Posted on: Tuesday, February 15, 2005

Verizon-MCI deal fails to spark investor interest

By Michael J. Martinez
Associated Press

NEW YORK — Verizon Communications' $6.7 billion bid for MCI Inc. met with indifference yesterday on Wall Street, where stocks barely budged in very light trading.

Mergers generally provide the markets with a boost, but with the telecom sector facing stiffer competition, investors saw the Verizon-MCI deal only as a necessary step in dealing with those competitive pressures. Most investors kept to the sidelines while the sector sorts itself out.

A rise in oil prices also kept investors out of the market. A barrel of light crude was quoted at $47.44, up 28 cents, on the New York Mercantile Exchange.

"It's the kind of day where you catch your breath, digest the move up we've had over the last couple weeks," said Jay Suskind, of Ryan Beck & Co. "There aren't a lot of catalysts out there that can really move the market."

With no premium on MCI's shares — they were valued in the Verizon deal at $20.75 — the usual buying that goes along with such an announcement was conspicuously absent. MCI shed 82 cents to $19.93, while Verizon slipped 12 cents to $36.19.

While the implications for the telecom sector will likely be profound, Wall Street's lack of enthusiasm was because merger talks had been in the news for some time, and that investors are focused on the economy rather than individual sectors.

The government's retail sales report for January is due today, while Fed chief Greenspan will testify about the state of the economy tomorrow and Thursday.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where consolidated volume came to 1.68 billion shares, compared with 1.96 billion on Friday.