A bullish end-of-year, tagged by a modest downturn, was then followed by a strong quarter close in a period marked by the rapid rise of the Dow Jones Industrial Average past the historic 10,000 mark, though it closed out the quarter by falling back below that benchmark. And the TWICE Stock Index followed suit, although the performance of industry shares fell short of the Dow.
Even though international conflict in Kosovo threatened to put the brakes on the economy, no signs of such a slowdown were evident by the end of the first quarter. Despite rising and falling fortunes of economies around the world, plenty of trends continued to indicate the robust health of the U.S. economy. Even so, it wasn't too healthy: Many indicators pointed to inflationary pressures that remain in check.
The Dow Jones Average ended the quarter at 9913.26, gaining 7.97%. The TWICE Stock Index closed ahead 5.73%, to 5237.03, and advancing issues outpaced declining issues 49 to 38.
Shares of Circuit City sparked ahead after Merrill Lynch analyst Peter Caruso said that its Divx technology may get boosted with an investment by Viacom's Blockbuster, though that is far from certain. Caruso raised his price target on Circuit City to $100 from $85. "If the Blockbuster investment in Divx were to occur, it would bode well for Circuit City stock," said Caruso.
Circuit City ended at $76.63, an increase of 53.4%.
Ultimate Electronics jumped 55.2%, to $9.31, after releasing record operating results for the quarter ended January 31. The company attributed the quarter's performance to an increase in gross margins from sales of higher-margin goods in their core areas of audio, mobile equipment and TVs.
Good Guys slumped after announcing a decrease in earnings per share for the fiscal first quarter ended December 31, with net earnings at $1.7 million, down from the year-earlier $2.4 million. Sales for the quarter were ahead 1%, but comparable-store sales were down 2%.
Although holiday sales were strong, president/CEO Robert Gunst said, "Our lackluster performance overall during the quarter reflects our sluggish sales in the more commodity-oriented categories of home office, small-screen television, portable audio, and stereo systems. The quarter's weak sales performance also reflects the impact of aggressive financing offers from some key competitors."
Good Guys' share price dropped 39.8%, to $3.88.
Brightpoint was tarnished after the company said it will not meet analysts' first-quarter revenue expectations. Brightpoint said it anticipates a break-even quarter. In response, Merrill Lynch, Legg Mason, and Warburg Dillon Reed downgraded the company.
Brightpoint said that, while business in the U.S. remained strong, international travails have wiped out any gains for the quarter. Its shares fell 57.1%, to $5.91.
Despite the fact that Rex Stores turned in substantial fourth-quarter gains, shares in the company slipped 14.4% and closed out our trading session at $11.56.
Japanese ADRs were among stronger TWICE Index performers on the strength of their cost-cutting restructuring plans. Showing double-digit gains in the quarter were Hitachi, Matsushita, NEC, Pioneer and Sony.
Other solid stock price gainers among our retailers were Best Buy (up 69.5%), CellStar (up 52.3%), Harvey Electronics (up 33.3%), Tandy (up 54.9%) and Tweeter (up 12.2%).
While still a penny stock, Carver has benefited from the return of founder Robert Carver, and its shares jumped 35% in value.
Other manufacturers with notable gains included Echostar (up 69%), O'Sullivan, benefiting from a planned buyout (up 31.6%), and Nokia (up 29.3%).
Among TWICE Index manufacturers with double-digit declines in share value were Boston Acoustics, Cobra Electronics, Franklin Electronic Publishers, Recoton and Vidikron. Dealers with dropping stock prices included Heilig-Meyers, Service Merchandise, Sound Advice and Tops Appliance City. – Nordby International