The most exciting event du jour in Fooldom is our AOL auditorium event tonight with Nasdaq President Al Berkeley. At 9 pm EDT, you'll have the rare opportunity to interact with the President of a major stock market, asking him questions and "listening" to him explain the inner workings of the Nasdaq. The Nasdaq's new president will update you on what he's got planned for the nation's fastest-growing stock market, and he will be joined live on stage by The Motley Fool's own David Gardner. Join your fellow Fools tonight!
Today's Fool Plate Special in the Lunchtime News featured a post-earnings look at the semiconductor capital equipment industry, specifically Applied Materials. We're covering a slew of conference calls today, including Ancor Communications, CompUSA, Williams-Sonoma and Boston Technology. MF Merlin's Economic News today discusses the Labor Department's preliminary report on productivity and unit labor costs during the second quarter, and the Commerce Department's June report on manufacturing and trade inventories and sales. 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. Enjoy!
Yesterday's conference calls:
ALADDIN KNOWLEDGE SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ALDNF)") else Response.Write("(NASDAQ: ALDNF)") end if %>
1-719-444-0803 (code: 265091)
APPLIED MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMAT)") else Response.Write("(NASDAQ: AMAT)") end if %>
1-800-642-1782 (code: 951947)
HOME DEPOT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HD)") else Response.Write("(NYSE: HD)") end if %>
1-402-220-6028
J.C. PENNEY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JCP)") else Response.Write("(NYSE: JCP)") end if %>
1-800-232-8641
WAL-MART <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %>
1-800-633-8284 (code: 1882323)
Calls for earnings reported today:
ANCOR COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ANCR)") else Response.Write("(NASDAQ: ANCR)") end if %>
after 11:00 a.m. EDT
1-800-633-8284 (code 1885446)
COMPUSA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPU)") else Response.Write("(NYSE: CPU)") end if %>
1-800-642-1687 (ID# 963520) -- replay at 4:00 p.m. EDT
Calls to be held tomorrow after earnings are reported:
WOOLWORTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: Z)") else Response.Write("(NYSE: Z)") end if %>
after 10:00 a.m. EDT
1-800-222-9740
STAPLES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SPLS)") else Response.Write("(NASDAQ: SPLS)") end if %>
after 5:30 p.m. EDT
1-402-220-5185 (password: Staples)
HIGHWAYMASTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HWYM)") else Response.Write("(NASDAQ: HWYM)") end if %> lost what it was expected to lose this quarter, $0.34 per share, but its bullish views on mobile communication technology prospects drove shares up $2 1/4 to $12 1/2. HighwayMaster, the only nationwide mobile communications concern serving the trucking industry with voice, data and global positioning technology, has recently switched from an expired AT&T service contract to its own new Network Services Center. The company's number of installed Mobile Communications Units rose to 17,439 this quarter, up 73% in the past year, and with over 10,000 additional units ordered and awaiting installation.
THE SPORTS AUTHORITY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TSA)") else Response.Write("(NYSE: TSA)") end if %> popped up $2 7/8 to $21 7/8 after beating estimates by two cents and being upped by Alex. Brown from "buy" to "strong buy." Lazard Freres also upgraded the firm, from "hold" to "buy," citing price and improving fundamentals. Lazard's 12-month price target is $28. Yesterday's earnings report featured record results, with sales for the second quarter up 23.6% over the year-ago quarter, and same-store sales up 4.3%. The retail industry uses same-store sales numbers to guage the performance of stores which have been in operation at least a year, thus leveling the field by removing the effect of additional locations opened during the year.
