 3/4 on Friday.
Auto parts distributor and advanced engineering products developer Consulier Engineering <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSLR)") else Response.Write("(Nasdaq: CSLR)") end if %> added $2 1/2 to $6 3/4 after announcing a two-for-one stock split effective April 15.
Telemarketing services company Telespectrum Worldwide <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLSP)") else Response.Write("(Nasdaq: TLSP)") end if %> rang up a $1 7/8 gain to $6 5/8 after naming Keith Alessi its new president and CEO. Alessi is the former CEO of tax preparer Jackson Hewlett, which was acquired by consumer services giant Cendant Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CD)") else Response.Write("(NYSE: CD)") end if %> in January.
Administrative outsourcing firm ProBusiness Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRBZ)") else Response.Write("(Nasdaq: PRBZ)") end if %> advanced $2 3/8 to $29 1/8 after soft drink maker Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> selected the company to provide payroll tax services.
Boeing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> fell $1 3/4 to $51 11/16 after The Wall Street Journal reported that new bottlenecks are hampering deliveries of more than 50 of the Seattle-based plane maker's latest 737 models, just weeks before their production is slated to double. The latest problems are due to chronic parts shortages and unexpected modifications demanded by European and U.S. safety regulators. Troubles last year in meeting a big jump in orders forced the world's leading maker of commercial jet aircraft to close some assembly lines temporarily and report its first annual loss in 50 years.
After climbing nearly 14% on talk of a possible merger agreement that began early this month, casino owner and operator Circus Circus Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CIR)") else Response.Write("(NYSE: CIR)") end if %> plunged $3 to $21 3/4 after announcing that talks with Hilton Hotels <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HLT)") else Response.Write("(NYSE: HLT)") end if %> have been terminated. As part of the $2.8 billion deal, Hilton would have split its gaming and lodging operations into two public companies through a tax-free spin-off, and Circus Circus would have merged into the resulting gaming company in a stock-for-stock transaction.
Ford Motor Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %> dropped $1 1/8 to $62 1/2 after South Korea's Hyundai Group announced a hostile bid for Kia Motors Corp. Ford owns about 16% of Kia and might make a rival bid for the company.
Pharmaceutical firm Eli Lilly & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> shed $1 5/16 to $63 15/16 on positive sentiment that competitor Pfizer Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %> will get FDA approval to market Viagra, a drug for male erectile dysfunction. Pfizer is also awaiting approval this month for Zeldox, a schizophrenia drug that would compete with Eli Lilly's blockbuster Zyprexa. Pfizer was up $4 7/16 to $96 9/16 this morning.
Integrated Circuit Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICST)") else Response.Write("(Nasdaq: ICST)") end if %> sank $3 to $20 7/16 after announcing after the bell Friday the resignation of its president and CEO, Stavro Prodromou. The company chairman, Henry Boreen, has assumed the position of interim CEO, and the company, which supplies fast ethernet integrated circuits and frequency timing generators for computers, peripherals, multimedia, information appliances, and data storage devices, has started looking for a replacement for Prodromou.
Luggage maker Samsonite Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SAMC)") else Response.Write("(Nasdaq: SAMC)") end if %> lost $3 to $29 3/8 after announcing a charge of around $2.6 million in its fiscal 1999 first quarter, which ends April 30, 1998, to restructure its Torhout, Belgium, softside manufacturing operations. The company expects annual savings of $2.2 million from the restructuring, or roughly $0.07 per share after taxes.
Creative Computers <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MALL)") else Response.Write("(Nasdaq: MALL)") end if %> plummeted $2 1/8 to $8 5/8 after the personal computer hardware, software, and peripherals seller announced that it expects to report a loss for the first quarter on sales exceeding $160 million. Creative Computers experienced strong PC/Wintel product sales but slower Macintosh-related sales, which have been subject to price pressures. The company will also take a charge for the closing last Friday of six of its seven stores.
Computer network services and products provider Data Systems Network <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DSYS)") else Response.Write("(Nasdaq: DSYS)") end if %> was cut $7/8 to $6 3/8 after announcing that the board-appointed special committee looking into previously announced accounting irregularities is nearing the conclusion of its investigation. Based on preliminary findings, the company predicts the results will have an impact of $1.5 to $2 million in 1996. Although 1997 revenue numbers should not be affected, earnings for the year will be impacted, resulting in a possible loss.
Florida-based BankAtlantic Bancorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBX)") else Response.Write("(NYSE: BBX)") end if %> slipped $15/16 to $13 9/16 after announcing late Friday that it expects first quarter earnings will be less than the $6.3 million reported for Q1 1997. The bank attributed the decline in earnings to increased prepayments of residential mortgages as a result of lower interest rates and higher expenses associated with the company's growth initiatives.
Abercrombie & Fitch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANF)") else Response.Write("(NYSE: ANF)") end if %> slid $2 9/16 to $44 15/16 after Bear Stearns lowered its rating on the men's and women's casual apparel retailer to "attractive" from "buy."
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
Click here for continually updated Portfolio Numbers.
WE DELIVER - Get The Lunchtime News delivered
to your e-mailbox every afternoon!
ANOTHER FOOLISH THING
See something moving a stock that we didn't cover?
E-mail the Fool News Team
and we will start working on the story.
Unfortunately, we cannot answer every e-mail
or respond to individual questions.
Yi-Hsin Chang (TMF Puck), a Fool
Brian Graney (TMF Panic), Fool Two
Alex Schay (TMF Nexus6), Fool, too
Dale Wettlaufer (TMF Ralegh), Final Fool
Contributing Writers
Brian Bauer (TMF Hoops), another Fool
Jennifer Silber (TMF Amused), Fool at last
Editing