While the credit markets are displaying signs of thawing over the past
week as interbank lending rates have dropped, disappointing bottom-line
performance for a handful of bellwether blue-chip stocks gave investors
cold feet over the past two days. Following a 200-plus point drop
Tuesday, the Dow Jones Industrial Average sunk 514.25 points Wednesday
to close at 8,519.25, due in part to double-digit earnings declines
reported by both drug giant Merck & Co. and the world's
largest aircraft manufacturer Boeing Co., whose stocks fell 6.54% to
$28.01 and 7.52% to $42.91, respectively.
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Paltry earnings also weighed down a deal stock in the battered banking
world. Wachovia Corp. dropped 6.24% to close at $5.71 per share
following its announcement of a $23.9 billion third-quarter loss, which
it pegged to write-downs of goodwill due to declining assets values and
nearly $7 billion reserved for credit losses. As losses mount, is Wells
Fargo & Co. regretting having won the battle with Citigroup Inc. to
acquired Wachovia for $15 billion?
As the market collapsed Wednesday, so did a pair of deals.
Samsung
Electronics Co. Ltd. dropped its unsolicited $5.9 billion bid for rival
flash memory maker SanDisk Corp., citing a "surprise" third-quarter
operating loss and "hurried" reworking of its joint venture with
Toshiba Corp., which increased the deal's risk. No love lost on
SanDisk's side as the company on Sept. 19 rejected a $26 per share bid
as too low from Samsung. However, shareholders don't have that loving
feeling, as SanDisk's stock plummeted 31.64% to close at $10.09
Tuesday.
Canadian software developer Corel Corp. on Tuesday said
discussions with a third party regarding a potential sale for $400
million-plus have ceased, sending the stock down 16.71% to close at
$5.83 per share. - Michael Rudnick
