Cable & Wireless stock headed south Thursday after the company finally came through with US$1.75 billion for MCI's Internet operations -- more a sign of investors turning their attention elsewhere than dissatisfaction with the much-anticipated deal.
The movement was typical of a day of mixed returns for telecom and tech stocks, with the Wired Index closing 4.06 points higher at 452.30.
"It's not unusual for stocks to be up on expectations of news and then down on the news," observed Frank Governali, an analyst with Credit Suisse First Boston. After nearly a week of anticipation over Cable & Wireless' intentions, he said, "the news is no longer new news."
New or not, Cable & Wireless did manage to throw traders a curve ball by announcing it will sell off 112 million shares, or 5 percent of its total stock, to cover the acquisition, which will make Britain's No. 2 telecom concern the world's second-biggest Internet carrier. The selloff of MCI's Internet business clears the way for the company's merger with WorldCom, which received a green light from US Justice Department authorities late Wednesday.
Cable & Wireless (CWP) closed down $1.50 at $40.50, while WorldCom (WCOM) finished 19 cents higher at $54.94. Also in telecom, Qwest Communications (QWST) rose $2.12, or 5.3 percent, to $42.12 on a report that British Telecom is eyeing the fiber-optic long-distance carrier for a potential alliance.
Much of the day's attention was focused on good old Microsoft (MSFT), which was to report its fiscal fourth-quarter earnings after the closing bell. Everyone's favorite software company closed unchanged at $117.38. It was the fifth most active stock on Nasdaq.
Dell Computer (DELL) advanced $1.88 to $113.75 on continued upbeat sentiment about second-half PC sales. Intel (INTC) edged up on newly rosy prospects for the semiconductor industry, rising 38 cents to $84.63.
Charles Schwab (SCH) surged $1.44 to $36.56 after announcing a 19 percent increase in quarterly earnings. America's largest discount broker said growth in trading offset lower commissions charged for online transactions. Schwab handled a record average of 88,000 daily trades in the second quarter, with more than half the transactions being made online.
Despite posting record quarterly results, AMR (AMR), parent company of American Airlines, nosedived $4.75 to $78.75. Although the airline industry looks to be in good shape, traders worry that increased capacity might chew into sales. They're also trying to gauge the impact of Asia's economic turbulence on future bookings.
Enron (ENE), the largest US electricity trader, soared $1.50 to $57.56 after announcing it will shell out nearly $1.3 billion for a controlling stake in Brazil's Elektro Eletriciade e Servicos SA. Enron's offer was almost double what the Brazilian government had been seeking.
And for no good reason whatsoever, investors started throwing money again at overvalued online stocks. After several days of declines, Yahoo (YHOO) was up $5.25 to $187, and America Online (AOL) accelerated $3.81 to $122.31.
Other major indices zoomed into record territory on strong blue-chip earnings reports. The Dow Jones Industrial Average finished 93.72 points higher at 9,328.19. The Nasdaq rose 6 points to end at 2,000.54, topping the 2K mark for the first time, while the S&P 500 gained 9.18 points to close at 1,183.99.
