Roadway Soars

Dana Corp. jumps on ArvinMeritor bid; Chico's climbs; plus more of today's stocks in the news

Transportation company Yellow Corp. (YELL ) will buy rival Roadway (ROAD ) in a $966 million deal that is expected to close at yearend. Roadway shares soared on the news that Yellow will offer $48 in cash and stock per Roadway share. S&P reiterated its hold ranking on Roadway but cut Yellow to accumulate from buy, saying the deal is above peer valuations for Roadway. Rival trucking giant Arkansas Best (ABFS ) shares rose after Yellow Corp. announced the agreement. Stephens reportedly upgraded Arkansas Best to overweight from underweight.

Auto-parts maker ArvinMeritor launched a hostile bid to acquire all outstanding shares of rival Dana Corp. (DCN ) for $15 per share in cash. S&P maintains hold. Dana's management has rejected the bid, but S&P says ArvinMeritor may consider a higher offer.

Women's retailer Chico's (CHS ) posted 16% higher June same-store sales, and 42% higher total sales. First Albany raised its estimates.

Bear Stearns downgraded Taro Pharmaceuticals (TARO ) to peer perform from outperform on valuation. S&P downgraded to hold from accumulate.

Raymond James raised its estimate and keeps outperform on Frontier Airlines (FRNT ). Frontier sees breakeven to 15 cents first-quarter earnings per share (excluding government aid monies, and non-recurring items), and says the June load factor was the highest monthly load factor in its history.

Pepsi Bottling (PBG ) posted 47 cents vs. 47 cents second-quarter earnings per share despite a 15% revenue rise. It sees 2003 earnings per share (before an accounting change) at the low end of a previously stated $1.61-$1.67 range. Citigroup says a strong second-half is feasible, and reiterates outperform.

Internet-management company Websense (WBSN ) sees better-than-expected 18 cents second-quarter earnings per share on a 33% revenue rise, citing a positive customer reaction to recently released products.

Legato Systems (LGTO ) agreed to be acquired by data-storage giant EMC Corp. (EMC ) in a stock deal valued at $1.3 billion. Terms: 0.9 EMC share per Legato share. Seperately, EMC sees second-quarter earnings per share meeting the 2003 guidance or beating it by a penny, with revenue at the high end of the previously forecast range of $1.425 billion to $1.475 billion. S&P reiterates hold on both companies.

Scholastic (SCHL ) sees lower-than-expected 68 cents to 73 cents fourth-quarter earnings per share (includes a previously announced 17-cent charge), and $1.42-$1.47 for fiscal 2003. The publisher cited weaker-than-expected results in trade books; it notes estimates do not reflect the latest Harry Potter book sales. Prudential and Goldman downgraded. S&P keeps hold.

Pacific Sunwear (PSUN ) raised the 20 cents second-quarter earnings per share guidance to 23 cents after posting 13% higher June same-store sales, and 22% higher total sales. First Albany and Pacific Growth raised estimates. S&P reiterates accumulate.

Cooper Tire & Rubber (CTB ) sees 13 cents to 17 cents second-quarter earnings per share, which includes items. Cooper Tire noted raw material prices were dramatically higher, and overall demand for replacement tires was weak.

SoundView upgraded Hughes Electronics (GMH ) to outperform from neutral.

Science-instrument maker and electronics manufacturer Varian (VARI ) sees 29 cents to 31 cents third-quarter earnings per share (GAAP), below the previous guidance. Varian cited the impact of the rapid weakening of the U.S. dollar, and several unusual items on the Scientific Instruments and Vacuum Technologies segments.

International Flavors (IFF ) sees second-quarter earnings per share consistent with the previous guidance, notwithstanding lower-than-anticipated sales. CS First Boston downgraded to neutral from outperform. S&P reiterates accumulate.

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