DJIA 9944.34 +67.99 (+0.69%) S&P 500 1303.74 +9.15 (+0.71%) Nasdaq 2411.92 +30.39 (+1.28%) Russell 2000 400.49 +2.11 (+0.53%) 30-Year Bond 95 31/32 -1/32 5.53 Yield
FOOL PLATE SPECIAL
An Investment Opinion
by Warren Gump
Pioneer Hi-Bred Harvested by DuPont
Chemical giant DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> this morning announced plans to acquire Pioneer Hi-Bred International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PHB)") else Response.Write("(NYSE: PHB)") end if %>, the world leader in selling corn seeds. DuPont will pay $40 a share in cash and stock for the 80% of Pioneer that it doesn't already own. After rising $9 13/16 Friday on news of discussions between the two companies, Pioneer rose an additional $3 5/8 to $37 15/16 this morning. DuPont was down $1 13/16 to $55 15/16.
This acquisition culminates a year of significant consolidation in the agricultural seed market. Last year, Monsanto <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MTC)") else Response.Write("(NYSE: MTC)") end if %> completed the purchase of Dekalb Genetics, which like Pioneer sells corn and soybean seeds, and announced plans to acquire Delta & Pine Land <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLP)") else Response.Write("(NYSE: DLP)") end if %>, the leader in cotton seeds.
Although paying a hefty 35x 1999 estimated earnings, DuPont's timing in making this acquisition is somewhat opportunistic. Pioneer's stock has fallen from over $43 last May because of weakness in the U.S. agricultural markets. In addition, Monsanto can't compete for Pioneer because it is burdened by the leverage assumed to pull off last year's purchases. Finally, rumors were circulating that DuPont was contemplating a merger with Monsanto. If that were to occur, the combined company probably couldn't pursue Pioneer due to antitrust concerns, leaving Pioneer standing alone against a gigantic, deep-pocketed competitor.
Strong financial resources and excellent research and development are two key ingredients for a successful seed company. The most profitable products are hybrids and genetically engineered products that meet the specific needs of customers. Developing these new seeds requires cutting-edge genetic knowledge, in addition to significant amounts of money. Pioneer will now be in position to compete even more aggressively. Combining DuPont's financial and intellectual resources with its own market leading position should help Pioneer become an even more important player in the seed and agricultural genetics business.
United Airlines parent UAL Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UAL)") else Response.Write("(NYSE: UAL)") end if %> climbed $4 9/16 to $71 5/8 after announcing that it expects first quarter earnings of about $1.35 per share and full-year earnings between $10 and $12 per share, significantly ahead of current First Call analysts' mean estimates of $1.12 per share for the quarter and $9.12 per share for the year. The company said it anticipates "strong performance," especially in the U.S., throughout 1999. The positive outlook boosted other air carrier shares as well. Northwest Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NWAC)") else Response.Write("(Nasdaq: NWAC)") end if %> added $1 3/16 to $26 9/16, US Airways Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: U)") else Response.Write("(NYSE: U)") end if %> advanced $3 7/16 to $55 15/16, and American Airlines parent AMR Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMR)") else Response.Write("(NYSE: AMR)") end if %> moved up $2 15/16 to $60 15/16.
Financial information and transaction processor First Data Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDC)") else Response.Write("(NYSE: FDC)") end if %> gained $2 11/16 to $44 1/16 after announcing that its First Data Merchant Services e-commerce unit has developed a custom credit card authorization interface with Web portal Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> that will allow Yahoo! Store merchants to process credit card orders quickly, safely, and reliably. Yahoo! also announced an agreement for setting up online merchant accounts with Banc One Payment Services, which is a joint venture between First Data and BANC ONE Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ONE)") else Response.Write("(NYSE: ONE)") end if %>.
Online fax-to-email services firm eFax.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EFAX)") else Response.Write("(Nasdaq: EFAX)") end if %> gained $7 1/4 to $20 after agreeing to provide free fax-to-email services to the 6.5 million members of online direct marketing company Xoom.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XMCM)") else Response.Write("(Nasdaq: XMCM)") end if %>. Xoom.com moved up $3 to $70.
Internet investment firm CMGI Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMGI)") else Response.Write("(Nasdaq: CMGI)") end if %> rose $19 1/8 to $183 1/8 on news that it will replace Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> on the Nasdaq 100 Index on March 18. Netscape, which received word late last week that its merger with online services conglomerate America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> will not be challenged by trustbusters at the Justice Department, tacked on $4 7/8 to $89 3/4.
Cardiovascular medical devices maker Possis Medical <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: POSS)") else Response.Write("(Nasdaq: POSS)") end if %> pumped out a $1 3/4 gain to $14 1/8 after winning FDA approval for a wider range of uses for its AngioJet system, which had previously been cleared to only remove blood clots from vascular grafts used by kidney dialysis patients. The new approval permits Possis to "aggressively pursue all segments of the coronary blood clot removal market," President and CEO Robert Dutcher said.
Drugstore operator Rite Aid <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RAD)") else Response.Write("(NYSE: RAD)") end if %> bounced back $1 5/8 to $24 3/16 after tumbling 39% on Friday on news that various growing pains at the firm will result in fiscal Q4 EPS $0.20 to $0.22 below analysts' previous estimates.
