MF Merlin's Economic News today covers the final April estimates of the University of Michigan's indexes of consumer sentiment and consumer expectations. You'll find the Economic News, as well as all our Special Sections and FoolWires on the Evening News screen. What's the difference between a reporter and an analyst? Not much, according to MF Templar in tonight's Fool on the Hill. Finally, stay tuned for details on MF Bogey's Industry Olympics report -- coming to you soon, via Fax! Enjoy!
Pixar <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PIXR)") else Response.Write("(NASDAQ: PIXR)") end if %>, one of this year's much-ballyhooed initial public offerings (IPOs), reported blow-out earnings today, taking the Street by surprise and driving shares up $2 3/4 to $24 3/4. Analysts had expected the company to merely break even, but the computer animation studio famous for Disney's "Toy Story" instead posted earnings of $0.13. In response, Robertson Stephens analyst Keith Benjamin raised his earnings estimates for fiscal 1996 from $0.25 to $0.33 per share, based on the first quarter's revenues.
Wireless One <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WIRL)") else Response.Write("(NASDAQ: WIRL)") end if %> announced today that it is acquiring TruVision Wireless in a $45 million stock deal. The new entity will boast 34,000 subscribers, over seven million line-of-sight households, and much-expanded channel capacity. Wireless One offers wireless cable TV in Southeastern rural markets and TruVision provides similar services in the Mississippi. Wireless One investors appear bullish about htis merger, as they sent shares up $1 1/4 to 14 3/4.
Focused-ion-beam (FIB) manufacturer Micrion <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MICN)") else Response.Write("(NASDAQ: MICN)") end if %> surged $5 to $27 1/4 today, after being upgraded by Hambrecht & Quist analyst Mark Fitzgerald from "buy" to "stong buy". Yesterday the company reported its twelfth consecutive quarter of revenue growth, but missed earnings estimates of $0.18 per share by seven cents. Fitzgerald pointed out Micrion's backlog, which has increased 409% in the past year.
Today's IPOs had a mixed first trading day. Affinity Technology Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AFFI)") else Response.Write("(NASDAQ: AFFI)") end if %>, maker of electronic products which expedite financial transactions, rose $3 to $20 1/2. i2Technologies, which develops software for global supply chain management, also advanced sharply, up $3 1/4 to $39 3/4. Not so fortunate was Heartport <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HPRT)") else Response.Write("(NASDAQ: HPRT)") end if %>, falling $1 3/4 to $35. Heartport develops procedures for minimally invasive heart surgery.
QUICK TAKES: HARBINGER CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HRBC)") else Response.Write("(NASDAQ: HRBC)") end if %> reported record earnings yesterday, with revenues up 58% over the year-ago quarter, and the stock advanced $1 7/8 to $21 1/8 in response. . . NUTRITION FOR LIFE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NFLI)") else Response.Write("(NASDAQ: NFLI)") end if %> continued to recover, up $1 3/4 to $14 after posting strong earnings last week and in spite of legal problems for Kevin Trudeau, its star distributor. . . RADISYS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RSYS)") else Response.Write("(NASDAQ: RSYS)") end if %> jumped $2 1/2 to $22 1/4 today, after rising strongly yesterday on the heels of a strong earnings report. The supplier of embedded computer technology reported record revenues and operating income up 152% from the year-ago quarter. . . OLYMPIC STEEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZEUS)") else Response.Write("(NASDAQ: ZEUS)") end if %> reported divine earnings today, beating estimates by seven cents, and rising $1 1/4 to $14 3/4. . . DOLLAR TREE STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DLTR)") else Response.Write("(NASDAQ: DLTR)") end if %> confounded analysts by reporting earnings of $0.03 per share when a loss of $0.01 had been expected. Shares advanced $7/8 to $33 5/8 in response. . . A mention in the New York Times for PATHOGENESIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PGNS)") else Response.Write("(NASDAQ: PGNS)") end if %> warranted a $1 1/4 to $17 3/4 rise today. The company is developing antibiotics to combat increasingly drug-resistant bacteria. . . INTUIT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INTU)") else Response.Write("(NASDAQ: INTU)") end if %> jumped up $3 3/4 to $52 despite getting slammed by CNBC's Dan Dorfman, who pointed to insider selling.
