Yesterday I said the Dow would make it to a record close. Today I’m eating my words. Perhaps I should also be eating my shorts. Again, today, it looks like the Dow will not be hitting a new record close at all. The second quarter GDP number was revised down from 2.9% to 2.6%. This lower number reflects the slow down we were talking about earlier in the week. At the very least it shows that the US isn’t growing at a break neck pace so there’s no need for the Fed to raise rates. Leaving rates unchanged or lowering then is good for the market.
Let’s take a look at SCUR. Secure Computing today announced a deal with IceWEB Partners. IceWEB Partners is going to start trying to sell Secure Computing’s line of products to their Federal Government customers. Ordinarily, that would be a good thing, but today SCUR also announced that they had received a letter of deficiency from NASDAQ. A portion of the news release reads as follows:
On September 26, 2006, Secure Computing Corporation, a Delaware corporation ("Secure"), received a Deficiency Letter (the "Letter") from Nasdaq ("Nasdaq") indicating that when Secure completed its acquisition of CipherTrust, Inc. ("CipherTrust") on August 31, 2006 (the "Merger") pursuant to the Agreement and Plan of Merger dated as of July 11, 2006 with Peach Acquisition Corp., a Georgia corporation and a wholly-owned subsidiary of Secure, CipherTrust and CT Shareholders' Representative LLC, a Georgia limited liability company (the "Representative"), as amended by that certain First Amendment, dated as of July 14, 2006, that certain Second Amendment, dated as of August 1, 2006, and that certain Third Amendment, dated as of August 30, 2006 (as amended, the "Merger Agreement"), it failed to comply with the shareholder approval requirements set forth in Nasdaq Marketplace Rule 4350(i)(1)(C) (the "Rule").
Nasdaq verbally notified Secure of such noncompliance on September 14, 2006. In response to the verbal notification, Secure took action to cure the deficiency by entering into the Fourth Amendment to the Merger Agreement to restrict the issuance, in connection with the Merger, of an aggregate number of shares of its common stock equal to or in excess of 20% of the number of shares of its common stock then outstanding on the closing date of the Merger, unless and until shareholder approval has been obtained.
Consequently, the Letter confirms that, subject to the public announcement requirements of Nasdaq Marketplace Rule 4803(a), Secure has regained compliance with the Rule and the matter is now closed. On September 27, 2006, Secure issued a press release, in accordance with Marketplace Rule 4803(a), disclosing receipt of the Letter.
So now the merger is going ahead and SCUR is onside with NASDAQ. The good news is that IceWEB is peddling SCUR’s products to its establish customers. Now the market is choosing to focus on the letter and the merger instead of the good news of the agreement. This focus on the negative is what concerns me. Looks like this might be an indication of the market mood in general. Perhaps I’m looking at what’s going on with a particular stock and overlaying it on the entire market.
Am I reading too much into what’s going on with SCUR today? Or is the market mood turning negative in general? Maybe what’s going on with SCUR is an indication of why the Dow can’t hit a new record? But if you look at the market breadth for the Dow it’s positive. More stocks are going up than down.
So what gives?
