Message-ID: <24255444.1075852563777.JavaMail.evans@thyme> Date: Tue, 4 Sep 2001 07:57:14 -0700 (PDT) From: schwabalerts.marketupdates@schwab.com To: jeff.dasovich@enron.com Subject: Morning Market View for September 04, 2001 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Schwab Alerts X-To: Dasovich, Jeff X-cc: X-bcc: X-Folder: \JDASOVIC (Non-Privileged)\Deleted Items X-Origin: Shankman-J X-FileName: JSHANKM (Non-Privileged).pst Charles Schwab & Co., Inc. Morning Market View(TM) for Tuesday, September 4, 2001 as of 9:30AM EDT Information provided by Schwab Center for Investment Research ================================================================ MERGER MANIA The extended vacation weekend appears to have recharged the competitive batteries in both the technology and energy sectors as several companies headed down the acquisition trail this morning. Equity index futures hinted at a negative open for stocks, extending the downside bias from Europe, despite some early enthusiasm following Hewlett Packard's (HWP,23) bid for Compaq Computer (CPQ,12.35,f4). Computer giant Hewlett-Packard has agreed to purchase rival Compaq Computer in a deal worth $25 billion in stock, as both companies look to enhance their competitiveness in an industry plagued by languishing sales and an ongoing price war. Hewlett-Packard will own 64% of the combined company with Compaq owning the remaining 36%. The announcement could put pressure on computer titans Dell (DELL,21,f1) and International Business Machines (IBM,100,f2), and the pricing war is likely to extend to computer services and network storage. Oklahoma-based Devon Energy Corp. (DVN,46,f2) has made an offer to purchase Canadian energy company Anderson Exploration Ltd. (AXN,17.07) for $3.4 billion, plus the assumption of $1.2 billion in debt, in a deal that would make the company the largest among independent North American exploration and production companies. The move comes just three weeks after Devon announced its acquisition of Mitchell Energy Corp. (MND,57) for $3.1 billion. In other energy news, Santa Fe International (SDC,25) agreed to acquire adversary Global Marine (GLM,14.40,f2) for approximately $3 billion in stock, plus the assumption of $900 million in debt, creating the world's second biggest offshore oil and natural gas driller. Chip stocks could see some volatile trading action today after the Semiconductor Industry Association reported that worldwide semiconductor sales in July fell 37.2% from the year-ago period to $10.86 billion. Sales were down 6.1% from June, but the agency's President said that he anticipated an end to the inventory correction in 3Q, with sequential growth beginning in 4Q. ---------------------------------------------------------------- TREASURY AND ECONOMIC SUMMARY Bonds were fairly active in front of this morning's National Association of Purchasing Managers' survey scheduled for a 10:00 a.m. EDT release. A Dow Jones Newswires forecast is looking for the index to move up to 44 from July's 43.6 reading, reflecting a slight deceleration in contraction in the manufacturing sector. The upward bias comes on the heels of last Friday's Chicago Purchasing Managers' Index, which showed a regional slowdown in the pace of contraction in manufacturing. ---------------------------------------------------------------- WORLD MARKETS Hewlett Packard's announced bid for Compaq sent stocks soaring overseas early, but gains were reversed with the Bloomberg European 500 Index down 0.33% as of 8:55 a.m. EDT. Early gains were tempered a bit by Ericsson's (ERICY,4.98,f1) warning that it sees no imminent recovery in the market for telecommunications products next year. Adding fuel to the fire in the beleaguered industry, both Marconi's (MONI,1.68,f1) CEO and chairman stepped down as the company said that it would post a first-half operating loss, due to substantial writedowns for inventory and recent acquisitions. The company had previously expected a breakeven first-half. The euro was lower against the U.S. dollar after failing to extend its recent uptrend, amid some sanguine economic data in the U.S. last week. Technology shares led Asian markets higher, with Japan's Nikkei closing up 3.49%. The yen was lower against the dollar as rhetoric about FOREX intervention to cap any unwarranted strength in the Japanese currency continued. Japan's prime minister gave banking stocks a boost after confirming that the worst of non-performing loans would be written off the books within two to three years. ---------------------------------------------------------------- FUTURES WATCH In the September Globex futures contract as of 8:55 a.m. EDT, the S&P 500 Index was down 1 point, while the Nasdaq 100 Index was down 4.5 points (4 points below fair value). The September DJIA futures contract was down 30 points (6 points below fair value), and the October crude oil futures traded on the NYMEX were down $0.06 at $27.14/barrel. 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