Today's Lunchtime News explained away those confusing fifth letters in Nasdaq ticker symbols. Coming up tonight are Special Sections on Motorola's earnings and on the semiconductor industry's book-to-bill number, both of which are scheduled to be reported after the bell today.
MF Merlin's Economic News today discusses the Commerce Department's May report on wholesale sales and inventories. 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 focuses on Motorola. Enjoy!
HEROES
Well, you have to admit that NIKE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %> does what it says -- and sometimes, does even better. Today, the athletic footwear and apparel manufacturer reported $1.06 EPS, versus consensus expectations of $.99 EPS. And it didn't stop there -- the company also said that worldwide orders for deliveries over the next five months were up 55%, compared to expectations of 25% to 30%. President Tom Clarke estimated that revenue in Japan and Germany, the company's two largest markets outside the United States, could be boosted by a total of $1 billion over the next five years. Pretty good news, huh? Apparently Dean Witter thought so, as it raised its fiscal 1997 earnings estimate for Nike to $4.95 from $4.70 and its fiscal 1998 estimates to $5.75 from $5.50. With all this news, the stock swooshed up $4 1/2 to $108 3/4.
BOSTON SCIENTIFIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSX)") else Response.Write("(NYSE: BSX)") end if %> today reported a net sales increase of 28.5% from the year-ago quarter and saw its shares jump $3 1/4 to $43 1/8. The company reported that revenues were hurt by an $8.4 million change in foreign currency exchange rates compared to the second quarter of 1995, which makes the $357 million in sales for this quarter look even better. These sales figures account for the acquisitions of both EP Technologies and Symbiosis Corporation, which were acquired last quarter. The company said that it plans to release earnings figures later this month. Boston Scientific is a "worldwide developer, manufacturer and marketer of medical devices, which are used in a broad range of medical specialties."
The International Trade Commission (ITC) today made an initial decision in favor of QUICKTURN DESIGN SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: QKTN)") else Response.Write("(NASDAQ: QKTN)") end if %>, and sent the stock up $1 5/8 to $15 as a result. The company had filed a complaint with the ITC in January of 1996 that Mentor Graphic's French MetaSystems subsidiary had infringed on its patents, and today, the government agency made a preliminary determination that Mentor's products do in fact use the interconnect architecture claimed by Quickturn in its Virtual Silicon emulation product. This means that Mentor Graphic's emulation products will be temporarily excluded from importation into the United States, a definite boon for Quickturn. Quickturn is involved in "the design and manufacture of design-verification solutions... that permit concurrent verification of ASICs and full-custom ICs with system hardware and software."
QUICK TAKES: Oppenheimer initiated coverage on COASTCAST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PAR)") else Response.Write("(NYSE: PAR)") end if %> today with a "market perform" rating, sending shares up $2 1/4 to $22 1/2... NETRIX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NTRX)") else Response.Write("(NASDAQ: NTRX)") end if %> pre-announced a second-quarter loss of less than $.10 per share, and was up $1 1/4 to $10 1/8. Apparently, that news was better than expected... Shares of SOFTKEY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SKEY)") else Response.Write("(NASDAQ: SKEY)") end if %> recovered $2 3/4 to $21 1/2 today, after the company made a positive presentation at the Wheat First Butcher Singer Conference... BELCO OIL & GAS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BOG)") else Response.Write("(NYSE: BOG)") end if %> was started by Oppenheimer with a "market perform" rating, sending shares up $2 1/8 to $35 1/8... CARDIOGENESIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CGCP)") else Response.Write("(NASDAQ: CGCP)") end if %> won approval to market its ITMR drug in the European Community today, and surged $2 1/8 to $14 3/4 as a result... SALTON/MAXIM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SALT)") else Response.Write("(NASDAQ: SALT)") end if %> entered into an agreement with White Consolidated for use of the White-Westinghouse trademark today, and closed up $13/16 to $5 13/16... IMATRON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IMAT)") else Response.Write("(NASDAQ: IMAT)") end if %> jumped $9/16 to $5 29/32 after announcing an order for ten Ultrafast scanners, valued at more than $20 million...MATTSON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MTSN)") else Response.Write("(NASDAQ: MTSN)") end if %> announced a new product based on its coupled plasma source technology, and rose $1 1/4 to $11 5/8.