Borland beat analyst earnings estimates yesterday by two cents posting $0.24, but slipped $3 1/4 to $16 3/4 today, after Soundview analyst Kris Tuttle cut his 1996 and 1997 estimates for the company. Tuttle explained that he feels the maker of software development tools is now fully valued and said he's keeping his short- and long-term "hold" ratings. In January of 1995 Borland restructured itself, deciding to concentrate on software development, and this was its fourth consecutive quarter of profitability since then.
Investors learned today that the Food and Drug Administration (FDA) is looking into whether one of its employees leaked confidential information to Summit Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BEAM)") else Response.Write("(NASDAQ: BEAM)") end if %> about competitor VISX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VISX)") else Response.Write("(NASDAQ: VISX)") end if %>. Summit, which develops laser vision correction systems, reported revenues up 78% from the year-ago period earlier this week and met analyst expectations, losing $0.11 per share. The stock beamed down $1 5/8 to $19 1/2 today on news of the leak. VISX was relatively unchanged, falling $1/4 to $34.
El Chico Restaurants <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ELCH)") else Response.Write("(NASDAQ: ELCH)") end if %> saw its shares refried today, down $13/16 to $8 after the company reported losing $0.05 per share, instead of the gain of $0.16 per share that the Street expected. El Chico also announced that it would be taking a second quarter charge of $6.2 million for closing restaurants and impaired long-lived assets. Wallace Jones, President and Chief Executive Officer (CEO), pointed to soft sales in a traditionally slow period, severe weather, and increased expenses.
QUICK CUTS: GATEWAY 2000 <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GATE)") else Response.Write("(NASDAQ: GATE)") end if %>, down $3 1/2 to $35 3/4, got bushwhacked by Oppenheimer & Co. today, getting downgraded from "buy" to "market performer" after posting earnings two cents ahead of estimates. . . RMI TITANIUM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RTI)") else Response.Write("(NYSE: RTI)") end if %> took a breather today, falling $3 5/8 to $20 3/4 after two days of rising for no discernible reason. . . DATASCOPE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DSCP)") else Response.Write("(NASDAQ: DSCP)") end if %> confessed yesterday in a conference call that near-term results will come in below earlier expectations and paid the price today, as shares dropped $1 1/4 to $18 1/4. . . A positive earnings surprise of $0.18 EPS instead of the expected $0.15 did not save chip-maker BROOKTROUT TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BRKT)") else Response.Write("(NASDAQ: BRKT)") end if %>, which sank $6 1/2 to $42 1/2. . . BUSINESS OBJECTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BOBJY)") else Response.Write("(NASDAQ: BOBJY)") end if %> also fell after beating estimates. Revenues were up 69% over the year-ago quarter and net income was up 103%, but the stock tanked $9 1/2 to $89 1/4. . . RAPTOR SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RAPT)") else Response.Write("(NASDAQ: RAPT)") end if %> met expectations of a $0.05 loss per share on revenues 395% higher than the year-ago quarter but was punished $3 1/4 to $34 3/4 anyway.
FOOL ON THE
HILL:
Meditations on Reporting
When Jeff Vinik called Micron Technology "still relatively cheap" in his September 30, 1995 letter to shareholders, he was probably unaware of the firestorm of controversy that it would set off months later. Vinik apparently soured on Micron and the rest of his technology holdings sometime in early November, selling into a small buying frenzy created when his September letter hit investor mailboxes across the country.
Paul Wick also created a stir, pounding the table on Advanced Micro Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMD)") else Response.Write("(NYSE: AMD)") end if %> during his Louis Rukeyser "Wall Street Week" appearance earlier in the year, while he was selling it in his Seligman Communications fund. Jim Cramer's SmartMoney column highlighting four thinly-traded stocks his investment firm held positions in pushed the boundary for many in the conventional media as well, despite the fact that he did not sell into the resultant surges.
Here we have professional investors who for one reason or another had the opportunity to appear before the public and say what they thought about a certain investment. In each instance, the established media was quick to crucify them for benefiting their shareholders at the expense of individual investors foolish enough to heed their advice.
Welcome to the 1990s, where every hot portfolio manager is a star and individuals recklessly plunge their life savings into anything they happen to feel remotely positive about. The jazzed-up momentum investing of the mid-'80s and the growth stock craze of the late '60s both produced similar media superstars. As far back as the dinosaur days of Baruch and Graham, what the big guys were doing often motivated the little guy to go along.
