INDEX:

I. Market News: The Fed Brings Christmas a Little Early
II. Heroes: CompUSA, Cypress Semi, USAir, Dell Comp., Manhattan Bagel
III. Goats: Franklin Elec. Pub., Beverly Ent., PolyGram, Hirsch, Price-Costco
IV. Investment News: Semiconductor Information Out on the Web!

MARKET CLOSE

DJIA: 5109.89, up 34.68
S&P 500: 611.93, up 5.12
NASDAQ: 1026.40, up 23.84

MARKET NEWS

The Federal Reserve surprised a lot of nervous investors today when it cut the Federal Funds rate by 0.25% today, providing the shot in the arm the market needed after yesterday's ugliness. Turnaround Tuesday delivered profits to anxious investors who had been smacked around in yesterday's mayhem.

HEROES

Computer-retailer CompUSA told investors today that it would buy back up to $30 million worth of its stock, which amounts to about 5% of the outstanding shares at today's closing price of $32 3/8, up $3 1/2 today. Stock buybacks are considered a positive because they boost earnings per share (EPS) by reducing the number of outstanding shares. Computer retailers have been under intense selling pressure in the last few weeks due to much ballyhooed reports that consumer demand for personal computers was slowing. Perhaps the scaremongers should remember that "slowing" from a 45% pace still leaves a lot of room for solid, long term growth.

Cypress Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CY)") else Response.Write("(NASDAQ:CY)") end if %> led the SRAM-related semiconductor companies on the rebound today, rising $1 3/8 to close at $13 1/4. Cypress is another company that is buying back shares. Although CY is a ways from its 52-week-high of $27 3/4, the company is set to report earnings of $1.66.

USAir <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:U)") else Response.Write("(NYSE:U)") end if %> continued to produce good news today, telling analysts that it would exceed their 1995 expectations with fourth quarter revenues. The shares were up $1 1/8 to $13 1/8 as company officials reported that November passenger yields were way above expectations and that the company anticipates bookings and yields remaining favorable until at least the first quarter. The elimination of unprofitable flights has really paid off better than anyone anticipated.

Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:DELL)") else Response.Write("(NYSE:DELL)") end if %>, a company whose shares have been mashed by warnings of slowing consumer demand for personal computers, rocketed ahead $6 1/8 to $35 5/8, a gain of 20%. CS First Boston raised Dell to Strong Buy today from Buy, stressing that Dell is more focused on the business sector than the consumer sector. Analyst William Gurley also speculated that the company would probably repurchase shares with some of its cash hoard. Gateway 2000 <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:GATE)") else Response.Write("(NASDAQ:GATE)") end if %>, the company Gurley cited as much more focused on the retail market, was up $2 1/8 to $23 1/4.

Manhattan Bagel Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:BGLS)") else Response.Write("(NASDAQ:BGLS)") end if %> recovered some of yesterday's losses caused by a negative New York Times article, rising $2 5/8 to $17 3/4. The article chronicled how two executives at I. & J. Bagel, which Manhattan Bagel acquired in June, had racked up huge gambling losses and had an environmental lawsuit pending against them from a previous company. The two fellows decided it was best for the company to throw in the towel and resigned today. Why the presence of two executives at a bagel company would cause the valuation to fluctuate 20-30% is anyone's guess.

GOATS

Franklin Electronic Publishing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:FEP)") else Response.Write("(NYSE:FEP)") end if %> had been going strong on news of a pocket version of Quicken until today, when it gave back $5 to close at $30 1/4. Franklin reported that earnings for the third quarter would be on target but revenues would be slightly below plan. The company's French unit had been hurt by the strike and domestic orders were a little slower than expected. Expectations for the fourth quarter and beyond have not changed. Does this represent a buying opportunity on some momentum investors cashing out? With a long term growth rate estimated at 25%, it sure does look interesting. A huge block accounting for about half of today's volume traded just after the open, according to Dow Jones.

Nursing home provider Beverly Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:BEV)") else Response.Write("(NYSE:BEV)") end if %>, long rumored to be an acquisition target of Integrated Health Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:IHS)") else Response.Write("(NYSE:IHS)") end if %>, plunged $1 1/4 today to close at $10 after issuing a bearish outlook for the fourth quarter. Higher than expected costs related to digesting an acquisition and opening some new hospital units decreased projected profits to only $0.10 EPS instead of the $0.23 EPS that the Street was angling for. The industry has also been under tremendous pressure due to the painful potential of Republican Medicaid/Medicare cuts.

Dutch-media giant PolyGram NV <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:PLG)") else Response.Write("(NYSE:PLG)") end if %>, rumored to be trying to buy 25% of Interscope Records, the rap-music outfit recently jettisoned by Time Warner, gave up $5 to close at $50 3/8 after the company told analysts profits would be flat for the year. The shares had gone as high as $66 1/2 a few months back when media acquisitions were all the rage.

