Verizon-MCI deal
fails to excite market

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's consolidation 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, head trader for Ryan Beck & Co. "There aren't a lot of catalysts out there that can really move the market."

The Dow Jones industrial average fell 4.88, or 0.05 percent, to 10,791.13.

Broader stock indicators closed narrowly higher. The Standard & Poor's 500 index was up 0.84, or 0.1 percent, at 1,206.14, and the Nasdaq composite index gained 6.25, or 0.3 percent, to 2,082.91.

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. Qwest Communications International Inc., which was also interested in MCI, lost 17 cents to $3.98.

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

"I think the merger really was built in to both MCI and Verizon's stock prices already," said Neil Massa, equity trader at John Hancock Funds in Boston. "Investors are looking forward now to later in the week, when you have retail sales reports coming out and (Federal Reserve Chairman Alan) Greenspan before Congress."

The government's retail sales report for January is due today, while Greenspan will be testifying on Capital Hill about the state of the economy and monetary policy tomorrow and Thursday.

The Fed chairman is not expected to signal any change in the central bank's policy of measured quarter-percentage point interest rate hikes.