Fiber optic telecommunications network operator Qwest Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QWST)") else Response.Write("(Nasdaq: QWST)") end if %> tacked on $4 1/16 to $73 11/16 after Morgan Stanley Dean Witter raised its rating on the company to "strong buy" from "outperform" and set a price target of $85 per share.
Internet domain name registrar Network Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSOL)") else Response.Write("(Nasdaq: NSOL)") end if %> gained $16 to $238 after saying it has registered its four-millionth address with a .com, .net, or .org suffix. The company also said net new international Web address registrations came in at 168,000 in Q4, up 91% year-over-year and 22% sequentially.
Virus and anti-HIV treatment developer Trimeris Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TRMS)") else Response.Write("(Nasdaq: TRMS)") end if %> added $1 1/2 to $14 3/8 after announcing that former Duke University Center for AIDS Research director Dani Bolognesi will become the firm's new CEO and chief scientific officer. Former Athena Neurosciences CFO Matthew Megaro will assume the role of president and CFO following the resignation of current president and CEO M. Ross Johnson.
Radio station operator and outdoor advertiser Chancellor Media Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMFM)") else Response.Write("(Nasdaq: AMFM)") end if %> tuned out $2 3/8 to $42 after announcing the end of a strategic review and plans to end a merger with LIN Television Corp., a management reorganization, an Internet initiative to establish local portals for each of its radio stations, and a $500 million equity investment in the company by Hicks Muse. Chancellor expects a Q1 charge of between $20 million and $25 million to fund the realignment.
Telecommunications equipment maker Ciena Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> fell $1 13/16 to $25 after saying it will acquire two privately held companies, Lightera Networks Inc. and Omnia Communications Inc., for a total of about $980 million in stock. Ciena expects the deals to become accretive to earnings during its fiscal year 2000. A replay of a company conference call about the acquisitions is available at (888) 203-1113 from 1 p.m. Eastern time today until midnight tomorrow. The access code is 648198.
Fleet Financial Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLT)") else Response.Write("(NYSE: FLT)") end if %> trailed off $1 3/4 to $43 on news that it will acquire BankBoston <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BKB)") else Response.Write("(NYSE: BKB)") end if %>, the nation's oldest bank, for $16 billion, or $53 per share, in stock. BankBoston, meanwhile, added $1 3/8 to $48 5/16. For more on the deal, reheat some of this morning's Breakfast With the Fool.
Chicago-based IT services company SPR Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPRI)") else Response.Write("(Nasdaq: SPRI)") end if %> was dumped $4 15/16, or 52%, to $4 9/16 after announcing that Q1 sales and operating results will be "significantly" below expectations. Revenues will be about 30% lower than planned and an operating loss is expected; three analysts polled by First Call currently expect EPS of $0.22. The company also agreed to terminate its planned merger with Metamor Worldwide <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MMWW)") else Response.Write("(Nasdaq: MMWW)") end if %>, which advanced $2 1/8 to $16 1/4. Metamor also said it is "comfortable" with analysts' $0.32 EPS projection for Q1 and authorized a $32 million stock buyback.
Medical cost management services firm Healthcare Recoveries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HCRI)") else Response.Write("(Nasdaq: HCRI)") end if %> lost $4 13/32 to $4 1/4 after it said Q1 EPS is seen coming in between $0.12 and $0.14, missing Wall Street's $0.18 consensus estimate. A new productivity program ended up lowering the amount of debt recoveries recorded as a percentage of backlog. Corrective steps taken by management are expected to right the ship by Q4.
Nutritionals and health care products maker USANA Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USNA)") else Response.Write("(Nasdaq: USNA)") end if %> dropped $7/8 to $8 7/8 after announcing Friday evening that a slowed market in North America and losses in its new U.K. division are expected to pull Q1 EPS to $0.15 or $0.16. Two analysts polled by First Call currently expect EPS of $0.18 for the period. Revenues are seen missing projections by 8% to 10%.
Homebuilder Meritage Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MTH)") else Response.Write("(NYSE: MTH)") end if %> was nailed for a $2 1/16 loss to $10 5/8 after it said construction delays at its Arizona locations will drag Q1 EPS "significantly" below Wall Street's $0.52 estimate. Managing Director Steve Hilton said the company expects Q1 closings to exceed year-ago levels with most of the delayed closings to be delivered in Q2.
Gas pipeline company El Paso Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EPG)") else Response.Write("(NYSE: EPG)") end if %> leaked $2 5/16 to $32 3/8 after it agreed, as expected, to acquire oil and natural gas company Sonat Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SNT)") else Response.Write("(NYSE: SNT)") end if %> for about $4 billion in stock plus $2 billion in assumed debt. The deal, expected to close in the third or fourth quarter, would create the nation's largest natural gas pipeline company.
Integrated circuit controls maker Frequency Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: FEI)") else Response.Write("(AMEX: FEI)") end if %> shed $15/16 to $6 1/2 after turning in fiscal Q3 losses of $0.18 per share, down from EPS of $0.31 a year ago and missing First Call's one-analyst breakeven estimate.
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Contributing Writers Brian Graney (TMF Panic), a Fool David Marino-Nachison (TMF Braden), a new Fool
Editing |