INDEX:
I. Market News: Technology Bounces Back
II. Heroes: Cadence, Grupo Televisa, Global Village, Recent IPOs, CNS
III. Goats: Timberland, Ann Taylor, Midwest Grain Products, OEA
IV. Investment News: September Same-Store Sales Numbers
V. Calendar: Friday's Economic Events
MARKET CLOSE
~~~~~~~~~~~~
DJIA: 4762.71, up 22.04
S&P 500: 582.63, up 1.16
NASDAQ: 1014.20, up 11.93
MARKET NEWS
~~~~~~~~~~~
After yesterday's drubbing in technology stocks, the sector bounced back today, recouping roughly two-thirds of yesterday's loss. The market reacted only slightly to today's weekly initial unemployment figures. For the most part, tomorrow's monthly unemployment is a more important number for bond traders, and the stock market sits tight in anticipation of that number as well. Also released today were the September retail same-store sales numbers (see Investing News for details).
HEROES
~~~~~~
Cadence Design Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:CDN)") else Response.Write("(NYSE:CDN)") end if %> led the pack of semiconductor-related issues on the upside, rebounding $3 1/4 to $40 1/4 after a three-day selloff pulled the Nasdaq Composite down more than 6%. Cadence Design develops software that semiconductor companies use to manufacture chips, particularly more complicated SRAM chips which are currently in demand for multimedia applications. Today was certainly a relief for Cadence shareholders, as it had fallen dramatically from an all-time high of $41 on Thursday.
The Mexican Bolsa has been under pressure recently from concerns that stagflation might paralyze the Mexican economy. This did not keep Grupo Televisa <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:TV)") else Response.Write("(NYSE:TV)") end if %> down today, though. The shares rocketed ahead $1 3/4 to $19 1/8 on news that Nomura upgraded the stock from "buy" to "strong buy." On balance, though, MF Yon's cautious reaction to the peso devaluation has proven pretty accurate---much to the dismay of some critics who chastised him, foreseeing 300-400% advances in the shares of Mexican banks and construction companies.
Yesterday, the Daily News had this to say about Global Village <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:GVIL)") else Response.Write("(NASDAQ:GVIL)") end if %>: "If the company makes its FY '96 consensus estimates of $0.98 per share, the current price might represent a bargain opportunity." Today, up $2 5/8 to $12 7/8, Global Village proved us right, issuing a press release stating, of all things, that its second-quarter net income will be *above* analysts' current estimates of $0.16 per share. Revenues have been driven by Global's TelePort Platinum product line of v.34 desktop modems. Officials at Global Village see this revenue growth carrying over into their fiscal third quarter as well.
Two recent initial public offerings regained some lost ground today. Business Resource Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:BRGP)") else Response.Write("(NASDAQ:BRGP)") end if %> rose $3/4 to $5 3/8 and General Scanning <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:GSCN)") else Response.Write("(NASDAQ:GSCN)") end if %> leapt forward $3/4 to $10 1/4. Both fell below their initial offering price in the recent Nasdaq selloff as speculative money and momentum investors simply got out of the market at any cost. Evidently, some investors spied opportunity where others feared ruin.
CNS Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CNXS)") else Response.Write("(NASDAQ:CNXS)") end if %> rose $1 1/8 to $10 5/8 today after the company pre-released its third quarter earnings. CNXS expects to report earnings of $0.07 a share compared with a loss of $0.04 in the year-ago period. Revenues increased 1500% from sales of the Breathe-Right strip. These results, however, are 30% shy of the consensus estimates reported by Zacks Analyst Watch. However, CNS has suffered through a particularly brutal sell-off and if it comes anywhere near its $0.91 estimate for '96, today's price might actually be cheap.
GOATS
~~~~~~
Timberland <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:TBL)") else Response.Write("(NYSE:TBL)") end if %> got Dorfed today, down $5 7/8 to $25, when Dan the Man (never to be confused with MF Nasdaq) questioned the takeover rumors that have swirled around the mail-order retailer. Dorfman claimed that many pros are bearish on the rumored takeover scenario. His sources all happen to be short the stock, however, which might bias their estimation. Claims of a weak balance sheet, inventory troubles, and slow growth have prompted some analysts to suggest that without a capital infusion, Timberland's share price could end up a goose egg. Timberland retails clothing and footwear.
Another month of same-store sales casualties. Ann Taylor <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:ANN)") else Response.Write("(NYSE:ANN)") end if %> fell $1 3/8 to $15 1/4 as same-store sales continued to plunge, down 5.2% for the month of September (see the table below in Investing News). Ann Taylor did manage to push up total sales by 9.9% with new store openings. Same-store sales numbers like this suggest that Ann Taylor might actually be showing some strength here. In the current retail environment, same-store sales increases come from promotional activity (read:SALES) which do not make a company a lot of money. With same-store sales down, we know Ann Taylor has not been reduced to shoveling out merchandise just to create cash flow---a move that killed Bradlee's and Caldor, for instance. However, Josephthal doesn't agree with us on this point and cut Ann Taylor's full-year estimates from $0.46 a share to $0.26-$0.31. Bottom-fishers might want to start giving the company a once-over, though.