C-Cor Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CCBL)") else Response.Write("(NASDAQ:CCBL)") end if %> pulled a Tech Data <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:TECD)") else Response.Write("(NASDAQ:TECD)") end if %> today, blaming a revenue shortfall in part on the installation of a new corporate computer system. C-Cor fell $6 3/4 to finish at $21 on the news. Investors who owned Tech Data might remember that the computer system took the wind out of three quarters of earnings before the shares began to recover, but once they did, there was money to be made. C-Cor has a "solid" backlog, according to the company, and believes that telecommunications reform will spur sales of its equipment for communications networks. But people who want to jump in after today might do well looking at what happened with Tech Data.

Hirsch Intl <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:HRSH)") else Response.Write("(NASDAQ:HRSH)") end if %> fell $1 3/4 to $12 1/4 today after announcing a 900,000 secondary offering, 700,000 of which will be new shares. The other 200,000 will be insider selling. Dilution and insider selling---the double whammy. Hirsch is a leader in the computer-enhanced embroidery machine market.

Retailers continued to get smacked today in spite of the joyous rate cut celebration. Price/Costco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:PCCW)") else Response.Write("(NASDAQ:PCCW)") end if %> got whacked for $1 5/8, closing at $14 5/8, after Alex Brown analyst Barbara Miller gave the firm a a buy instead of strong buy. Dollar Tree Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:DLTR)") else Response.Write("(NASDAQ:DLTR)") end if %> also lost 10%, falling $2 11/16 to $23 13/16. Perhaps investors should simply wait for the time of deepest pessimism and start picking up some retail stocks? We hope to do an Investment Perspective on just that topic later in the week.

INVESTING PERSPECTIVE:

I had the opportunity last Sunday to surf the Web a little. You may be surprised by what I am about to reveal, but I actually have not been out on the Web very much at all, as from the beginning of my online investing career I have been a Foolophile. Actually, I am writing today's Investment Perspective with people like me in mind ... people who have not jumped out on the Web because it was so huge and daunting they did not feel they had time to look and decided to just stick with the Fool.

One of the industry groups that I follow pretty closely is semiconductor capital equipment -- probably why it shows up in the darn news so much. Through a website, I happened across a shocking array of resources for investigating the fundamental aspects of the semiconductor equipment.

The first place I found was Dataquest. Dataquest, recently gobbled up by the Gartner Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:GART)") else Response.Write("(NASDAQ:GART)") end if %>, is the premiere provider of trade information for the technology industry. These are the guys who put out projections of general industry and segment growth into the next decade.

Their Web Address is -- http://www.dataquest.com/home.html

This site is basically an advertising ploy, with one exception. Their press releases for the last three months are stored in one spot on their Web page and they are pretty enlightening --- in this one little corner of cyberspace you can get a slew of projections for the semiconductor industry, semiconductor equipment industry, storage industry, and so on. This allows you to pinpoint what Dataquest thinks is growing and perhaps offer you an idea of what industry sectors to look for companies in.

Another place I found was Infrastructure, at -- http://www.infras.com

Infrastructure is a forward minded newsletter dealing with chip and chip equipment stocks. In fact, it is testing a Daily Notes product e*mailed to subscribers. Hmmmm ... great minds think alike? They won't give up their portfolio to you unless you pay up, but you can look at their indexes and old issues, which still have scads of cool information that is really useful. Did you know 70% of capital outlay for a new fab goes to semiconductor equipment? Just found that out from Daily Notes last week. There are a lot of other fun facts, including lists of private and public competitors to various companies.

The next two are industry organizations -- http://www.sematech.org/public/home.html and http://www.semi.org/

Both of these organizations are funded by the semiconductor and semiconductor equipment industries. The Websites serve as clearing houses for information. There are all sorts of technical papers and newsletters to sample and check out, potentially allowing you to parse out which technology is cutting edge and which technology is on the dull side.

SPECNet (http://www.smartlink.net/~bmcd/semi/cat.html) is probably the most interesting, as it hosts semiconductor equipment companies advertising their wares online. It did not seem tremendously big, but you can pick up some nice information on private companies that you otherwise would have to rely on some brokerage analyst report to get.

The last place I visited was SI Investor, at http://techstocks.com/investor/StockTalk-4. These are basically message boards frequented by people interested in Silicon Valley stocks. I went to the Kulicke & Soffa board and was pretty underwhelmed, but there might be a gem out there if you are willing to sift about.

What being "digital" is all about is having unlimited access to information. Unfortunately, part of this access is being overwhelmed by the possibilities. In the coming weeks and months, I will try to "surf" and find a group of Websites that are related to one sector or investment theme and attempt to put them all together for Fools. When our redesign debuts next year, the Fool hopes to collect a lot of these Websites in nifty little forms to allow you access to them without even typing in those nasty URLs. Until then, I'll try to feed 'em to you in this column.

Pity the Wise,

Byline: Randy Befumo (MF Templar)

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