Weekend Cocktail Chatter

After a Monday on which it looked like the technology sector was in full meltdown, investors came rushing back into the sector on Tuesday and Wednesday and, oh, on Thursday as well, after pretty much every tech company in the world–with the exception of Compaq–announced better-than-expected earnings. Analysts who had insisted that last week’s rotation of money into cyclical stocks represented a real change in this market say that this is just a temporary blip. And so we will let them cling to their illusions.

Earnings in general, in fact, have been much better than expected. One urban legend has it that the stock market’s prices today are supposed to reflect where corporate profits will be six months from now. If so, it’s eerie that the rapid rebound from last summer’s collapse began in early April, and accelerated as the fall progressed. Of course, I’m not sure what that means about where corporate profits will be six months from Monday. Though I guess they’ll be much better six months from today. OK, now my head hurts. On to the Chatter.

1. “Philip Morrisearned $2 billion last quarter on $18.4 billion in sales, despite paying out $1.1 billion to 46 states as part of the tobacco settlement. Impressed analysts fairly shouted, ‘You can’t stop this company. You can only hope to contain it!’”

2. “The U.S. trade deficit leapt to an all-time high of $19.4 billion in February. U.S. consumers lamented that American farmers and manufacturers are finding it harder to compete abroad. Then they went out and bought some more DVD players and wide-screen televisions on credit.”

3. “Compaq dismissed CEO Eckhard Pfeiffer after the company fell painfully short of analysts’ expectations. In an interview in the Wall Street Journal Thursday, Pfeiffer continued to insist, as he did when the shortfall was first announced, that Compaq’s recent problems are industry-wide. That same day, IBM announced that its computer hardware sales in the most recent quarter were up 17 percent, crushing expectations . ‘OK, so the problems are industry-wide, except for IBM. And Dell. And maybe Gateway, too.’”

4. “Also ‘resigning’ unexpectedly was Borders CEO Philip Pfeffer, who’d been with the company only six months. Apparently the long-dreaded ‘Pf’ purge has been carried out.”

4a. “The chairman of Borders said the company would now be looking for a CEO who had an ‘open mind.’ So when the company hired Pfeffer it was to see how someone with a closed mind would do?”

5. “Deutsche Telekom and Telecom Italia agreed to an $82 billion merger, by some measures the largest ever. In order to get the deal to go through, the German government had to assure Italy that it would restrict its voting rights and eventually divest itself of DT shares. Why it had to do this was not made exactly clear, probably because no one felt like coming out and saying, ‘We remember 1944.’”

6. “Jon Corzine, chairman of Goldman Sachs, and John Meriwether, founder of Long-Term Capital Management, want to start a new version of LTCM, free of the control of the 14 banks that bought the hedge fund when it nearly went under last summer. Among possible names for the new fund : ‘We’ve Got the Whole World in Our Hands,’ ‘Live Free or Be Bailed Out,’ and ‘It’s a Bond-Trader Thing. You Wouldn’t Understand.’”

7. “Microsoft came out with earnings that, as usual, solidly beat analysts’ estimates. CFO Greg Maffei cautioned, though, that earnings growth–which was 43 percent in the last quarter–would probably be slower for the rest of the year. These two sentences will be true of the next eight Microsoft earnings reports.”