EDS Takes Another Hit

Lehman posts lower-than-expected profit; Weyerhaeuser warns; plus more of today's stocks in the news

Electronic Data Systems (EDS ) says its financial position remains strong, and reiterates recent guidance. Earlier, Merrill downgraded the stock to sell from neutral and said EDS might face a sizable charge for losses in derivatives trading. The stock fell 29% to 11.70. Last week, EDS said it expects September-quarter earnings of $0.12 to $0.15, well below the previous target of $0.74.

Weyerhaeuser (WY ) sees lower than expected $0.05-$0.10 third-quarter EPS, saying the estimate is based on a likely loss in its Wood Products business.

Lehman Brothers (LEH ) posted lower than expected $0.70 third-quarter EPS on $1.35 billion revenue.

Lehman initiated coverage of Amgen (AMGN ) with overweight, and started the biotechnology sector with a positive sector view.

Lexmark (LXK ) and Dell Computer will develop and produce Dell inkjet and laser printers as well as related aftermarket cartridges that will be sold directly to customers. S&P reiterates hold.

U.S. Physical Therapy (USPH ) sees $0.15-$0.16 third-quarter EPS. The company believes patient visits for the third quarter will be down from the second quarter by about 2%. S&P cut its estimates and target.

Radiologix (RGX ) sees at least $0.14 third-quarter EPS, and at least $0.75 EPS for 2002, saying greater seasonality in July and August impacted third-quarter procedure volume and service and fee revenues. Wachovia downgraded to hold from strong buy.

According to press reports, the CEO of Novellus Systems (NVLS ) says customer orders could be even lower than previously projected.

Xerox (XRX ) says the U.S. attorney's office in Bridgeport, Conn., is conducting an investigation into Xerox's past accounting issues, which had been previously reviewed by the Securities and Exchange Commission.

AG Edwards, Goldman, CIBC and S&P downgraded El Paso (EP ). On Monday a FERC judge issued an opinion that El Paso manipulated the California natural gas market during the 2000/2001 energy crisis.

JP Morgan reportedly cut its estimates on General Electric (GE ).

CS First Boston cut its estimate and target on Micron Technology (MU ) ahead of its fourth-quarter earnings release after Tuesday's close.

At a technology conference, Cisco Systems (CSCO ) reportedly says customers are finding it increasingly difficult to project their near term business prospects in a weak spending environment. CSFB cut its estimates and target.

CS First Boston downgraded Newport (NEWP ) to underperform from neutral.

Tenet Healthcare (THC ) sees $0.68 first-quarter EPS from operations vs. the consensus estimate of $0.63, citing volume gains, unit revenue improvements, controls and reduced interest costs. S&P reiterates buy.

Maytag (MYG ) sees $0.65-$0.70 third-quarter EPS from continuing operations vs. $0.79 consensus, citing sluggish sales of major appliances, lower production rates, and the delayed launch of a new washer.

Marvel Enterprises (MVL ) raises third-quarter sales guidance by $18 million to $63 million to $68 million, and its 2002 sales outlook by $20 million to $235 million to $245 million. The company raises third-quarter EBITDA to $20 million to $22 million, 2002 to $68 million to $73 million.

Bear Stearns reiterates outperform on OSI Pharmaceutical (OSIP ). CE Unterberg reiterates buy. On Monday the company received fast track status with the FDA for its experimental cancer drug Tarceva.