A bunch of companies rocketed forward on positive earnings reports. Medical product maker BIOMATRIX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BIOX)") else Response.Write("(NASDAQ: BIOX)") end if %> zipped ahead $1 1/8 to $14 1/8 after the company posted second quarter earnings of $0.50 per share, compared with a loss of $0.18 in the year-ago quarter. LERNOUT & HAUSPIE SPEECH PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LHSPF)") else Response.Write("(NASDAQ: LHSPF)") end if %>, expected to lose $0.03 per share, jumped $2 1/4 to $23 1/4 on earnings of $0.02 for its second quarter, compared with a loss of $0.54 in the year-ago quarter. DELL COMPUTER CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DELL)") else Response.Write("(NASDAQ: DELL)") end if %> reported $1.05 per share (including a ten-cent charge) versus expectations of only $0.86, sending shares up $4 3/16 to $60 13/16. Information technology product and service distributor MICROAGE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MICA)") else Response.Write("(NASDAQ: MICA)") end if %> surged $1 1/8 to $15 3/8 after beating estimates for its third quarter by three cents, reporting $0.24 per share compared with $0.05 in the year-ago quarter. Hardware, plumbing and heating supply distributor HUGHES SUPPLY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HUG)") else Response.Write("(NYSE: HUG)") end if %> beat estimates by nine cents, reporting $0.90 per share for its second quarter and advancing $2 1/2 to $37 7/8.
QUICK TAKES: News that Munich Reinsurance Co. would buy reinsurance firm AMERICAN RE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARN)") else Response.Write("(NYSE: ARN)") end if %> for $3.3 in cash sent shares of the acquiree up $4 1/2 to $62 7/8. Kohlberg Kravis Roberts (KKR) bought American Re for $1.4 billion in 1992... RALCORP HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RAH)") else Response.Write("(NYSE: RAH)") end if %> shareholders chanted "Rah! Rah!" on news that the company will be selling its ready-to-eat Chex cereal and snack division to GENERAL MILLS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GIS)") else Response.Write("(NYSE: GIS)") end if %> for $570 million. Ralcorp shares advanced $2 1/2 to $22 1/2... Shares of telecom concern WESTELL TECHNOLOGIES were lifted $1 3/8 to $34 3/8 when PACIFIC TELESIS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PAC)") else Response.Write("(NYSE: PAC)") end if %> announced yesterday that it would be using Westell as its equipment vendor in phase one of just-launched cable modem and high-speed digital subscriber line field tests.
MORE QUICK TAKES: SILVER KING COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SKTV)") else Response.Write("(NASDAQ: SKTV)") end if %> beamed shares up $2 3/16 to $28 after announcing that they were adjusting the merger arrangements with SAVOY PICTURES ENTERTAINMENT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SPEI)") else Response.Write("(NASDAQ: SPEI)") end if %>, essentially sweetening the deal for Silver King shareholders... TIFFANY'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TIF)") else Response.Write("(NYSE: TIF)") end if %>, announcing plans to open new stores in Denver and Las Vegas, rose $2 to $36 1/2. REFLECTONE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RFTN)") else Response.Write("(NASDAQ: RFTN)") end if %> jumped $2 1/4 to $22 1/4 on news of a multimillion dollar contract to supply flight simulators to Turkish Airlines... PAYCO AMERICAN CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PAYC)") else Response.Write("(NASDAQ: PAYC)") end if %> shares surged $1 13/16 to $13 9/16 as Payco will merge with OSI Holdings Co. in a $150 million deal... Telephone and communications concern TELEPORT COMMUNICATIONS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TCGI)") else Response.Write("(NASDAQ: TCGI)") end if %> surged $1 1/4 to $19 following Merrill Lynch's naming the company as a "Focus One" stock and reiterating its near- and long-term "buy" ratings.
CORRECTION: A Fool goofed. Yesterday's Evening News transposed the current and year-old fourth quarter earnings of MAXIM INTEGRATED PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MXIM)") else Response.Write("(NASDAQ: MXIM)") end if %>. We should have reported that Maxim earned $0.49 per share this year and $0.17 last year.
Fibre Channel pioneer ANCOR COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ANCR)") else Response.Write("(NASDAQ: ANCR)") end if %> shares tumbled $2 7/8 to $13 1/8 after the company reported a second-quarter loss of $0.10 per share on 88% higher revenues, versus a loss of $.012 in the year-ago quarter. Exacerbating its problems might be the fact that the lone analyst following the company had only expected a loss of $0.06. Ancor's gross profit sat at 45.5% of sales for the second quarter, up from 40.4% in the year-ago quarter and 37.1% in the first half of 1995. Stephen O'Hara, Ancor's President and Chief Executive Officer (CEO), sees revenue growth in the second quarter and year-to-date periods as a sign of growing market acceptance of Fibre Channel as a high performance data communications technology.
