Iomega competitor SyQuest moved up strongly today, announcing a new product. We have a Special Section looking at this development. Meanwhile, today we're also launching our own latest product, "IOMG in Fooldom Today", a five-days-a-week e-mailed digest of the best from our Iomega message folder. For the first few weeks, we're offering a free trial subscription to it. If you'd like to be on the mailing list, send a note to [email protected]. America Online followers might want to check into our America Online message folder (#18), where Tom Gardner has posted a nine-part discussion of the company. We'll be compiling this into a special collection soon.
MF Merlin's Economic News today covers the Conference Board's report on the composite indices of leading, coincident, and lagging indicators for April and the National Association of Purchasing Management's report of the results of its May member survey. You'll find the Economic News, as well as all our Special Sections, FoolWires, and earnings reports, on either the Evening News or Stock Research screens. In tonight's Fool on the Hill, MF Templar continues his look at investing opportunities in conglomerates. Enjoy!
Anyone thinking that Fools are moving the market is urged to consider the impact of the "nonline" media. Today CNBC aired bullish coverage of HARRIS COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NHWK)") else Response.Write("(NASDAQ: NHWK)") end if %>, and the stock leapt $2 3/43 to $23 3/4. TELULAR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WRLS)") else Response.Write("(NASDAQ: WRLS)") end if %>, also praised, jumped $1 7/8 to $7 11/16. Meanwhile, this weekend's issue of Barron's caused shares of BOSTON ACOUSTICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BOSA)") else Response.Write("(NASDAQ: BOSA)") end if %> to rise $4 3/8 to $23 7/8. Tim Curro, general partner of Value Holdings and member of the financial establishment called Boston Acoustics "undervalued". (MF Templar wrote a feature on Harris Computer earlier this year -- you can find it by using Fool Search, via a button at the bottom of our main screen.)
Iomega competitor SYQUEST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SYQT)") else Response.Write("(NASDAQ: SYQT)") end if %> excited investors today, announcing the EZFlyer 230 removable hard drive. In today's Lunchtime News, MF Templar pointed out that the original EZ135 drive was produced with 270 MB hard drive platters which were faulty on one side (thus yielding 135 MB of usable space). It appears that the company is now using both sides of the same disks, and has given the product a sleeker look, as well. The company also announced that, "SyQuest is refocusing on market segments that require maximum performance, notably publishing, graphics and Internet users." Shares flew $3 3/4 to $14 3/4.
INNOVEX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INVX)") else Response.Write("(NASDAQ: INVX)") end if %> shares rallied $2 to $19 on the introduction of EchoSearch from the company's Iconovex software division. Available in July, EchoSearch uses Java to enable users to search on several different engines at the same time, improving speed and accuracy. After each search EchoSearch presents a document which indexes and summarizes its findings, weeding out the less relevant found items. NETCARTA CORP., a CMGI <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CMGI)") else Response.Write("(NASDAQ: CMGI)") end if %> company, also announced a new Web product -- the NetCarta WebMapper, which allows Webmasters and site developers to manage Web content and speed navigation on the Web. Shares of CMGI jumped $4 1/2 to $27 3/4.
QUICK TAKES: DNX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DNXX)") else Response.Write("(NASDAQ: DNXX)") end if %> rose $1 1/4 to $8 1/2 after receiving a patent for gene-altered mice, related to an enzyme thought to be involved in arthritis, septic shock, and respiratory problems... UNIVAR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UVX)") else Response.Write("(NYSE: UVX)") end if %> exploded up $6 7/8 to $19 1/4 this morning after Dutch-based storage, transport and distribution concern Koninklijke Pakhoed NV sought to buy the remaining shares it does not own for $19.45 a share... Biotechnology concern BIOCRYST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BCRX)") else Response.Write("(NASDAQ: BCRX)") end if %> shot up $1 1/2 to $15 1/2 after privately-held Torri Pharmaceutical agreed to pay $22 million in a PNP Inhibitors licensing pact... The Nasdaq's Small Order Entry System (SOES) is what many attribute ENERGY RESEARCH'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ERCC)") else Response.Write("(NASDAQ: ERCC)") end if %> $2 to $21 rise today, to another 52-week high... OPENVISION TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OPVN)") else Response.Write("(NASDAQ: OPVN)") end if %> rose $1 15/32 to $19 7/32 after Lehman Brothers initiated coverage of the company with a "strong buy" rating... SURGICAL TECH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SGTI)") else Response.Write("(NASDAQ: SGTI)") end if %> surged $1 5/8 to $7 3/4 in anticipation of its closing on the purchase of 4Health.
SAND TECHNOLOGY SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SNDCF)") else Response.Write("(NASDAQ: SNDCF)") end if %> took a breather today after a recent run-up, falling $6 3/4 to $21. The Toronto-based company announced today that several companies were testing its Nucleus Server data storage product, which is targeted at Fortune 500 companies, and is able to answer queries involving massive amounts of data. Last week the company reported a major deal with Digital Equipment Corp., which will bundle Nucleus Server with DEC hardware.
PARADIGM TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PRDM)") else Response.Write("(NASDAQ: PRDM)") end if %> shifted down $7/8 to $8 3/8 after forecasting a second quarter loss, including a $3.6 million charge and an inventory adjustment of $5.8 million. Last week PaineWebber downgraded the company to "neutral" from "buy". Shares of this SRAM developer were trading in the mid-thirties a year ago, but times have been tough for semiconductor stocks, and many people today believe that SRAM is going the way of the dinosaur.