Looking back to the Wall Street of the early twentieth century for a moment, this kind of copycat attitude made sense. Financials were not publicly available but were only shown to the most inside of insiders. It took the pioneering Charles Dow and his Wall Street Journal to get simple things like balance sheets out before the public's eye, and it was in these days that the reporter became a tireless crusader for the rights of the individual investor.
Over the decades, credibility has grown and a trust has been built between the business reporter and the reader. The business reporter, an odd hybrid half-journalist, half-analyst, has proudly born the standard of truth and justice. Despite the occasional scandal of a Heard on the Street reporter leaking the contents of their column or some BusinessWeek distributors playing Hot Stock recommendations before the masses could get them, it has been an unsullied standard.
Fast forward to our current late bourgeois age, where Dan Dorfman stands as a six-figure-income pinnacle of financial journalism and the odd reporter makes dangerous forays into the balance sheets of growth companies which only eager short-sellers will hold in their hands. What has happened to that credibility and trust? Where has the standard gone? Somewhere in the dawn of the information age, right after the curtain was stripped from the Wall Street machine and you saw the wizened little man pulling the levers, the business reporter became a dying breed. A Tyranosaurus Rex. Or perhaps more fittingly, a dodo.
Were Vinik, Wick or Cramer clearly in the wrong, abusing a public trust? Should we see events like these as the reason why unbiased financial journalists are the principle resource of the individual investor? Or perhaps is the question more muddied by the financial journalists' lack of expertise. When the curtain was pulled back on Dan Dorfman's portfolio a few weeks ago and all it showed was General Electric and a few penny stocks, many a head shook at the true investing ignorance of the man. How can we come to rely on the person who does not invest for the scoop and refuse to listen to the person who does because of the potential for wrongdoing?
Solving this problem is like navigating the strait formed by Scalia and Charybdis or getting by the isle that was home to the Sirens alive. Sly Ulysses himself would have realized that filling his sailors' ears with wax and strapping himself helpless to the mast would not have been the best way to ensure his financial future.
We live in an age of uncertainty, where everything is to be held suspect and no one is to be trusted. Analyst or reporter, they are all subject to the same forces of greed and power that would drive many in their position to skirt grey lines. Deep skepticism is the investor's birthright, and blind faith the one unpardonable sin. Distrust authority and make your own decisions. Make a study of investing and find the common sense in what has been presented as magic for so long. Not even Fools should escape scrutiny -- the slaps I have received from investors in Micron Technology and Softkey International who think what I have said about both in this column or on the message boards is wrong are proof of that.
Listen to the likes of Vinik, Wick and Dorfman as voices to be compared to the many one can now find on message boards throughout the Digital World. My Foolish preference is to prefer the practitioner over the reporter any day, and to view all in the end as "reporters of value", analyst and journalist alike. Listen carefully, check your facts afterwards, survey others' opinions and make your investment decisions. That is the first wonder of the Digital Age.
ANOTHER FOOLISH THING: Desktop Video with MF Ben
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Okay. You've figured out that "the technology sector" isn't really one big mass, and that it is really made up of discrete smaller groups of stocks. Have you discovered yet that one of the most compelling and growing technology niches is Desktop Video? Check out MF Ben's Desktop Video industry area (at keyword: sector) and you'll find stock reports on the likes of C-Cube, Zoran, Radius and Oak Technologies and you'll learn how Digital Versatile Disks (DVD) might change our future. If you've been wondering what the heck "DBS", "JPEG", and "compression" really are, you'll appreciate the handy DTV glossary. And if you just want to toss around some ideas or pick other investors' brains, head on over to the DTV message board.
Do you have what it takes to be a Fool? Is your investing outlook sufficiently
Foolish?
Well. . . take The Fool Quiz! The Fool Quiz is a new primer by Jeff Robinson
(MF Swagman) and is chock full of entertaining questions and situations where
you have to make an investment decision. And no, you don't have to order
the teacher's guide separately! The detailed answers are included. Learn
all about investing from the stories of Wenceslas Widgets and Mercutio's
Church Doors. Make sure you know when to buy, when to short, and when to
sell. Find out what CANSLIM and the PEG and the PPP really are. A masterful
Foolish overview, and as interactive as printed paper can get! The Fool Quiz
is available for $12 (plus $2.50 s&h) in
FoolMart or by e-mailing
[email protected].