• 03 Apr 2006 at 8:25 AM
  • China

Opening Bell: 4.3.06

patriciarusso.jpgAlcatel Jumps on Plan to Buy Lucent in $13.4 Bln Swap (Bloomberg)
It’s official; they’re merging. 8,800 jobs will be cut, Lucent’s Patricia Russo will be the first female CEO of a large French company, and nothing says bubble like Alcatel, the acquirer, jumping 8.8% on the news. The merger will be judged, obviously, on cost savings, which are possible given the bloat that these two aging giants must have — at least they didn’t say synergies. All in all, pipes are back. Om Malik notes the return of second-rate optical stocks, whose shares have surged in the past few months — at least they’re not calling them internet backbone companies.
Microsoft’s Big Year (Barron’s)
Will this finally be the year of Ol’ Softy. After basically flatlining since 2001, Barron’s thinks the company may be back. Of course, they’ve been on the brink of being back before, but this time Barron’s means it. The case for the company is based on an upcoming product release cycle, the biggest in the company’s history, and renewed IT spending among corporations. It’s a bold argument, as the magazine calls the company a growth stock once again. At the same time, the company seems to be poorly run. Product delays, which have always been part of their reputation, seem to be getting worse, and it’s unclear that when (if?) the new Vista operating system will be released, it will have enough features to drive a rapid upgrade cycle. Remember when people were waiting in line on midnight the night before Windows 95 was released? Could you imagine anyone doing that on a cold night this coming January?
Capex Revival, For Real This Time? (WSJ)
Here’s an argument we’ve heard a lot in the last year: When the consumer finally weakens because their credit card is tapped out, and their home stops rising in value so they can’t use it as an ATM anymore, capital expenditure will make up for the loss and save the economy. But will companies actually start investing, or is this just wishful thinking? After several years of saving money, there has been a tickup in hiring and investment, with capex expected to grow by 6.5% this year, slightly higher than the recent average. Still, it looks spotty and the article is only able to cite a handful of examples, like Hasbro buying a puzzle maker (so?), or Guess re-modeling 30 of their stores. Hmm… capex rebound, maybe not so much.
Euronext looking for partner (Telegraph)
Stock exchange merger mania may continue, as Euronext may be the next suitor to try for LSE’s hand. Both Australia’s Macquarie, and more recently the Nasdaq, have been rebuffed when proposing to London. We’ll be really disappointed if, in ten years, we don’t have one single, global, 24-hour, 7-days a week electronic exchange that doesn’t list every publicly available stock, bond and commodity. So from our perspective, get mergin’ quick.

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