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A day of deals

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There have been several deals made this morning between various company's and they are getting mixed responses.

Shares of telecom service giant Qwest Communications (NYSE:Q) $2.24 said it sold its directory publishing business, QwestDex, to two private investment funds for $7.05 billion, providing the troubled telephone company with a much needed infusion of cash. Qwest said it sold its phone book unit to The Carlyle Group and Welsh, Carson, Anderson & Stowe.

The deal will be achieved in two stages. The first stage will have the QwestDex Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota being purchases for $2.75 billion. The remaining operations will be purchased for $4.3 billion during the second stage, which the company hopes to clear next year.

Qwest (Q) expects to use the proceeds from the sale to help pay down its heavy $26.5 billion debt loan and help fund its operations.

While some analysts were predicting that Qwest (Q) might not have enough cash to make it through the end of the year, the company said the directory deal gives it enough liquidity to fund the company through 2005.

Legg Mason upgraded Qwest (Q) to "buy" from "hold" based on the company's pending announcement that it has avoided a short-term liquidity problem and set a price target of $6 for Qwest's common stock.

Cisco makes acquisition

Networking giant Cisco Systems (NASDAQ:CSCO) $14.75 are edging lower at $14.66 in pre-market trading after the company announced that it is exercising its right under 2001 agreements to acquire privately held Andiamo Systems for about $2.5 billion. The deal will not close until 2004 and the purchase price will eventually be based on Andiamo's sales and Cisco's valuation at the time. The acquisition is notable as Andiamo is a maker of fiber channel switching gear, which will put Cisco into closer competition with Brocade (NASDAQ:BRCD) $16.18 and McData (NASDAQ:MCDT) $10.36.

JP Morgan upgrading AT&T

Dow component AT&T (NYSE:T) $10.78 gained 22-cents to $11.00 over Instinet trading, after being upgraded to "buy" by JP Morgan. Additionally, a Reuter article indicated that AOL Time Warner (NYSE:AOL) $13.33 is set to buy out AT&T's (T) stake in Time Warner Entertainment in a $9 billion deal.

Stock futures edge lower

Stock futures are edging lower this morning as S&P futures (sp02u) trading down 4.10 points at 944.90. NASDAQ futures are off 7.00 at 1,013.50 and Dow futures are lower by 37 points at 8,930.

Fair value for the S&P 500 today is $0.40. That price will not change during the session. HL Camp & Company has their computers set for program buying at $1.80 and set for program selling at $-1.66. Fair value for the NASDAQ-100 today is $1.81.

Treasuries are seeing a rather strong round of buying this morning as YIELD drop lower. Yesterday's stock rally into the close found Treasuries near unchanged levels and this morning's buying in Treasuries may have stocks loosing some of their recent bullish steam near-term. Just as we monitored the intermediate- term 500-day moving averages as resistance over the past couple of days, equity bulls will be looking for these moving averages to serve as potential support or a "hovering point" for the major market averages and monitor for similarity or DIVERGENCE to the early November time period.

Jeff Bailey
Senior Market Technician
Option Investor

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