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Roundup: Markets on 13th October 1998

Much twitching in virtual standstill markets

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The Dow and Nikkei were down marginally, and Nasdaq down 2 per cent. In the US, yesterday was a day of irrational movements in the markets, with fierce reactions to downgrading by financial analysts. On the acquisitions front, Alcatel is acquiring Packet engines Inc, a specialist in wire-speed routing and Ethernet, for $315 million, which sent its shares up 6 per cent. Platinum Software is acquiring DataWorks in a stock swap worth $93 million. There were few gainers. Apple edged up 3.5 per cent on anticipation of good results because of iMac sales. Intel fell 2 per cent to $83.56 before its Q3 results were known. Cisco and Microsoft lost 3 per cent, Dell, Electronic Arts and Symantec fell 5 per cent, and Intuit 6 per cent. The Irish CBT Group dived 26 per cent on Nasdaq as a result of disappointing Q3 earnings down 39 per cent on the year-earlier quarter, while Broadcast.com fell 12 percent because of its Q3 loss, despite doubled earnings. Compaq lost 10 per cent when financial analyst Piper Jaffray reduced its Q4 eps estimate to $0.30 from $0.34, and shave $500 million from the revenue estimate to $10.5 billion. E*Trade was fingered by BancBoston and fell 12 per cent on downgrading. Baan had another damp day, and fell a further NLG 2 to NLG 21.50 in Amsterdam, down 8.5 per cent following yesterday's 29 per cent. Analysts International, a Y2K specialist consultancy, was down 25 per cent after reporting eps of $0.27, only three cents below expectations, which shows how jittery investors/speculators are about earnings. Even when Computer Task Group, another Y2K specialist, reporter eps of $0.37 and beat its Q3 estimate by two cents, it was downgraded by Warburg Dillon Read to "hold" and its shares lost 17 percent. Is there no pleasing these gnomes, or could it be that the future has arrived too soon? Service companies are thought to be suffering from less spending by their clients because of the Y2K issue. PeopleSoft, mindful of what had happened to Baan, decided not to turn up to give a presentation at BT Alex Brown's investors' conference. The excuse, that they were in their quiet period, is invalid as this was known when the invitation was accepted. Bad news seems likely when its results are announced, and shares dropped 19 per cent. Bob Austrian of Montgomery Securities expects PeopleSoft to report Q3 income of $44 million, up 53 per cent from the $29 million in the year-ago quarter. He may be disappointed, it seems. PeopleSoft shares fell 25 per cent on 2 October as part of what is now seen to be general concern about the health of the ERP market, which is having a contagious effect on related companies. David Readerman of Montgomery Securities and a good buddy of Microsoft, is looking to Microsoft announcing Q1 income of $1.3 billion, up 38 per cent on the year-ago quarter. He thinks the revenue will be $4.1 billion, up 30 per cent. Microsoft eps are estimated by First Call consensus to be 49 cents. It would be a surprise if the Street were not surprised: it always underestimates Microsoft's eps, either because it helps to put the share price up for their own holdings, and/or because Microsoft uses Excel at the last minute to juggle its unaudited results to beat the Street, by changing policy on such variables as revenue recognition and deferred income. ® Click for more stories

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