Today's Lunchtime News took a look at Micron Technology and the wonderful world of commodity semiconductors. Our Special Section on retailer earnings continues to grow, with conference call summaries being added soon for The Limited, Dayton-Hudson, Intimate Brands, PETsMART, and Ross Stores.
MF Merlin's Economic News today discusses the Labor Department, Bureau of Labor Statistics report on U.S. import and export prices in July. 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 Jenny Craig. Enjoy!
CONFERENCE CALLS
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Today's Calls:
ROSS STORES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ROST)") else Response.Write("(NASDAQ: ROST)") end if %>
after 2:00 p.m. EDT
1-402-222-9906
PETSMART <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PETM)") else Response.Write("(NASDAQ: PETM)") end if %>
after 12:00 noon EDT
1-800 633-8284 (code 1924196) -- replay
Yesterday's Calls:
ANNTAYLOR STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANN)") else Response.Write("(NYSE: ANN)") end if %>
1-402-351-9977 -- replay
INTIMATE BRANDS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBI)") else Response.Write("(NYSE: IBI)") end if %>
1-800-863-8517
THE LIMITED <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LTD)") else Response.Write("(NYSE: LTD)") end if %>
1-800-805-3502
Tomorrow's Calls:
NOVELL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NOVL)") else Response.Write("(NASDAQ: NOVL)") end if %>
after 7:30 p.m. EDT
(402) 222-9908
SUNGLASS HUT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RAYS)") else Response.Write("(NASDAQ: RAYS)") end if %>
after 11:00 a.m. EDT
1-800-475-6701 (access code: 313090)
HEROES
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Women's apparel retailer WET SEAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WTSLA)") else Response.Write("(NASDAQ: WTSLA)") end if %> saw its Class A shares surge $4 5/8 to $34 3/8 today, after the company posted second quarter earnings of $0.25 per share, nearly double Wall Street estimates of $0.13, and far ahead of last year's loss of $0.06 per share. Sales were up 109% over the year-ago period, with same-store sales up 16.5%. Kathy Bronstein, Vice Chair and Chief Executive Officer (CEO), noted that, "Our earnings have substantially increased compared to prior year second quarter as a direct result of the increase in comparative store sales, along with significantly improved leverage in our operating costs. We are looking forward to a successful back to school selling season."
NEWBRIDGE NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NN)") else Response.Write("(NYSE: NN)") end if %> shares popped up $9 3/8 to $59 3/8 today, on the heels of an impressive earnings report. The Canada-based digital telecommunications networker, expected to earn $0.49 per share in its first quarter, reported $0.51 EPS. According to the company, its wide-area-network (WAN) products were most responsible for the quarter's strong performance, with Newbridge ATM WANs holding roughly 50% market share. Newbridge also announced a joint marketing venture with BELLSOUTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BLS)") else Response.Write("(NYSE: BLS)") end if %> and plans to buy back up to 4 million shares -- roughly 5%. Cowen & Co. raised its Newbridge earnings estimates for 1996 and 1997, while J.P. Morgan upped the firm from "market performer" to "buy."
Analyst ink sent a number of companies zooming skyward today. ARNOLD INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AIND)") else Response.Write("(NASDAQ: AIND)") end if %> leapt $1 5/8 to $15 5/8 today, on an initial "strong buy" rating from Morgan Stanley, which set a 12-month target price of $20 for the trucking concern. GENESIS HEALTH VENTURES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GHV)") else Response.Write("(NASDAQ: GHV)") end if %> popped up $2 1/8 to $24 1/2 as the nursing and personal-care facilities stock was named Merrill Lynch's "focus one" stock of the week. Genesis recently acquired GERIATRIC & MEDICAL COS. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GEMC)") else Response.Write("(NASDAQ: GEMC)") end if %>. Industrial concern DOVER CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DOV)") else Response.Write("(NYSE: DOV)") end if %> surged $3 1/8 to $46 1/2 once it was added to Goldman's "priority list" from the "recommended list." Dover manufactures everything from elevators to fluid-delivery systems to parking meters. WATSON PHARMACEUTICALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WATS)") else Response.Write("(NASDAQ: WATS)") end if %> advanced $3 1/2 to $29 1/2 on a Gruntal uppage from "neutral" to "long-term outperform," while HEALTH MANAGEMENT SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HMSY)") else Response.Write("(NASDAQ: HMSY)") end if %> was boosted $3 1/2 to $26 by a Robinson Humphrey "long-term buy" reiteration.
QUICK TAKES: Those mysterious shares of food company-turned-networker DIANA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DNA)") else Response.Write("(NYSE: DNA)") end if %> are at it again, rocketing ahead $8 5/8 to $30 1/8 with the company unwilling to comment or explain... WARNER LAMBERT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WLA)") else Response.Write("(NYSE: WLA)") end if %> advanced $2 7/8 to $62 3/4 on revived rumors about a possible buy-out, with Cowen & Co. hosting a lunch for the pharmaceutical concern... Cowen also hosted a lunch for CEPHALON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CEPH)") else Response.Write("(NASDAQ: CEPH)") end if %>, whose shares soared $3 1/8 to $17 7/8... FIDELITY FINANCIAL BANKSHARES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: FFRV)") else Response.Write("(NASDAQ: FFRV)") end if %> leapt $2 5/8 to $15 7/8 on pending news of a buyout... SECURITY DYNAMICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SDTI)") else Response.Write("(NASDAQ: SDTI)") end if %> and MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MSFT)") else Response.Write("(NASDAQ: MSFT)") end if %> agreed this morning to cross-license a number of cryptography products, sending shares of Security Dynamics up $4 1/4 to $60... Retailer PETSMART <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PETM)") else Response.Write("(NASDAQ: PETM)") end if %>, specializing in products for Fluffy and Rover, unleashed a $2 5/8 to $27 1/2 gain today, following posting earnings of $0.03 per share against expectations of $0.09... Despite today's cut from "attractive" to "neutral" from Bear Stearns, investors continued to pour into IMNET <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IMNT)") else Response.Write("(NASDAQ: IMNT)") end if %>, boosting it $2 1/4 to $18 following last week's blow-out earnings.