Midwest Grain Products <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:MWGP)") else Response.Write("(NASDAQ:MWGP)") end if %> was punished today, falling $1 3/4 to $11 1/2, on news that it would report a loss next quarter and would not pay a dividend. Shareholders are always disappointed when earnings are weak, but they become downright vengeful when the dividend isn't paid. Midwest claimed the move will improve its cash flow, meaning that the company is in danger of having negative working capital and not paying some bills. The company blamed its woes on higher raw material costs for grain, obviously its main product. Competition and softness in the gasohol market (nobody seems to want the stuff) combined to kill any chance of a profit.
OEA Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:OEA)") else Response.Write("(NYSE:OEA)") end if %> dropped $2 1/2 to $28 1/8 after reporting earnings of $0.38 per share, just shy of the $0.40 analysts were expecting. Definitely a no-no in this market. OEA had a nice spin on the press release though, starting it with "Another Record Year for OEA!" Unfortunately, it was not enough of a record to suit investors. OEA makes electronics gadgets for the military.
INVESTING NEWS: September Same-Store Sales
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Sept. Aug.
Store Total Same Store Total Same Store
American Eagle +35.0% +2.0% +23.0% -11.0%
Ames Department -0.7% -1.5% +1.7% +1.6%
AnnTaylor +9.9% -10.0% +9.5% -11.0%
Bed, Bath & Beyond +40.4% +2.9% +32.5% +1.1%
Best Buy +40.0% +5.0% +59.0% +14.0%
Bon-Ton Stores +31.4% +5.0% +32.2% +3.5%
Broadway Stores -8.7% -9.2%
Caldor Corp. -2.9% -10.4%
Carson, Prarie Scott -4.7% +6.1% -12.1% -1.1%
Catherine's Stores +9.0% +2.3% +6.1% +0.4%
Cato Corp. -1.0% -5.6% -3.0% -8.0%
Charming Shoppe -18.0% -21.0% -21.0% -24.0%
Claire's Stores +13.0% +3.0% +16.0% +6.0%
Consolidated Stores +18.3% +8.6% +11.8% +1.2%
Dayton Hudson +12.0% +5.3% +10.1% +3.5%
Designs Inc. +17.0% +2.0% -1.0% -12.0%
Dillard Dept. +5.0% +2.0% +5.0% +2.0%
Dollar General +24.0% +7.3% +17.7% +0.4%
Dress Barn +12.0% +2.0% +2.0% -8.0%
Edison Brothers -10.0% -5.8% -7.6% -4.0%
Family Dollar +15.8% +7.4%
Federated Dept. +81.7% +4.9% +70.9% +0.9%
Filene's Basement -2.0% -5.0% -8.0% -10.0%
Fred's Inc. +3.1% +1.3%
Gantos Inc. -2.0% -2.0%
Gymboree Corp. +31.0% +0.0% +27.0% -6.0%
Hechinger -13.0% -13.0% -15.0% -13.0%
Heilig-Meyers +14.9% -0.9%
Hi-Lo Automotive +15.7% -0.4%
Jamesway Corp. -12.8% -12.0%
Penney, JC +2.0% -0.9% +1.8% -0.4%
K-Mart +3.2% +4.1% +2.9% +2.0%
Kohl's Dept. +39.3% +14.2% +14.1% -3.9%
Lechters Inc. +5.2% -3.7% +2.3% -6.8%
MacFrugal's -3.7% -11.8% +2.9% -6.7%
May Department +10.5% +2.9% +5.2% +0.0%
Melville +6.6% +1.4% +5.3% -0.6%
Men's Warehouse +24.6% -6.6% +25.2% +6.8%
Mercantile Stores +0.6% -0.1% -1.7% -2.2%
Michael's Stores +7.0% -8.0% +13.0% -1.0%
Natural Wonders +3.4% -2.3% +2.0% -5.1%
Neiman Marcus +8.4% +5.5% +6.3% +4.6%
Pacific Sunwear +7.0% +5.0% +25.0% -5.0%
Perfumania +27.2% +7.1% +13.5% -3.8%
Profitt's +8.0% +8.0% +7.0% +7.0%
Ross Stores +12.0% +6.0% +9.0% +2.0%
Sears +6.8% +4.5% +5.3% +3.0%
Sharper Image +2.0% -2.0% +7.0% +2.0%
ShopKo +11.1% +2.4% +8.0% +0.9%
Solo Serve Corp. +9.8% +12.0%
Sports & Recreation +29.0% +0.0% +31.0% -1.5%
Starbucks Corp. +58.0% +9.0% +62.0% +12.0%
Gap +21.0% +3.0% +12.0% -6.0%
Limited +10.0% +100.0% +3.0% -6.0%
TJX Cos. +15.0% -1.0% +5.0% -7.0%
Today's Man +3.0% -16.0% +28.0% +0.0%
United Retail Group +9.0% +1.0% +4.0% -3.0%
Value City +14.1% +3.0% +3.6% -4.4%
Venture Stores -0.9% -5.3% -7.6% -13.1%
Waban +5.8% -2.5% +6.2% -2.1%
Walmart +13.2% +4.2% +3.4% +3.3%
Woolworth +4.0% -0.1% +3.1% -1.0%
Younkers Inc. N/A +4.9% +1.6% +1.6%
CALENDAR: Friday's Economic Events
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
---September Employment Situation (8:30)
---August Consumer Installment Credit (2:00)
---August Wholesale Trade
Byline: Befumo/Sheard (MF Templar/MF DowMan)