Today's Lunchtime News featured a rather humorous (no, really!) discussion of yesterday's America Online outage. Of special interest in Fooldom tonight will be same-store retail sales data for July, a slew of new earnings synopses (including a Special Section on America Online's earnings which were announced after the closing bell today -- three cents ahead of estimates), and a Rogue piece on Dole's proposed capital gains tax cut.
MF Merlin's Economic News today discusses yesterday's release of the Federal Reserve's "Beige Book" report, the June report on consumer credit statistics, and the latest weekly report on new claims for state unemployment insurance. 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 is in a world of his own. Enjoy!
OLSTEN CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OLS)") else Response.Write("(NYSE: OLS)") end if %>
Thursday, 8/8, after 2:00 p.m. EDT
Replay number: 1-800-475-6701 (access code: 311861)
SARA LEE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLE)") else Response.Write("(NYSE: SLE)") end if %>
Thursday, 8/8, available after noon
1-402-220-3124
CPI CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPY)") else Response.Write("(NYSE: CPY)") end if %> surged $2 7/8 to $17 5/8 after announcing the formation of a joint venture with EASTMAN KODAK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %>. Eastman Kodak will buy 51% of CPI's Fox photofinishing unit, PhotoFox, for $56.1 million. PhotoFox operates 551 minilabs. Its Chairman and Chief Executive Officer (CEO) Alyn V. Essman stated that, "This alliance with Kodak is a new opportunity in which, together, we can recreate and expand the business in our photofinishing division," adding, "Our objective is to move the photofinishing business from a routine photo processing operation to a creative endeavor, taking advantage of all the technologies and all of the capabilities developed by our two companies."
Hand-held blood analyzer concern I-STAT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: STAT)") else Response.Write("(NASDAQ: STAT)") end if %> continued its advance today, rising $2 3/8 to $15 3/8 after missing its earnings estimates by four pennies yesterday. Encouraging investors is the fact that sales have risen some 31% in the most recent quarter. Company executives remain embroiled in some controversies, though, with the SEC investigating the firm. Shares have swung between $11 1/2 and $45 3/4 in the past year. Meanwhile, another medical company which surged yesterday retreated a bit. AMYLIN PHARMACEUTICALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMLN)") else Response.Write("(NASDAQ: AMLN)") end if %> shares slipped $1 3/8 to $12 1/4 following yesterday's JOHNSON AND JOHNSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %> announcement that it intends to continue funding testing of Amylin's new drug designed to treat diabetes, scheduled to be launched in 1999. Hambrecht & Quist issued a "buy" rating on the company today.
Several retailers had a red letter day. GYMBOREE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GYMB)") else Response.Write("(NASDAQ: GYMB)") end if %> swung ahead $3 1/8 to $26 1/2 in spite of posting a 3% same-store sales decrease, pushing total sales up by 22% with an aggressive series of new store openings during this quarter. Hambrecht & Quist upped the company to "strong buy" from "buy." Meanwhile, Alex Brown & Sons initiated coverage of DOLLAR TREE STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DLTR)") else Response.Write("(NASDAQ: DLTR)") end if %> with a "strong buy" rating, boosting shares of the deep-discount retailer $2 1/2 to $32 1/2. ROSS STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ROST)") else Response.Write("(NASDAQ: ROST)") end if %> rose $1 1/8 to $37 1/8 on an 8% increase in same-store sales.
QUICK TAKES: NOKIA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOK.A)") else Response.Write("(NYSE: NOK.A)") end if %> rebounded $3 3/8 to $39 7/8 today after reporting earnings. The company believes it can continue to improve earnings at its mobile phone unit based on improvements in efficiencies and sales of new products... GILEAD SCIENCES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GILD)") else Response.Write("(NASDAQ: GILD)") end if %> rose $1 1/2 to $19 1/8 after announcing a $60 million marketing agreement with PHARMACIA & UPJOHN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PNU)") else Response.Write("(NYSE: PNU)") end if %> to market an AIDS-related drug, Vistide, outside of the United States... ROTO-ROOTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ROTO)") else Response.Write("(NASDAQ: ROTO)") end if %> unclogged for $5 to $41 1/2 after CHEMED <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHE)") else Response.Write("(NYSE: CHE)") end if %> announced a $41-per-share tender offer for the 50% of the company that it does not currently own. Roto-Rooter is a commercial plumber... Reporting $0.04 EPS versus only a penny last year, shares of recent initial public offering (IPO) PEGASYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PEGA)") else Response.Write("(NASDAQ: PEGA)") end if %> vaulted $4 1/2 to $18 3/8 this morning... BROOKTROUT TECH. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BRKT)") else Response.Write("(NASDAQ: BRKT)") end if %> popped up $1 5/8 to $20 7/8, started by Prudential at "buy" with a $26 target price... TRUE NORTH COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TNO)") else Response.Write("(NYSE: TNO)") end if %> reported $0.26 per share when analysts were officially expecting $0.32. But shares rising $2 5/8 to $19 3/8 suggests that many had been ready for worse news... 99 CENTS STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NDN)") else Response.Write("(NYSE: NDN)") end if %> rose $1 3/4 to $15 1/8 on a NatWest upgrade from "accumulate" to "buy." Ironically, shares cost considerably more than 99 cents each.
The 52-week high of $48 3/4 that CALIFORNIA AMPLIFIER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CAMP)") else Response.Write("(NASDAQ: CAMP)") end if %> racked up a few weeks ago is now a distant memory, as the stock traded down $1 3/4 to $7 7/8 after it forecast a loss for the second quarter due to soft domestic sales and delays in international purchases. The company manufactures analog wireless cable equipment, such as amplifiers, downconverters and antennas, and there is concern about the future of such products as wireless cable providers move to digital technologies.
