Gap CEO Retires

Citigroup buys California bank; PacifiCare sees earnings below guidance; plus more of today's stocks to watch

Gap Inc. (GPS ) shares fell after the retailer announced the retirement of CEO Millard Drexler. Merrill downgraded the shares to near term neutral from strong buy, and to long term buy from strong buy.

Golden State Bancorp (GSB ) agreed to be acquired by Citigroup (C ) for a total of about $5.8 billion in cash and stock. Terms of the deal call for Golden State shareholders to receive $16.40 in cash and 0.5234 of a Citigroup share per Golden State share. S&P maintains hold on Golden State and buy on Citigroup.

Home Depot (HD ) fell after Jefferies downgraded the stock to hold from accumulate. Yesterday, the home-improvement retailer posted $0.36 first quarter EPS on 5% same store sales rise, on a 17% total sales rise.

Goldman Sachs cut earnings estimates on a host of software companies, including Rational Software (RATL ), as its recent IT surveys confirm that the second quarter shaping up to be another very challenging quarter.

Johnson & Johnson (JNJ ) shares gained ground after it announced that trial results of its drug-coated stent, a device used to keep the coronary artery open during angioplasty procedures, showed just a 2% rate of artery re-clogging.

Albertson's (ABS ) shares jumped after the company commits over $1 billion in capital investment over three years for new stores and remodels in California.

Inverness Medical Innovations (IMA ) offers 1.6 million shares at $23.00.

In repsonse to FERC request for information regarding "round-trip" trading, Williams Cos. (WMB ) says it did not engage in Enron-style trading strategies.

The FDA reportedly says Biogen's (BGEN ) experimental drug Amevive is effective in treating psoriasis, but more study is needed to evaluate infection risk.

AutoZone (AZO ) shares gained after it posted $0.96 vs. $0.56 third quarter EPS on 9.5% higher same store sales and 11% sales rise.

Internet Security Systems (ISSX ) fell after SoundView says it is taking a more cautious stance after recent inputs at industry conferences in the past several weeks.

Borders Group (BGP ) lost ground after it posted first quarter EPS of $0.05, vs. $0.01, on a 3% revenue rise. It noted that Borders' superstore same-store sales showed lower than normal trends. It sees $0.02-$0.03 second quarter EPS. S&P keeps accumulate.

Digital River (DRIV ) says it has built bad launched mobile commerce (m-commerce) specialty store for Software Oasis, a U.S. based electronic software distribution provider.

Salomon SB upgraded Abercrombie & Fitch (ANF ) to buy from outperform. (CCBL ) shares fell after it said it does not expect to generate further revenues in the near term from customer Adelphia (ADLAE ). As a result, it sees $60 million to $65 million in fourth quarter sales and $0.02-$0.04 EPS (pro forma). HC Wainwright cut estimates, while S&P downgraded the stock.

PacifiCare (PHSY ) sees second quarter EPS of $0.85-$0.88 vs. prior guidance of $0.90-$0.93, and 2002 EPS of $3.37-$3.47. The company cites higher interest expense and a one-time writedown of bank fees.

Deutsche Telekom (DT ) reportedly says Q1 core profit grew 4.4%. ABN Amro says the results were weaker than expected. ImClone (IMCL ) and Bristol-Myers (BMY ) plan at least three big clinical trials of Erbitux cancer drug as they seek regulatory approval, according to a press report.

CS First Boston upgraded PeopleSoft (PSFT ) to buy from hold. On May 21, the SEC claimed the company's former auditors violated certain rules in past audits of PeopleSoft.

Saks Inc. (SKS ) posted $0.15 vs. $0.12 Q1 EPS from operations on slightly higher same store sales.

Tech Data (TECD ) posted $0.60 vs. $0.57 Q1 EPS despite a 16% sales drop. The company sees $3.75-$3.9 billion in Q2 sales and $0.53-$0.58 EPS (including a net loss related to its Hungary operations).

Polo Ralph Lauren (RL ) posted $0.45 vs. $0.44 Q4 EPS (adjusted) on a 3.3% revenue rise. The company maintains its $1.80-$1.90 fiscal 2003 EPS guidance.

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