Digital audio equipment company EUPHONIX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: EUPH)") else Response.Write("(NASDAQ: EUPH)") end if %> plunged $2 5/8 to $5 1/4, losing a third of its value on no news that Fool HQ could initially find. Euphonix's CEO returned our call to the company, explaining that a 10Q report had just been filed with the Securities and Exchange Commission (SEC), with the company warning that it wouldn't meet previous expectations for the second half. The problems were blamed on some key customers' financing problems, which are preventing them from making planned Euphonix purchases. 10-Qs are unaudited quarterly financial reports which publicly-traded companies must file with the SEC.
The New York Times had investors thinking twice about RETIREMENT CARE ASSOCIATES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RCA)") else Response.Write("(NYSE: RCA)") end if %> today, pointing out that although the company has had an impressive run of late, people should think twice about its operations and management. It seems that much of the company's business is tied to the top two officers, who have had undisclosed "run-ins with Federal securities regulators." Retirement Care, which runs nursing homes, retirement communities and assisted-living centers, saw its shares deflate $1 1/2 to $10 3/8 as a result.
QUICK CUTS: SYQUEST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SYQT)") else Response.Write("(NASDAQ: SYQT)") end if %> tumbled $1 to $5 9/16 after reporting a net loss of $3.61 per share, compared with a gain of $0.15 in the year-ago quarter... OSHMAN'S SPORTING GOODS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: OSH)") else Response.Write("(AMEX: OSH)") end if %> was dunked for $1 1/16 to $6 3/8 after warning that it expects to lose $1.35 per share in its second quarter, compared with a gain of $0.24 in the year-ago quarter... Credit card reporting and collection service PMT SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PMTS)") else Response.Write("(NASDAQ: PMTS)") end if %> dropped $3 3/8 to $19 7/8, downgraded by Montgomery Securities from "buy" to "hold"... EDISTO RESOURCES <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: EDT)") else Response.Write("(AMEX: EDT)") end if %> which plans to expense nearly $1 million related to two unsuccessful offshore wells, slipped $1 1/2 to $9 1/2 today... Telecom concern PREMIERE TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PTEK)") else Response.Write("(NASDAQ: PTEK)") end if %> beat estimates by 2 cents, but fell $4 1/4 to $22 3/4 anyway.
An Investment Perspective by
Randy Befumo
(MF Templar)
FOOL ON THE
HILL
Connectivity Confusion
(Note: This feature is optimally read with AOL 3.0 for windows. If you're a Windows user who hasn't upgraded yet, go to keyword: Upgrade. If you're a Mac user, rest assured that there's an upgrade around the corner for you, which will allow you to take advantage of exciting hyperlink technology, among other things. If you are reading this from the web, In the meantime, we apologize if you see too many distracting character strings in the piece below.)
Fools the world around are mulling about in confusion, trying to determine which networking stock the Motley Fool seems to love the most. Is it 3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: COMS)") else Response.Write("(NASDAQ: COMS)") end if %>? The Fool Portfolio recently bought some shares of this one-stop computer networking shop. But how about big and bad CISCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CSCO)") else Response.Write("(NASDAQ: CSCO)") end if %>, whose shares have been purchased in the past few weeks by none other than Greg Markus (MF Boring) of the Motley Fool's Boring Portfolio? Then there is the Industry Decathlon, a weekly product sent by fax or e-mail, penned by our own David Forrest (MF Bogey), who ran the numbers earlier this summer and came up with CABLETRON SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CS)") else Response.Write("(NYSE: CS)") end if %> as the most attractive networking stock. And ardent Fools know that Leeza Rodriguez (MF MOM) and Paul Motter (MF Networx) from the Motley Fool's AOL Networking area have not even been consulted. What gives here?