SPACETEC IMC CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SIMC)") else Response.Write("(NASDAQ: SIMC)") end if %> plunged $3 1/2 to $15 3/4 after running up in recent weeks in anticipation of a rosy earnings report. Well, the earnings were reported last week, and rather rosy they were. The "provider of 3-D interactive motion control input hardware controllers and software systems" saw revenue for fiscal 1996 nearly 47% above year-ago levels, and international revenues up 68%. Major customers include General Motors, General Dynamics, British Aerospace, SAAB Aerospace, Digital, SunExpress, IBM, and Hewlett Packard.
QUICK CUTS: Richmond-based ESKIMO PIE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: EPIE)") else Response.Write("(NASDAQ: EPIE)") end if %>, sandwiched between rising costs and a weak consumer environment, melted $2 1/2 to $18 1/2 when it reported that it would not meet year-ago earnings of $0.71 EPS for its next quarter... Investors disappointed in TECHFORCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TFRC)") else Response.Write("(NASDAQ: TFRC)") end if %> still continue to sell, a month after the recent initial public offering (IPO) came across with disappointing earnings. The stock fell $1 1/2 to $9 1/2 ... OPTICAL CABLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OCCF)") else Response.Write("(NASDAQ: OCCF)") end if %> got whacked for $5 to $39 when Alan Ableson reported in Barron's that the company's indoor-outdoor cable technology is not covered by patents and that Berktek has been making indoor-outdoor fiber-optic cable for about two years... Transaction processing software developer NOVA CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NIS)") else Response.Write("(NYSE: NIS)") end if %> fell $2 to $36 after Smith Barney initiated coverage of the company with merely a "neutral" rating... ZOOM TELEPHONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZOOM)") else Response.Write("(NASDAQ: ZOOM)") end if %> saw its shares zoom Southward, down $2 5/8 to $18 3/4 on no apparent news. The company announced a new line of fax-modems at the Comdex trade show this week.
Breaking Up Is Hard To Do -- part III of IV
On Friday, I described the opportunities that an individual investor has to espy a conglomerate that *needs* to be broken apart but has not managed to do so yet. I cited poor recent financial performance and current shareholder desire to see such a spin-off as necessary prerequisites. The potential spin-off of Woolworth's athletic group was cited as a ready example of a company with poor recent financial performance that could see substantial value realized by a spin-off of this kind. This sort of value-oriented investment is one that requires a lot of patience before you reap any gains from it. In my opinion, if you were to make four investments along this theme, you would probably only hit about one company that broke up, although I think that the value realized would generate an above-market return for the entire portfolio.
For those with less patience, however, buying companies that have already announced a spin-off but have not completed it yet might be more to your liking. There are so many tired old conglomerates breaking in two or three at this point that an incredible variety of opportunity abounds. In fact, one could almost call it shooting fish in a barrel. Although we lack the exact returns that were profiled in Butler's Academic Digest last month on how companies did post spin-off, the return was consistently market-beating and quite worth the effort, to my recollection. Time and time again, the investor who actually waited until *after* the break-up was announced to invest could have still reaped substantial benefit.
The reality is that the market has a lot of trouble recognizing the full value of a portfolio of unrelated businesses when they have been brought together under one corporate rubric. An example is the kind of value shareholders have seen spring forth from SEARS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: S)") else Response.Write("(NYSE: S)") end if %> since the company began spinning off subsidiaries in February of 1993, when DEAN WITTER-DISCOVER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DWD)") else Response.Write("(NYSE: DWD)") end if %> first went public. An investor who bought Sears on January 1st of 1993 would have received 0.39031 shares of Dean Witter on July of 1993 and 0.93 shares of ALLSTATE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALL)") else Response.Write("(NYSE: ALL)") end if %> in June of 1995. An investor who bought Sears at $16 7/8 on January 4th, 1993, would not only have seen those shares climb to $50 1/4 today, but would also have owned $23 1/8 of Dean Witter and $40 3/4 worth of Allstate for a total of $114 1/8, a stunning 72% annualized return over the past three and a half years.
Now, of course you are thinking that this is just history and nothing like this will ever occur again. Just as institutional investors consistently missed and mis-priced the spin-offs of one of the highest-profile retailers in the world, these sorts of spin-offs continue to confuse and confound Wall Street at large, offering significant value to the individual investor willing to measure investment time in years and not quarters. Among the many behemoths gearing up to spin-off or split-off shares of a majority owned subsidiary to the public are AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>, DIAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DL)") else Response.Write("(NYSE: DL)") end if %>, DUN & BRADSTREET <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DNB)") else Response.Write("(NYSE: DNB)") end if %>, H&R BLOCK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HRB)") else Response.Write("(NYSE: HRB)") end if %>, MANOR CARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MNR)") else Response.Write("(NASDAQ: MNR)") end if %>, MERCER INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MERCS)") else Response.Write("(NASDAQ: MERCS)") end if %>, 3M <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MMM)") else Response.Write("(NASDAQ: MMM)") end if %> and US LONG DISTANCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: USLD)") else Response.Write("(NASDAQ: USLD)") end if %>.