Monday, March 06, 2006

Monday Morning Musings

Morning News of Note:
  • T BLS: A Reborn AT&T To Buy BellSouth $67 Billion Deal Sets Field For a Race With Cable Over Phones and TV 'An Explosion of Technology' A $67 billion deal to buy BellSouth Corp. puts AT&T back on top of the telephone industry -- but this time, it is just one of many rivals in a high-technology race to dominate telecommunications, television and the Internet. Yesterday, AT&T Inc. said it has agreed to acquire BellSouth, aiming to create a super-size phone company that reunites four of the Baby Bells created in the historic 1984 breakup of Ma Bell. (Full Story) WSJ
  • EDMC: Education Management Draws $3.4 Billion Offer Providence Equity, Goldman To Buy For-Profit School In Bet on Sector's Prospects Providence Equity Partners Inc. and Goldman Sachs Group Inc.'s investment arm have agreed to purchase Education Management Corp. for $3.4 billion, Education Management said, as increased access to federal funding improves the prospects of for-profit trade schools and universities. Education Management runs 72 primary campuses across the U.S. and Canada, training its 72,000 enrolled students in fields such as fashion, psychology and Web-site design (Full Story) WSJ
  • Semis: LEXR anncd co reschedule earnings release, cites accounting of inventory and reserves; sees 4Q eps ($0.25)-($0.28)/ FC ($0.15) on revs $237m-$240m/ FC $236.37m // Toshiba to spend ¥500bln to build fab to boost NAND flash output; est fab to start produciton in early 2007; co benefitting from strong AAPL iPod demand -- Nihon Keizai // Fullcomp International Investment plans to build $300m semi fab in Beijing, China for contract use; plant to begin mfg thjis month; cpacity 30k 8in wafers/mo -- FT // MU CEO Steve Appleton said co may take a look at IFXs DRAM unit after IFX anncd plans to divest unit -- EE Times
  • EU Economy: EU Feb retail PMI 49.6 vs 49.7 in Jan // ECB President Trichet said infaltion above 2% is reason enough to raise interest rates; ECB rates remain accomodative; there is a need to watch EU housing mkt as loans outpace GDP growth
  • Mad Money Summary: Jim Cramer told his viewers on Friday that it was time to buy I-Flow (IFLO), a medical device company. Their main product is the ON-Q pain relief system, which "delivers a continuous infusion of a local anesthetic for up to five hours directly to the treatment area" for a variety of procedures. If you are in the market for shoes, Cramer suggests Steve Madden (SHOO). He says the company is a best of breed in the mid-price shoe range, and he believes it is "not to late to get on board" even though the stock is up 45% since August. Cramer then said the time was right for high-speed optical network plays, mentioning Bookham (BKHM), JDS Uniphase (JDSU), Ciena (CIEN) and MRV Communications (MRVC). In the Lightning Round, Cramer was bullish on Pioneer Drilling (PDC), Yahoo! (YHOO), Concur Technologies (CNQR), Crown Castle (CCI), JDSU (JDSU), Ciena (CIEN), Bookham (BKHM), Crocs (CROX), Broadcom (BRCM), Marvell (MRVL), Pacific Ethanol (PEIX), Archer Daniels Midland (ADM), BHP Billiton (BHP), Motorola (MOT), Grey Wolf (GW), Schlumberger (SLB), Halliburton (HAL), Nabors (NBR) and Starbucks (SBUX), and was bearish on Intel (INTC), Tyson Foods (TSN), Charles & Colvard (CTHR), Palm (PALM), Frontline (FRO), United Microelectronics (UMC) and Silicon Motion Technology (SIMO)

Market Comments: The market is relatively flat after the open, following Friday's late day weakness. The merger announcment (T/BLS) before the open and the EDMC buyout is helping to bolster enthusiasm.

The yield on the 10-year has broken to a new 52-week high at 4.71%. While this is disconcerting to many, it is still not at a level that is deemed too competitive to stocks. Moreover, it has been years since the 10-yr. was over 5.0%.

Energy stocks are under pressure again, on some positive headlines on the Iran issue (which is sending crude prices lower). And tech looks strong, led by chip-related stocks.


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