Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.invest From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: invest Mon, Jun 8 1992 Date: Mon, 8 Jun 92 05:19:51 EDT Message-ID: 06-08 0000 DECISIONLINE: Personal Investing USA TODAY Update June 8, 1992 Source: USA TODAY:Gannett National Information Network INDIVIDUALS BEWARE THE IPO: Initial public stock offerings aren't always a good deal for small investors. A look at 1991's IPOs shows that individuals and institutions tend to share equally in the pain of deals that flop. But institutions get a far higher return in successful IPOs. This conclusion isn't surprising considering Wall Street's system of distributing IPO shares heavily favors large clients. (For more, see special IPO package below.) JOBLESS NUMBERS LOWER STOCKS: Unexpectedly weak news on employment sent stocks slightly lower Friday in a zigzag session. The Dow Jones average of 30 industrials, down about 25 points at its midsession low, ended with a 1.04 loss at 3398.69. For the week the average eked out a gain of 1.81 points. The Labor Department said the unemployment rate jumped to 7.5% in May, its highest level in almost eight years. BANC ONE ADDING TO EMPIRE: Banc One has agreed to buy West Virginia's largest banking company, Key Centurion Bancshares, in a stock swap worth $536 million. Key Centurion has about $3 billion in assets, compared with $49 billion reported by Banc One at the end of its first quarter. In April, Banc One announced plans to buy Valley National, an Arizona bank. Friday, Banc One's stock fell 1:2 to $46 1:2. COMPAQ ANNOUNCES NEW PCS: Compaq Computer, its profits eroded by low-cost competitors, will introduce four dirt-cheap personal computers next Monday. Two cost less than $1,000. The machines, code-named Prolinea, are Compaq's answer to fierce competition that forced it into a price war to keep market share. Friday, its shares rose on the news, closing up 1 5:8 at $28 3:4. DU PONT TO TAKE EARNINGS HIT: Du Pont Co. said Friday it expected its second-quarter earnings to be reduced by 15 to 20 cents a share for costs associated with the recall of its Benlate DF fungicide. Du Pont said it expects at least 90% of the expected $500 million to $560 million in recall claims to be settled by the end of the quarter. Du Pont's 1991 earnings were reduced by 32 cents because of problems with Benlate. AMES REPORTS LOSS FOR QUARTER: Ames Department Stores Inc. on Friday reported a first-quarter loss of $37.7 million, disappointing news for the discounter after having ended 1991 with its first profitable quarter since filing for bankruptcy protection two years ago. The first-quarter loss amounted to $1.09 per share, compared with a loss of $47.8 million or $1.36 per share, for the same period a year earlier. CHEMICAL RAISES PRIME: Chemical Banking, the only major bank to cut its prime rate after the Federal Reserve eased credit in April, has raised its prime rate from 6.25% to 6.5%, the same as most other banks. Chemical, the nation's third-largest banking company, says it took the action because it doesn't anticipate further Fed easing in the near future. GOLD PRICES HIGHER: Gold prices rose slightly in domestic and overseas trading Friday. On the New York Commodity Exchange, gold bullion for current delivery settled at $338.70 a troy ounce, up 10 cents from Thursday. Later, Republic National Bank quoted a bid of $338.60, up 20 cents. On the Comex, silver bullion for current delivery settled at $4.051 a troy ounce, down from $4.075 late Thursday. SPECIAL PACKAGE ON IPO: BIG INVESTORS FAVORED: A new USA TODAY report shows that institutions fare better than individuals on successful IPOs. Example: Among the record 392 companies to go public last year, Grand Casinos 240% through May 29. But much of that gain came on a first-day jump of 75% from the $5 offer price to $8 3:4. Since its first close, when individuals could buy in the open market, the stock is up just 94%. PAIN SHARED EQUALLY: The 94% gain isn't bad, but a pittance compared to what big investors got if they bought and held. The year's biggest flop, Salton:Maxim Housewares, fell 71% after being issued Oct. 9 at $12 a share. That's the loss institutions suffered if they bought at the IPO price and held. Individuals, more likely to have bought after the first-day close of $11 3:4, would have lost 70%. BIG INVESTORS GET FIRST CRACK: "The odds are really against you," says Stephen Leeb, editor of Personal Finance newsletter. Here's why: When a company wants to sell stock to the public, it hires investment banks to line up stock investors who might be interested in buying. Usually, investment banks approach their largest clients - mutual funds, pensions and insurance companies - first. INDIVIDUALS DISADVANTAGED: Inevitably, Ma and Pa investors are left out, or at least "sorely disadvantaged by the process," says John Markese, research director at the American Association of Individual Investors. "Remember the cliche: If you can get a piece, you probably don't want it." And if a broker is pushing an allegedly hot IPO: "Ruuunnnnn," says Bob Mescal of New Issues newsletter. (End of package.) DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens Monday at 3398.69, after closing down 1.04 Friday. The New York Stock Exchange composite opens at 227.88, down 0.02. The American Stock Exchange market value opens at 397.16, down 0.02. The NASDAQ OTC composite opens at 585.43, down 2.83. 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Personal Investing Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM