Stock Market Chumps..........10-03-06

Quest Diagnostics Inc. (DGX)

Last Trade:	50.00
Trade Time:	4:02PM ET
Change:	10.90 (17.90%)

Quest Diagnostics Inc., the top U.S. provider of diagnostic testing services, said Tuesday it has lost its contract with UnitedHealthcare, which accounts for about 7 percent of Quest revenues.

The news slammed Quest shares, which plunged almost 18 percent.

Lyndhurst-based Quest lost out to Laboratory Corp. of America Holdings, which said it had won an exclusive, 10-year agreement with UnitedHealthcare beginning Jan. 1, 2007.

Laboratory Corp., based in Burlington, N.C., said it expected the deal to bring in more than $3 billion from UnitedHealthcare and related business.

Quest, which reported $5.5 billion in revenue last year, said it could not yet estimate the financial impact of losing the national provider contract with UnitedHealthcare, its largest customer and one of the country's largest health insurers. Quest had provided lab services to UnitedHealthcare for 10 years.

However, Quest said it expects to continue servicing some UnitedHealthcare members as a contracted provider in Ohio, Missouri and Kansas. The company also plans to compete for UnitedHealthcare's business in other markets as a non-contracted provider.

"We will focus on keeping as much of the business as we can from United, but at the same time grow the rest of the business," Surya N. Mohapatra, Quest's chairman and chief executive officer, told analysts during a conference call.

He said that given Quest's large distribution network and quality of service, he believes doctors and patients will insist that UnitedHealthcare use Quest's laboratories to test their specimens.

Quest and its competitors collect blood, urine and tissue samples from hospitals, doctors' offices and clinics for tests to diagnose medical conditions.

Mohapatra said that "it would have been fiscally irresponsible" to sign a new contract with UnitedHealthcare, given its "unreasonable demands" and "unilateral provisions."

He added: "If we had signed that contract, it would have been irresponsible not only for us as a company but for the whole industry. We will always go for profitable growth, but we will not go for volume at any cost."

During the call, company officials hinted at the possibility of layoffs, saying they might have to adjust costs as the volume of business changes. Bob Hagemann, the chief financial officer, said Quest would provide further information on that when it gives its year-end profit forecast.

Quest has about 42,000 employees. Most are in the United States, but it also operates laboratories in Mexico and the United Kingdom. About 3,300 employees are in New Jersey, its home state.

Besides doing medical tests, Quest is the largest U.S. provider of drug and alcohol testing for employers and also does background checks of prospective employees.

UnitedHealthcare is part of Minneapolis-based UnitedHealth Group Inc.

Company spokeswoman Maria Shydlo said she could not comment on the specifics of its contract offered to Quest or on the remarks of Quest officials.

"We believe that with Lab Corp. coming on, we can get affordable lab services," she said.

Quest shares fell $10.90, or 17.9 percent, to close at $50 in regular trading on the New York Stock Exchange, with trading volume of 25.4 million shares, about 12 times the normal level. Shares were up 20 cents in after-hours trading. Laboratory Corp. shares rose $1.36, or 2.1 percent, to $66.57, while UnitedHealth Group shares rose 15 cents to $49.58, also on the NYSE.

Spatialight Inc. (HDTV)

Last Trade:	1.69
Trade Time:	4:00PM ET
Change:	0.29 (14.65%)

SpatiaLight Inc., a maker of high-definition video panels, filed with regulators on Tuesday to periodically sell up to $75 million in common shares, debt securities, guarantees of debt securities, warrants and units.

The company said in a registration statement with the U.S. Securities and Exchange Commission that it will use the proceeds from the offering for general corporate purposes, including working capital and potential acquisitions.

Under a shelf registration, a company may sell securities in one or more separate offerings with the size, price and terms to be determined at the time of sale.

Marvell Technology Group Ltd. (MRVL)

Last Trade:	16.80
Trade Time:	4:01PM ET
Change:	2.29 (12.00%)

MRVL shares lost 12% Tuesday after the company said demand for its chips would decline in the third quarter and administrative expenses would rise.

The company blamed lower demand from its hard disk drive customers. It said the personal computer sector is weak and inventory has increased.

Marvell Technology's stock closed Tuesday at $16.80, down $2.29, or 12%.

The 52-week range for Marvell's stock is $16.70 to $36.83.

Marvell Technology Group said it expected a significant increase in administrative expenses in the third quarter of fiscal 2007 due to higher costs related to a previously announced internal review of stock option practices and related accounting matters.

Sehat Sutardja, Marvell's president and chief executive officer, said he expected the sales downturn to be a "short-term event."

"We remain focused on continuing to aggressively invest in our business and to expand the reach of our technology into a growing number of high volume targets," he said in a prepared statement.

Marvell Technology is a fabless semiconductor company. It provides digital and mixed-signal integrated circuits for data storage and broadband communications. The company's products include chips that convert analog data from a magnetic disk into digital form for computing, preamplifiers, and Ethernet switch controllers and transceivers.