INDEX:

I. Market News: Fed Holds the Line On Interest Rates
II. Heroes: Quick & Reilly, SCOR, Harry's, Molten Metal Tech.
III. Goats: Featherlite, Sequent, Brooke Group, Lunar Group
IV. Investment News: Norand and The Woeful Earnings Chorus
V. Calendar: Wednesday's Economic Events

MARKET CLOSE

DJIA: 4765.60, down 4.33
S&P 500: 581.41, down 0.40
NASDAQ: 1038.04, down 8.11

MARKET NEWS

Waiting for the Federal Reserve to decide today whether to cut rates (they didn't cut them), the market churned over more concerns about third quarter earnings. The early morning gains the market had posted eroded as the day progressed. Expecting to see slowing growth for the S&P 500, perhaps only 7.5% overall into 1996, some investors are beginning to believe that the earnings explosion that has driven the market this year is beginning to slow.

HEROES

Quick & Reilly <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:BQR)") else Response.Write("(NYSE:BQR)") end if %> rose $2 3/8 to $43 3/8 today on an 80.4% increase in earnings per share (EPS) for the most recent quarter, heralding a potential great quarter ahead for the rest of the brokerage group when they start to release their earnings in October. The company reported that FY '96 will be another "record" year. Quick & Reilly also announced a 3-for-2 stock split as well as boosting their quarterly payout by 7.5%. Quick & Reilly provides discount brokerage services for individual investors.

SCOR US <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:SUR)") else Response.Write("(NYSE:SUR)") end if %> surged $3 7/8 to $15 today after its parent corporation in Europe decided to make a bid for all the outstanding shares, bringing it back into the fold. Shareholders of SCOR will receive $14 cash for each share of SCOR US that they currently hold. SCOR provides property and casualty insurance as well as reinsurance in the treaty and facultative markets.

Rebounding from an intense price decline yesterday, Harry's Markets <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:HARY)") else Response.Write("(NASDAQ:HARY)") end if %> rose $1 3/4 to close at $5 1/2 today. It appears that founder Harry Blazer, who relinquished the President and CEO spots on August 30th, has reasserted himself in both positions as of yesterday, ousting four of the five other Board of Directors members in the process. Home Depot President Arthur Blank was one of the victims of Harry's hellbent-for-vengeance purge. Blazer never relinquished the Chairman position, so he was the only Board member who was not ousted yesterday. Harry's (the store) has been plagued by high costs and heavy competition as it fights for its share of the Atlanta grocery market, with four farmers markets and two prepared stores in its corporate empire. Analysts, who had believed that Harry's departure was going to return some stability to the company, think that the turnaround may now take longer than anticipated.

Molten Metal Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:MLTN)") else Response.Write("(NASDAQ:MLTN)") end if %> benefited today from Lockheed Martin's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:LMT)") else Response.Write("(NYSE:LMT)") end if %> decision to expand their partnership, boosting Molten's shares $6 to $30 3/4 today. Lockheed Martin plans to join its environmental services unit with M4 Environmental L.P., a joint-venture formed by the two companies in 1994. The new limited partnership will be known as ECO-21 Technologies and will be owned 50-50 by the two companies, meaning that Lockheed is essentially giving Molten 50% of its own unit in the transaction. M4 Environmental was originally formed to capitalize on Molten's proprietary recycling technology.

GOATS

Featherlite <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:FTHR)") else Response.Write("(NASDAQ:FTHR)") end if %> shares slipped $1 3/8 to $6 1/4 today after the company reported that the third quarter would show a loss and earnings for the year would be substantially below expectations. In fact, the maker of car and truck trailers will probably earn less than half of what analysts had expected previously based of the dismal third quarter pronouncement. Smaller-than-expected sales increases, in conjunction with high aluminum prices which killed their gross margins, were to blame for the pain.

