By Clyde Noel
Stock Report
Despite the worse-than-expected unemployment report last Friday, it was a good week for the markets. The Dow rose 2 percent, the Nasdaq increased 4.7 percent and the Town Crier index was up 8.54 percent.
More importantly, the Dow closed above 10,000, and the Nasdaq above 2,000, exceeding key milestones that reveal a recovery.
Numerous Town Crier index companies had double-digit increases.
Adobe was up 13.75 percent; Applied Materials, 11.85 percent; E-Trade, 30 percent; Lam Research, 12.09 percent; Network Appliance, 23.33 percent; 3Com, 26 percent; and Varian Semiconductor, 18.88 percent.
Friday’s announcement of the David and Lucile Packard Foundation decision to vote against the merger of HP and Compaq creates a serious doubt the merger will take place.
The announcement came shortly after the market closed last Friday and after market trading showed HP increased $1.63 to $25.15 while Compaq dropped $1.32.
Opponents of the deal said it weighs down HP with Compaq’s lagging personal computer business, and takes too long to integrate.
Carly Fiorina’s career will depend on the merger, because she is the backer of the deal. She should have consulted both the David and Lucile Packard Foundation and the Hewlett family before she made a move.
A merger dilutes the 201 million shares of HP stock the Packard Foundation owns and their worldwide contributions depend on the value of the stock.
Another factor considered is the 15,000 jobs eliminated to save $2.5 billion and that is not the way David Packard worked with his employees. It’s not the HP way.
Recently, shares of HP stock slumped along with other technology companies in Silicon Valley. But when the deal to acquire Compaq was announced Sept. 4, the stock was in the 20s and fell to $15. When opposition to the deal surfaced, the stock advanced to $25 a share.
Carly should listen to the Kenny Rogers song, “You’ve got to know when to hold’em, know when to fold ‘em.”
Look for lots of public relation disaffection before the merger comes up for a vote sometime in the first half of 2002, after government anti-trust committees approve.
The recession seems to be fading. The recovery will start the 2nd quarter of 2002. Today’s market is an indicator of what will happen.
Tech stocks are beginning to rally because the economy is on the way to recovery. Positive news from marquee names in the high-tech sector by Cisco and Intel are boosting the sentiment in the tech market. Keep in mind, investors have to be in the market before the good news hits.
Noel, a seasoned investor, covers the stock market for the Town Crier.