First and foremost, readers should understand that any time one of our writers talk about a company and its stock, from Founding Fools David Gardner (MotleyFool) and Thomas Gardner (TomGardner) to our cadre of Stock Board Sweepers, these are purely individual opinions. The Motley Fool as a company does not recommend that people buy, sell, short, hedge or otherwise make any trading decision of any kind. Passionately concerned about investing, the Fool's goal is education, information and community, not initiating coverage of SO & SO INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SOSO)") else Response.Write("(NASDAQ: SOSO)") end if %> with a short-term long-term buy rating and urging anyone who comes in the forum to BUY! BUY! BUY! Although media perception is sometimes different, the real goal here is one of fun, education and communication, not creating Tulipmania. The real-money managed portfolios are just that, real-money managed portfolios that illustrate what happens when you follow various approaches to investing. They in no way, shape or form are models that we advise people to blindly follow or cherry-pick the underperformers from.
So all that aside, why did Tom, Greg and David come up with different networkers to buy at various points in time? Does this point to some lack of consistency among the investment approaches being used in the Motley Fool? Bingo. Although the Fool eschews certain subsets of analysis because of questionable philosophical merit, there is still quite a bit of diversity within Foolish thinking. Balance sheets, earnings, cash-flows, company visions and management excellence all play a different role in each Foolish application, even when there is wide agreement on the basic principles.
The Fool Portfolio's Transaction Report for 3COM, penned by Tom Gardner, clearly outlines what was on his mind when he decided to add the shares to the Fool Portfolio. Gardner focused on the company's fundamental strategy of "providing products and services both to giant conglomerates and to the small businesses and individual users linking to local-area networks and the Internet" and illustrated the company's brand-building efforts with the 3Com Ballpark. Gardner pronounced the balance sheet "outstanding," finding "$500 million in cash versus $110 million in long-term debt, and $1.2 billion in current assets versus $414 million in current liabilities." He looked at the long-term returns an investor could have earned from the stock over the past seven years (3Com: 7-Year Chart), a factor that is very important in his investment decisions. He then looked at the long-term growth rate and next year's estimates and pronounced the stock cheap at $46 and change.
Greg Markus's line of reasoning in his Cisco Transaction Report is similar to Tom's -- in fact, Greg mentions Tom in his first sentence, saying, "Tom's stock-selection approach is deliberately intuitive -- obvious, even. It emphasizes consistent earnings growth, positive cash flow, healthy profit margins, minimal debt, and the like." Markus found that Cisco was not nearly as cheap as 3COM if you looked at the forward numbers, writing that Cisco "is trading at 31-times projected EPS for calendar 1996... projected to grow EPS at approximately 35% annually over the next five years." However, a major theme of the Boring Portfolio is buying stocks close to the long-term growth rate and enjoying the ride as the stock appreciates purely because earnings continue to grow. If you buy Oxford at 40 times earnings and it grows 40%, keeping the same multiple, you are up 40%, right? Obviously, the key assumption is that the multiple will stay constant. You can read more about Markus's approach in The Boring Portfolio Area.
The last thing that is confusing many Foolish investors in this networking enigma is the fact that David Forrest (MF Bogey) found Cabletron to be the cheapest of them all when he looked at networking stocks a few week ago in the Industry Decathlon. Forrest, who recently outlined his investment approach in his Industry Decathlon Primer, relies on a series of valuations and financial ratios to find the cheapest stock in a group. Obviously, this emphasis on what is numerically cheap would diverge from the emphasis on quality articulated by both Gardner and Boring. In reviewing the write-ups about the purchase decisions, it would seem that the qualitative aspect was paramount in Markus's decision, important in Gardner's choice and not necessarily vital to Forrest's selection. In the end, an investor confused by the respective choices who gets beyond the fact that they were very time-sensitive as well will take it as an illustration of how different investment styles weigh qualitative and quantitative aspects.
Randy Befumo (MF Templar),
a Fool
Fool On the Hill
Selena Maranjian (MF Selena),
a Fool
Heroes & Goats & Editing
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