'Gray Monday' Wasn't So Bad

MARKET SHARE Bob Starzynski

'Gray Monday' Wasn't So Bad

In light of Wall Street's big fall and quick yet partial recovery last week, I thought it would be the perfect time to revisit the stocks that comprise our TechTicker. Just how did those integrators, distributors and resellers fare when the Dow Jones Industrial Average dropped more than 500 points in one day, falling below 7,600?

All of the companies on our list dropped Aug. 31, save one. Hats off to SED International, which started the day at $4.25 a share, dropped slightly and then spiked near the closing bell to $4.50. Of course, the celebrating was short-lived for SED, which opened the next morning 11 percent lower at $4. The big moans came for SED Sept. 2, when the company hit its 52-week low of $3.75.

The only other company from our list to go through "charcoal gray Monday" without many scratches was Computer Sciences Corp., which lost only about 1 percent of its value that day. CSC hovered right above $55 a share most of the day. Within two days, the company's stock soared 30 percent to a 52-week high of $70. Word on Wall Street Sept. 2 was that CSC was rallying on speculation the company would soon sign several new deals.

Lockheed Martin Corp. appeared poised to make it through Aug. 31 unscathed. Then 3 o'clock rolled around. The company started that Monday at over $90 a share, up slightly from Friday's close. No significant fluctuation occurred within about one hour before the closing bell, when Lockheed's stock suddenly dropped and closed just over $87, a 52-week low. Before the market opened Sept. 2, Merrill Lynch upgraded its rating on Lockheed's stock, and the pain from Monday was over. Midday trading that day almost reached $95, more than making up for Monday's fall.

Eight of the companies on the list lost at least 10 percent of their value Aug. 31: Boeing, BTG, Condor Technology Solutions, Electronic Data Systems, Keane, Unisys, Vanstar and Arrow Electronics. Of those, Unisys and Arrow suffered the worst, losing 17 percent and 18 percent, respectively. The TechTicker average fall that day was 7 percent.

While the TechTicker companies took the same bath as the rest of the stock market, most of them bounced back in the subsequent two days.

Arrow Electronics was up 18 percent the next day. Unisys recovered three-quarters of its nose dive by Wednesday. After losing 12 percent of its value Aug. 31, Vanstar announced it would split into two units and briefly spiked 5 percent over its pre-drop price. Once news of a poor quarter of revenue and losses surfaced Sept. 2, the company settled back down another 8 percent to close the day at $8.25.

One company that didn't bounce right back was MicroAge, which announced the acquisition of two integration partners in Ohio and Southern California Sept. 2. After losing 4 percent Monday, the stock dropped another 4 percent on the acquisition announcement.

Tech Data was one of the companies that bounced back higher than it fell. On Aug. 31, Tech Data fell 2 percent. Two days later, it was back up 5 percent after announcing a surprisingly strong second quarter.

Litton Industries was down 2 percent Monday and another 1 percent Tuesday ? the day the market rallied back almost 3 percent. But surprising earnings results Wednesday pulled Litton out of its slide, sending it up 6 percent in morning trading.

For questions, comments and suggestions, contact Bob Starzynski via e-mail at bobs@pnbi.com.

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