GOATS
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Multimedia software developer MACROMEDIA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MACR)") else Response.Write("(NASDAQ: MACR)") end if %> finally announced what had been rumored for almost a month -- that its first quarter will come in below expectations. The software developer dropped $3 7/8 to $15 3/8 -- well off the $38 levels it sat at on June 10th when these rumors first started to impact the stock. Chairman and Chief Executive Officer (CEO) Bud Colligan noted that, "Our revenue growth rate in fiscal Q1 did not meet our expectations." He added that, "Despite the general slowdown in Macintosh revenue, we are encouraged by strong sales gains on the Windows platform and the continued acceptance of Macromedia Studios and Shockwave. We are controlling expenses carefully, investing in long-term market share growth and focusing resources on the Internet."
Telecommunications equipment manufacturer DIALOGIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DLGC)") else Response.Write("(NASDAQ: DLGC)") end if %> got crushed for $18 to $28 3/4 after reporting that it will only make $0.24 EPS to $0.28 EPS compared to expectations of $0.33 EPS in the second quarter, blaming weakness overseas. Hambrecht & Quist downgraded the company from "buy" to "hold". Semiconductor company LSI LOGIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LSI)") else Response.Write("(NYSE: LSI)") end if %> was mashed for $2 to $21 1/2 when Rick Whittington of SoundView Financial downgraded it to a "hold" from "short-term buy" this morning. Another "logic"-related stock, DISCREET LOGIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DSLGF)") else Response.Write("(NASDAQ: DSLGF)") end if %>, rose $5/8 to $7 1/8.
Those who sold BUSINESS OBJECTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BOBJY)") else Response.Write("(NASDAQ: BOBJY)") end if %> last week when its competitor PRISM SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PRZM)") else Response.Write("(NASDAQ: PRZM)") end if %> pre-announced a bad quarter saved some money today -- the French data warehousing concern dropped $3 3/4 to $26 1/2 when it reported that it would make only $0.10 EPS to $0.12 EPS. Alex. Brown analyst Bill Shattuck cut his earnings estimate from $0.75 to $0.72 per share (EPS) for 1996, and left his 1997 estimate of $1.07 unchanged.
Oppenheimer started Boring portfolio holding OXFORD HEALTH PLANS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OXHP)") else Response.Write("(NASDAQ: OXHP)") end if %> as a "market-performer", dunking the fast-growing health maintenance organization (HMO) $4 3/8 to $35 3/4 today. The Oppenheimer report cited slowing top-line growth, pricing pressures, and increased competition among managed-care providers and see Oxford shares as fully-valued now.
QUICK CUTS: A Smith Barney downgrade from "buy" to "neutral" dropped KOHL'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KSS)") else Response.Write("(NYSE: KSS)") end if %> $2 1/2 to $31 1/8... Windows utility software developer SYMANTEC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SYMC)") else Response.Write("(NASDAQ: SYMC)") end if %> slipped $1 3/8 to $10 after warning of disappointing earnings... OPTA FOOD INGREDIENTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OPTS)") else Response.Write("(NASDAQ: OPTS)") end if %> opted to announce a new V.P. of R&D (research and development) today, and tumbled $2 1/4 to $7 3/8... Meanwhile, CALIBER SYSTEMS'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CBB)") else Response.Write("(NYSE: CBB)") end if %> chief financial officer (CFO) left the company, sending shares down $1 1/4 to $23 1/2... Medical product developer PLC SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: PLC)") else Response.Write("(AMEX: PLC)") end if %> and engineering and architectural firm GRC INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GRH)") else Response.Write("(NYSE: GRH)") end if %> said they know of no reason their stock were down, off $1 3/4 to $18 1/2 and $4 3/8 to $28 1/2 respectively.
