Level 3 Snares Web Deal with Microsoft

Merrill Lynch nosedives on warning; Cheap Tickets shares get marked down; plus other stocks in the news

Level 3 Communications (LVLT ) is in a three-year deal to provide Internet access in North America to six Microsoft Network properties, including MSN Hotmail and MSN Messenger.

Merrill Lynch (MER ) sees $0.52-$0.57 vs. $0.87 Q2 EPS on revenues 15% below Q1 levels, especially in equity and debt trading. The company says the past four weeks have been the weakest of the quarter. S&P downgraded to hold.

Cheap Tickets (CTIX ) sees lower than expected $0.04-$0.05 Q2 EPS on revenue of $27.5M-$29M. CIBC World and Dain Rauscher cut estimates.

Alliance Gaming (ALLY ) sees $2.20 fiscal 2001 EPS from operations and $87M EBITDA on revenue of about $525M, $3.05-$3.15 fiscal 2002 EPS and $105M EBITDA on $590M in revenue. Alliance terminated the proposed sale of its Nevada Route.

Lehman cut estimates on Cisco Systems (CSCO ) but maintains its buy rating.

Aether Systems (AETH ) says revenue growth for the rest of the year will be flat to modest. S&P maintains hold.

Cytogen Corp. (CYTO ) says a study found it possible to identify recurrent prostate cancer with greater precision by using the company's ProstaScint antibody in combination with other diagnostic imaging techniques.

Earthlink (ELNK ) increased its monthly service price to $21.95 from $19.95. S&P maintains hold.

CS First Boston upgraded BE Aerospace (BEAV ) to strong buy from buy.

Lakes Gaming (LACO ) says its contract with Coushatta Tribe for management of Grand Casino Coushatta will not be renewed when it expires on January 16, 2002. The tribe itself will control the casino.

Montana Power (MTP ) finalized an agreement that will buy out the remaining term of a power supply contract with Advanced Silicon Materials LLC, an action that removes Montana Power's exposure to uncertain future energy prices.

Singing Machine (SMD ) posted breakeven Q4 EPS on a 72% sales rise. The company raised its fiscal 2002 EPS estimate to $1.25 on revenue of $65M-$70M.

Tucker Anthony downgraded Gadzooks Inc. (GADZ ), American Eagle (AEOS ) and Pacific Sunwear (PSUN ), citing a choppy environment for youth retailers.

Goldman downgraded Heidrick & Struggles (HSII ) to market perform from market outperform.

Safenet Inc. (SFNT ) sees $0.09-$0.13 Q2 loss on revenue 30%-40% below previously expected $6M. The company cites reduced expectations from OEM accounts in the networking industry. First Union cut estimates.

Outback Steakhouse (OSI ) says analysts' EPS expectations have not sufficiently factored in lower than expected same-store sales growth and higher than expected costs of goods sold. CS First Boston cuts estimates.

CIBC World downgraded PacifiCare Health (PHSY ) to hold from buy.

Applied Micro (AMCC ) cuts Q1 guidance to a $0.04-$0.06 loss from operations on revenue of $40M-$45M. S&P downgraded the shares to avoid from hold. CS First Boston cut estimates.

Goldman downgraded both Act Manufacturing (ACTM ) and Benchmark Electronics (BHE ) to market perform from market outperform.

Robert Half (RHI ) sees $0.20-$0.22 Q2 EPS on revenue of $640M-$650M. The company now sees $0.80-$0.90 2001 EPS on revenue of $2.5B-$2.7B.

Eaton Corp. (ETN ) sees Q2 operating EPS 20%-30% below the current $1.21 consensus and revised its 2001 estimate to the $4.05-$4.20 range, citing declines in almost all North American markets.

Sonic Corp. (SONC ) posted $0.41 vs. $0.33 Q3 EPS on a 23% revenue rise. The company sees 18%-20% Q4 and fiscal 2002 EPS growth.

New Horizons (NEWH ) sees lower than expected $0.18-$0.20 Q2 EPS on revenues of $43M-$45M.

Family Dollar (FDO ) posted $0.31 vs. $0.29 Q3 EPS on a 15% sales rise. The company sees Q4 EPS of about $0.20.

Tecumseh Products (TECUA ) sees $0.85-$0.95 Q2 EPS vs. previous guidance of $1.00-$1.10. Tecumseh cited weak retail sales of lawn and garden products in the first half.

Icos Vision Systems (IVIS ) sees a $0.10-$0.15 Q2 loss from operations on $6.2M revenue due to a slowdown in orders and push-outs of existing orders. The company will cut its workforce by 12% and take a one-time Q2 charge.

Rockwell Collins (COL ) will replace Longs Drug (LDG ) in the S&P 500 Index after the close of trading on June 29. Rockwell International (ROK ) is spinning off Collins to its shareholders. Longs will replace NCH Corp. in the S&P MidCap 400 Index.

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