The Chief Financial Officer (CFO) of Sequent Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:SQNT)") else Response.Write("(NASDAQ:SQNT)") end if %>, Robert Gregg, reported today that the company told analysts that profit forecasts for the third quarter are much too high. Sequent shares fell $3 1/2 to $18 3/8. Gregg stated that the issue was more a timing one rather than a product- or operations-related issue. Analysts had been floating numbers in the $0.37 a share range for the quarter. Datalogix <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:DLGX)") else Response.Write("(NASDAQ:DLGX)") end if %>, which recently surged after signing a contract with Sequent, lost $2 7/8 to $15 today on Sequent's bad news.

Brooke Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:BGL)") else Response.Write("(NYSE:BGL)") end if %> dropped $2 1/8 to $9 1/4 after the day-to-day drama of its involvement with Carl Icahn to purchase substantial stakes in RJR Nabisco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:RN)") else Response.Write("(NYSE:RN)") end if %>. Although today's drop comes on no apparent news, Brooke Group has risen considerably on speculation that it and Icahn will buy out RJR Nabisco and cut it in half. Brooke Group recently got clearance to buy up to a 15% stake.

Lunar Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:LUNR)") else Response.Write("(NASDAQ:LUNR)") end if %> dropped $2 11/16 to $31 9/16 today after Hologic Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:HOLX)") else Response.Write("(NASDAQ:HOLX)") end if %> reached an agreement in principle to settle some outstanding disputes over commercial and legal matters. The agreement calls for a ten-year cross-licensing or sublicensing for a number of patents having to do with x-ray and ultrasound bone densitometry. The companies have agreed not to litigate on these technologies. Evidently, investors who had hoped for a settlement decided to get out today.

INVESTING NEWS: Norand Gets Shellacked For Poor Earnings

Norand Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:NRND)") else Response.Write("(NASDAQ:NRND)") end if %> shares tumbled $17 3/8 to $17 1/4 today as a massive earnings disappointment, accelerated by a raft of brokerage downgrades, pushed the shares down a whopping 50%. Not since Sybase <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:SYBS)") else Response.Write("(NASDAQ:SYBS)") end if %> and Chipcom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CHPM)") else Response.Write("(NASDAQ:CHPM)") end if %> both choked a few months ago has a mid-cap technology stock been so decimated.

Norand, which develops computer systems that automate the collection of product sales, inventory control, and warehouse data management, had touched as high as $48 1/4 in August on prospects for blockbuster earnings for the rest of the year. The company saw an almost non-stop rise from its May low of around $27 as the second leg of the massive technology rally pushed everything higher.

The earnings disappointment today was caused by a massive write-off at Norand's Italian division. The disappointment, which might have been viewed as a one-time event, was accompanied by the ominous statement that investors should steel themselves for a shortfall in the first half of 1996 because of a number of product delays. The disappointment, though still characterized by some as a one-time event, was the second shortfall in earnings in the past four quarters, suggesting all is not well in Cedar Rapids.

The cost of the write-off? $8.2 million, or $1.05 per share, as a result of irregularities uncovered during an audit of the wholly-owned Italian subsidiary. The "irregularities" include sales reversals, bad debt, and inventory write-offs. The managing director there has been fired and a replacement is currently being sought.

The company sees lower gross margins in the first half and has had setbacks in developing its PEN*KEY products resulting from a third-party delay in software development. It is these developments rather than the Italian fiasco which led analysts to downgrade the stock. Prudential, William Blair, and Donaldson, Lufkin & Jenrette all got out the hatchets.

Bottom fishers might be intrigued by today's dramatic drop. The analysts who cut estimates cited a range of $1.10 to $1.60, suggesting that if Norand could get in there and continue its historic 20.0% growth rate, this might be the time to be buying. The Italian fiasco is definitely a one-time affair and the first half of 1996 is not necessarily the end of the world. None of today's bad news appears to be a trend of any sort. For investors with a 1997 time horizon, shares of Norand might be worth looking into. The cash position does not seem all that strong, though, considering that it will need to wade in some pretty cold waters over the next two quarters.

CALENDAR: Wednesday's Economic Events

---August Durable Goods Orders (8:30)

Byline: Befumo/Sheard (MF Templar/MF DowMan)