An Investment Opinion by MF Templar
FOOL ON THE HILL: Motorola Reports Earnings
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Albert Lin of Cowen & Co. has turned today's earnings report from MOTOROLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> into an extravaganza! After Mr. Lin upgraded his rating on Motorola from "neutral" to "strong buy" yesterday he sparked a small rally in the blue chip, pushing it to the highest level it has seen in 1996. Reporting on the eve of the Semiconductor Industry Association's much-ballyhooed book-to-bill, it has become quite an event here in the Fool News room, as all three of our staffers wait with baited breath for both releases.
Let's be clear though -- we are not expecting wonderful news on the semiconductor front. With estimates on the semiconductor book-to-bill ratio coming in at around 0.865, it should represent an improvement but should show that we are definitely not out of the woods yet. The core of Lin's recommendation of Motorola had nothing to do with the Schaumburg, Illinois-based concern's semiconductor business -- it was the revival in the flagging cellular business that caught his eye. He cited stronger sales of the StarTac cellular phone and raised his second quarter earnings estimates for the telecommunications concern from $0.63 to $0.85 -- way above the consensus of $0.68 EPS a share and actually higher than last year as well.
Motorola has been caught up in the simultaneous slowdown of two of its key units after a blistering 1995. Worldwide cellular growth has clicked down to the 15% to 20% range from the 25% it had seen for most of the decade, hitting Motorola and its competitors Nokia, Ericsson and NEC equally. Motorola had warned earlier in the year of higher than anticipated cellular inventories, the first sign of slowing demand in this area. The semiconductor demand picture got all confounded in late 1995, crashed in early 1996 and has spent the rest of the year recuperating. An implosion in memory prices caused an inventory purge which resulted in sagging prices for chips across the board, smacking right up in Motorola's face.
When Motorola was bouncing in the low $50s, pessimism had grown significantly and many did not see any sort of near-term recovery in the offing -- including me, actually. Cellular growth was slowing. Semiconductor prices did suck. The raw comparisons between this year and last year would be flat to slightly up in the best of scenarios, if revenues from telecommunications equipment, wireless and paging could support the two business units that were sliding. It just did not seem like there was a lot of near-term news that could generate a move up. So why is Motorola up 20% since then? Because analysts, as they are wont to do, got too pessimistic. Now we are all waiting with bated breath to see if Motorola will beat $0.68 EPS, three cents lower than it made last year. And some people say that expectations have nothing to do with the price of a security.
Well, those of you plugged into the news have already seen that Motorola dashed the higher expectations created by Mr. Lin yesterday, reporting $0.54 per share. The low end of expectations was $0.44 EPS, however, so somebody out there had a pretty clear idea that a 50% decrease in price for 16 meg DRAM over the quarter would crush revenue growth for Motorola. Sales for the company's semiconductor unit fell 5% from last year with new orders plummeting 34% -- on top of margin pressure on the products that were more profitable last year. The synergistic effects of lower profits and lower margins in the chips combined with price pressures in the cellular market dashed any hope of the wireless business helping them out.
So where is Motorola going tomorrow? Hard to say. An improving book-to-bill that is much better than anticipated might convince investors that we did hit the bottom in April. At month six of book-to-bills lower than 1.0, it compares well to the historic length of previous downturns, most of which last six to nine months. There is even talk now of the inventory correction having been completed. This correction has definitely been shorter and sharper than anything else in the historical record. If investors can treat the Motorola numbers today as the bottom, it is set up for very nice comparison next year. Although the stock might return to the mid-$50s, these numbers along with the turn in the book-to-ratio make 1997 suddenly look a lot better.
ANOTHER FOOLISH THING: Ask the Headhunter, Women!
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Nick Corcodilos, host of the "Ask The Headhunter" forum on Motley Fool and author of The New Interview Instruction Book, will be tonight's chat guest on the Women's Interests channel at 9pm ET (keyword: Women). Come find out what the "new interview" is and how you can use it instead of resumes and want ads to win the right job in today's difficult job market. Then post your own questions on Nick's Foolish Forum at keyword: Headhunter.
(c) Copyright 1996, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.
Transmitted: 7/9/96