DJ MARKET TALK: RIMM Workaround Could Be Pivot Point
Edited by Paul Vigna Of DOW JONES NEWSWIRES (call: 201-938-5172; e-mail: paul.vigna@dowjones.com) MARKET TALK can be found using N/DJMT
2:33 (Dow Jones) JPMorgan's latest take on Research In Motion (RIMM) patent saga with NTP. "We believe the worst case scenario for RIMM is obviously an injunction, with an immediate impact to the stock of 20-25%, though downside of up to 40%+ is possible if the workaround were also impacted," or if there's a likelihood the injunction continues for a long period. Other outcomes, positive for RIMM: judge doesn't bother with workaround, which reduces threat of injunction having material impact and buys RIMM time for patent appeals to be finalized; or court denies injunction but grants NTP accrued payments and royalties on future sales. Royalty payment "would be more than offset by multiple expansion" with lifting of litigation overhang, JPM says. (JHS)
2:20 (Dow Jones) Although Esterline Tech's (ESL) FY1Q earnings missed Street views, they still beat the company's own forecast, Stephens notes. "We continue to believe that our full year and longer-term views remain relatively intact," firm says. The solid commercial aerospace and defense market over the next several years should be good for ESL, firm adds. Stephens maintains overweight rating and $50 price target, and advises buying on the weakness. ESL down 5.7% at $40.70. (PJV)
2:09 (Dow Jones) Lead S&P and Nasdaq futures contracts near unchanged after midday, as sources report minimal participation. The more than $2/bbl rise in crude oil futures has not produced a big equity sell-off, but it might be stalling rally attempts. March S&P's stay in a 5.9 point trading range, finding stubborn chart resistance at Wednesday's 1 1/4-month high of 1296.00. Recently trading at 1298.80, down 0.4 points. March Nasdaq slipped below its Thursday low of 1673.00 before staging a modest rebound. Recently at 1675.50, unchanged. (HLP)
2:00 (Dow Jones) Strong crude-oil prices after an attempted suicide-bombing attack at a Saudi oil facility, plus safe-haven buying, sent gold sharply higher, analysts say. Buy stops were triggered. Silver followed, extending its gains quickly on buying right before the end of the session. April gold settled up $10.30 to $561.20 an ounce. (ALS)
1:52 (Dow Jones) February wasn't a pleasant month for shorts lurking in the telecom sector. A rally among telecom players, sparked by in-line quarterly results, higher risk tolerance and waning bear conviction, has driven down short interest, says Banc of America. Verizon (VZ) saw its short interest fall for the first time in four months following healthy 4Q results and the closure of the MCI merger, while Citizens Communications (CZN) and Sprint Nextel (S) also saw significant declines. With the rally cooling, Banc of America does see short interest rising again in March. (RC)
1:38 (Dow Jones) Westwood One (WON) plummets after issuing a weak 1Q outlook. The company's projection - high single-digit to low double-digit revenue declines - was "significantly" below expectations, "especially during an Olympic quarter," Bear Stearns says. Traffic revenue in the 4Q, which fell 10%, was also worse than expected. "We had expected some weakness in traffic but not of this magnitude," firm says. Citigroup says forecast would work out to a 1Q loss, "a situation we have not seen in many years," and highlights company-specific issues layered on top of industry weakness. WON down 18% at $11.48. (PJV)
1:27 (Dow Jones) With slackening competition from Delta (DAL), JPMorgan ups JetBlue (JBLU) to neutral form underweight. "Contrary to our expectations, Delta has materially reduced summer flying levels in former Song markets, between the Northeast and Florida," the firm says. "Overnight schedule transmissions suggest an average of 13 fewer daily frequencies in key JetBlue markets, a reduction of 25%. Given the incorporation of smaller gauge aircraft in certain markets, we expect actual Delta seating capacity to decline by 32% versus earlier planned Summer 2006 levels. Accordingly, we believe JetBlue will return to profitability in 2006," JPM says. JBLU up 4.4% to 11.59. (JHS)
1:10 (Dow Jones) US stocks have improved as the session progresses with the Dow Industrials shaking off much of their morning losses. Main sources of weakness for the index -- Altria and J&J, offset somewhat by Exxon's gains. Energy, financials, utilities and even chips (despite negative Intel sentiment) all higher. Real estate and telecom are weak. DJIA off about 23 points; Nasdaq up 5; S&P 500 up about a point. (JHS)
12:53 (Dow Jones) CIBC downgrades Capital One (COF) to sector performer from outperformer, "based upon the recent move in the stock and based upon our belief that our outlook for earnings upside to current estimates has tempered," the firm says. Wait for a more compelling entry point or stronger growth outlook before getting more aggressive on the shares, CIBC says. The downgrade isn't based on any fears over credit quality, the firm adds. COF off 0.9% to $88.03. (JHS)
12:37 (Dow Jones) "We do not see anyone topping National Grid's $42 all cash deal" for KeySpan (KSE), Calyon says. "Other bidder's would likely have to pay $45 or higher if the offer was in stock," the firm adds. ConEd (ED) is the most likely other bidder, but would have a hard time justifying a $45/share price, Calyon says. Investors seem to agree -- KSE up 0.6% to $41.35. (JHS)
12:27 (Dow Jones) Some well known names in diverse industries are getting the thumbs up from Morgan Stanley chartist Mark Newton. He's encouraged by AT&T's (T) advance to new four-year highs, and although overbought, feels that the stock can move higher in the upcoming months. Dell has shown constructive signs of bottoming out near its 50% retracement level of a 2001 to 2004 advance. Further gains are likely to resistance targets near $35. Bank of America's (BAC) recent pullback could lead to buying opportunities to targets near $47.50, then $50, Newton says. (KJT)
(END) Dow Jones Newswires
02-24-06 1433ET
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