TheSUBWAY.com's Technology Talk Forum: Friday, May 21, 2004: Price of Crude Gives Investors Worries!


WESTON, Fla., May 21, 2004 (PRIMEZONE) -- Stocks got back on track Friday, as all major averages traded in the green in early dealings. Concerns over the price of crude and trouble in Iraq continued to weigh on investors, but by early afternoon, the averages managed to hold gains. The Nasdaq Composite was up 14.99 points, to 1,911.58, while the Dow Jones industrial average was higher by 73.83 points, to 10,010.67.

Crude oil futures rose after the U.S.-appointed head of the Iraqi Governing Council, Ezzedine Salim, was killed last Monday near the U.S. headquarters in Baghdad. Also damaging investor confidence were Commerce Department figures showing the U.S. trade deficit widened by 9.1 percent to a record $46 billion, much higher than what analysts were expecting.

Stocks in the news include ADC Telecommunications (Nasdaq:ADCT), which announced it had completed its merger on Friday of KRONE Group, a supplier of copper and fiber-based connectivity solutions, cabling products, and services.

NeoMedia Technologies (OTCBB:NEOM) was trading heavy after recently announcing that it has entered into a Master Marketing Alliance Agreement with Fortune(R) 500 company Science Applications International Corporation (SAIC) to market the capabilities of both companies in each other's business arenas.

Brocade Communications Systems, Inc. (Nasdaq:BRCD), today followed its second quarter financial results by outlining the next phase of its operational and organizational plan for long term leadership in the Storage Area Network (SAN) infrastructure market.

And Tellabs (Nasdaq:TLAB) held a Corporate Conference Call to discuss its acquisition of AFC for approx. $1.9b in stock and cash. TLAB will issue approx. 136m common shares with roughly 552m common share outstanding post closing in connection with this deal. The focus of the questions and answers session included Merger, Verizon, product lines, equity, synergies, breakup fee, and bankers.

The latest Federal Open Market Committee meeting was held on Tuesday, May 4, 2004, where the FOMC changed its tune somewhat, saying in its statement that "The Committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal," the FOMC said in its statement. "Similarly, the risks to the goal of price stability have moved into balance. At this juncture, with inflation low and resource use slack, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured."

In plain terms The Fed is saying that conditions have improved to the point that rates can start moving up from their current historically low levels, but will probably do so at a measured, and even pace . . . no 50 and 75 basis point hikes in the near future. The Fed also said it "continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity." Regardless, many analysts are saying the first rate increase may come as early as June.

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