KLA INSTRUMENTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: KLAC)") else Response.Write("(NASDAQ: KLAC)") end if %> reported earnings of $0.61 EPS, two cents shy of consensus estimates. The market reacted to the company's report that delays in foundry construction have hurt the flow of incoming orders across the world by dropping shares $2 3/8 to $20 1/2. LAM RESEARCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LRCX)") else Response.Write("(NASDAQ: LRCX)") end if %> was one of many semiconductor equipment concerns whacked by KLA's weak results, dropping $1 3/4 to $25 on a sentiment shift. Meanwhile, APPLIED MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMAT)") else Response.Write("(NASDAQ: AMAT)") end if %> slipped $1 5/16 to $26 1/8, aided by Smith Barney initiating coverage with a "neutral" rating. Will the semiconductor book-to-bill number to be reported tonight cause sentiment to whipsaw again?
QUICK CUTS: Sportswear concern QUICKSILVER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: QUIK)") else Response.Write("(NASDAQ: QUIK)") end if %> investors were cut to the quick today, watching shares plunge $5 7/8 to $20 1/8 after Dillon Read downgraded the company to "neutral" on concerns about July sales... Greece-based ANANGEL-AMERICAN SHIPHOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ASIPY)") else Response.Write("(NASDAQ: ASIPY)") end if %> sunk $1 to $9 after suspending its dividend due to dry bulk freight market weakness.
An Investment Perspective
by Randy Befumo (MF
Templar)
FOOL ON THE
HILL
My God -- The House Is Down Again!?
"Holy smokes! The house is down again today!" cried Burt Cambell as he peered at the ticker tape scrolling across CNHC.
His wife, Dottie, called out from the kitchen. "What's wrong, honey?"
"The house. It is down again today. The ticker is reporting the quote for 121 Maple Lane as down $5000 today." Burt grimaced angrily and pounded on the arm of his recliner with a balled-up fist.
"Could it be a mistake? You know, last week you were following 120 Maple Lane for three days before you figured out what was wrong." Dottie turned off the kitchen faucet and proceeded to begin loading the dishwasher.
"Dag nabbit, I am positive it was 121 Maple. There was breaking news on the whole development earlier today." Burt stood up and began to pace back and forth across the sparsely-decorated living room. Boxes strewn about from their recent move still littered the common area. "It appears the Homeowner's Association is talking about raising fees again for the swimming pool -- knocked the snot out of the entire street, down 5% on the day."
Burt listened for a few minutes to the sound of dishes being racked together in the new dishwasher, shook his head in an expression of frustration and went over to the dining room table. Sprawled out on its surface was a carefully drawn chart entitled "121 Maple Lane," showing daily price information on a graph. He grabbed a sharp pencil and began to draw in today's close.
"Honey, what's the house worth today at the close?" Dottie was dropping the last few pieces of silverware into the small rack in the dishwasher. She paused to scrape a desiccated food particle off of a fork with her fingernail.
"$120,000. It is down $20,000 since we bought the house three weeks ago."
"Well, we have had the whole Homeowner's thing, and then the neighbors did get a pit bull, and we did scratch up the house a bit in the process of moving in." Dottie closed the dishwasher and turned it on, desperately hoping Burt would not do anything rash.
"My goodness, the house has broken critical support at $121,000 and just fell below its 200-day moving average. The bids are drying up for houses in this neighborhood as well, Dottie... by golly, the market knows something here that we don't."
"I'm sure it will recover, honey." Dottie strode out into the dining room to rub her husband's neck. Burt was putting the finishing touches on his point-and-figure chart and did not look very pleased with the results.
"That's it. We're selling." Burt suddenly rushed for the phone, dialing their 24-hour real estate broker. "I refuse to see our life's savings mashed by a downturn in the real estate market."
"Burt, we just moved in."
"And we can move out just as fast. Cut your losses, let your winning houses grow." Burt had already dialed and Ken Smith's brusque voice barked out a greeting on the other end. "Ken, Burt Campbell here... we are going to sell the house... yeah, I saw it broke the 200... and I am not sure what kind of quarterly report we can put out... I mean, the kitchen was just refinished."
"Honey... don't you think we should talk this over..."
"Good, $119,000 on the bid? I'll take it." Burt hung up the phone, moving to the bottom of the stairs to bellow at his kids. "Alice? Charlie? Pack up your stuff, kids. We are moving out of this house tomorrow." A few fleeting groans floated down the stairs, but from the footfalls Dottie knew the children had gone to comply with their father's wishes.
"Burt, I am just not sure about this. I mean, we have only been here..."
Burt cut her off entirely. "Dottie, I have seen the price of a house fall as much as 50% in a few days. They are a necessary evil. When you see one going south on you, though, you absolutely have to get out." Burt went to the living room to retrieve the newspaper in order to scope out a new abode. "I think the houses on Ventura Avenue have been rising lately. Maybe we should buy one of them to live in."
Dottie knew it was pointless to argue. Thankfully, any loss would be made up by their retirement portfolio. Although quotes for the stocks came out very infrequently, she knew that they had been faring handsomely over the last ten years. They had purchased the portfolio and mortgaged 90% of it, doing quite well in spite of the high margin interest. Over the last twenty years, their portfolio had more than doubled in spite of the fact that the margin interest was 8%. Thank goodness stocks did not have daily quotes, she reflected for a moment. Otherwise people would buy and sell them as frequently as they did houses.
Randy Befumo (MF Templar),
a Fool
Fool On the Hill
Selena Maranjian (MF Selena),
a Fool
Heroes & Goats & Editing
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