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Adam Einer, theWHIR.com
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June 8, 2001 — Markets finished the week in negative territory on a week marked by oddities at the NYSE, bad news for the entire hosting sector and an interesting separation of business at Worldcom.
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The tech-heavy Nasdaq lost 48.93 points, or 2.16 percent, to finish the week at 2,215.07. The Dow fell 113.74 points, or 1.03 percent, to close at 10,977. The Nasdaq posted a modest gain for the week, gaining about 50 points, while the Dow finished the week with a bit of a loss, slipping about 30 points.
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Part of the blame for today’s poor performance can be blamed on the NYSE, which was forced to halt trading this morning for approximately an hour and a half after a failure in the exchange’s connectivity system.
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It was the first time since 1998 that the exchange was forced to halt trading. The outage lasted from approximately 10:10 am to 11:35 am.
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“We could have continued trading with other than our systemic traffic, but did not feel this was fair particularly to the retail investor, ” said Dick Grasso, NYSE Chairman and CEO, in a release.
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Even after trading resumed, glitches still remained. According to the Wall Street Journal’s online edition, some stocks, including IBM, were still not trading hours later. NYSE says all systems were go by 2:30 pm.
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The fact that hundreds of millions of investor’s dollars were put in limbo for a number of hours definitely did not have a positive effect on markets.
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Over on the Nasdaq, Worldcom unveiled its new MCI tracking stock today, one day after shareholders approved a proposal to split the company’s Internet and long distance operations in to separate stocks and six months after the idea was initially proposed.
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Prior to the separation, all of Worldcom’s operations traded under the ticker symbol WCOM. With the split, Worldcom issued stock for the company’s MCI Group, which will track the company’s phone, paging services and dial-up Internet services. The new stock will trade under the ticker symbol “MCIT.” Meanwhile, the company’s core Internet, Web hosting and corporate telephone services will continue to trade under the “WCOM” symbol, as will the company’s international businesses.
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The news was fairly well-received among investors, as the stock closed close to where it had opened despite a day where most companies closed in the red. Worldcom lost 3.09%, or 57 cents, to close at 17.85, and MCI Group finished down 36 cents, or 1.95%, to end its inaugural day at $18.06.
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On Thursday, crumbling communications giant PSINet Inc. announced it had signed a letter of intent with an investment group led by Cori Capital Partners, L.P. and a number of additional investors, including senior members of PSINet’s Latin American management team, to purchase PSINet’s Latin American operations and facilities in Argentina, Brazil, Mexico and Uruguay.
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Last week, Canadian telecom TELUS announced that it would pick up the bulk of the beleaguered company’s Canadian assets as they looked to expand from their western base in to the rest of Canada.
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Shares in Web hosting company Exodus Communications took a huge hit over the second half of this week after a brokerage firm expressed concern as to whether or not the company could reach growth targets in the middle of an industry-wide price war.
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A report by CIBC World Markets suggested that a glut of Internet Data Centers could lead to a devastating price war in the industry. The firm re-iterated its “hold” rating on the stock.
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Since the release of the report Wednesday, shares have plummeted from approximately $8.00 to less than $6.40. Exodus finished the day at $6.33.
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An interesting side note: Exodus said recently that the company is shifting its focus slightly. CEO Ellen Hancock said Monday that the company was trying to land established companies with proven track records as clients instead of upstart dot-coms.
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And while Ellen Hancock was explaining her company’s new strategy, European broadband carrier Global TeleSystems, Inc. (GTS) was being served notice from the New York Stock Exchange (NYSE) informing them that trading in GTS shares had been suspended.
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The NYSE halted trading in the shares, which trade under the ticker symbol GTS, due to an “abnormally low selling price” for common stock, according to a release from the company.
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The company was also informed that the NYSE intended to seek to de-list shares in the company through the Securities and Exchange Commission.
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GTS said yesterday that they would immediately appeal the decision and apply to have its shares traded on the OTC bulletin board.
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Despite the mediocre performance of markets this week, it could have been a lot worse. A number of heavy hitters from the tech sector, including warnings from 3com, Handsping and Juniper Networks, could have caused a lot more damage than they did. Count your blessings as we head in to next week.