GOATS
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BAUSCH & LOMB <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BOL)") else Response.Write("(NYSE: BOL)") end if %> shares slid $2 7/8 to $33 1/8 today when competitor Advanced Bionics Corp. received Food and Drug Administration (FDA) approval to market its Clarion Cochlear implant, designed to restore hearing to the deaf. While many might only associate contact lenses and eye-care products with the Bausch & Lomb brand, the company also markets Miracle Ear hearing aids. The company recently settled for $34 million a class action suit alleging that identical contact lenses were sold under different names for different prices.
Shares of COMPUSERVE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CSRV)") else Response.Write("(NASDAQ: CSRV)") end if %> were disconnected to the tune of a $1 5/8 to $11 7/8 drop this morning as the online service reported a $0.19 EPS loss, wider than expected. The company forecast a second quarter loss and will cut 4% of its workforce. Revenues were up nearly 12%, but subscription growth dropped. The company, which came public in April at $30 per share, expects its second half to be considerably stronger. The service has upgraded the speed and performance of its service, adding an integrated web browser and forging partnerships with NETSCAPE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NSCP)") else Response.Write("(NASDAQ: NSCP)") end if %>, IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>, and ORACLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ORCL)") else Response.Write("(NASDAQ: ORCL)") end if %>. Come Fall, the company will be launching CompuServe 3.0 and WOW! for teens.
QUICK CUTS: ORACLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ORCL)") else Response.Write("(NASDAQ: ORCL)") end if %> shares were pushed down $1 1/8 to $37 7/8 when Goldman Sachs analyst Rick Sherlund moved the data processing software concern from Goldman's "priority list" to its "recommended list." Sherlund cited the large gains in the shares since April... TSX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TSXX)") else Response.Write("(NASDAQ: TSXX)") end if %> slumped $2 3/16 to $11 13/16 today, after the company missed first quarter estimates of $0.25 EPS by three cents. The firm manufactures cable television equipment and video generation machines... PROJECT SOFTWARE AND DEVELOPMENT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PSDI)") else Response.Write("(NASDAQ: PSDI)") end if %> retreated $1 1/2 to $30 1/'2 following an initial Josephthal Lyon "buy" rating.
An Investment Opinion by MF Templar
FOOL ON THE HILL: Jenny Craig Slims Down
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Shares of JENNY CRAIG <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JC)") else Response.Write("(NYSE: JC)") end if %> were put into a rapid weight-loss program today, getting clocked for $5 5/8 to $11 1/2 after reporting fourth quarter results for fiscal 1996. The weight management services concern posted earnings for the period of $0.36 EPS, up 64% over the previous quarter on a 6.5% increase in revenues. This performance blew away past consensus estimates of $0.32 EPS but it was not enough to save the company from taking a serious beating.
What is everyone worried about? Apparently a new weight loss drug has depressed demand for Jenny Craig's services during the normally weak summer period. Heightened public awareness of new weight loss drugs like that of INTERNEURON PHARMACEUTICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IPIC)") else Response.Write("(NASDAQ: IPIC)") end if %> "presents a new challenge for the company over the coming fiscal year" was the message that analysts heard in the conference call last night. This is Jenny's explanation for the sharp drop in business in the July-to-early-August period when measured against the same time a year ago. The numbers look pretty grim -- leads are down 31%, program sales dropped a sickening 34%, active clients fell 12%, and weekly deposits slackened by 14%.
Jenny steadfastly maintains that this is only a temporary problem as these new drugs need to be prescribed by physicians and used in conjunction with a reduced-calorie diet, exercise program and behavior education -- things which Jenny Craig and HEINZ <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HNZ)") else Response.Write("(NYSE: HNZ)") end if %>-owned Weight Watchers excel at. Jenny Craig maintains that leads have exploded by 30% in the test markets where it is combining its weight loss program with the use of appetite-suppressing Redux. Further confounding the picture is the $6.1 million purchase of 36 Jenny Craig centers in New York and Hawaii from a franchisee. This increases the number of centers owned by Jenny Craig to 624, up 6.1%.
During the quarter, Jenny Craig repurchased 4.4 million shares of its common stock, including 3.5 million that it snapped up during a Dutch auction in March. The company spent $44 million in this action and still has a $50.6 million war chest left. The company was purchasing shares back then in the $10-per-share range, implying a similar buyback would be possible unless the company's estimation of the fundamentals has changed. The company repurchased 0.9 million shares of stock in 1995. At the close, 21% of the company's market capitalization was backed up by cash. The company now trades at 0.47 times sales and 12.1 times trailing earnings. CS First Boston analyst Rebecca Yarchover slashed the stock from "buy" to "hold" this morning, declining to comment on her rationale.
Jenny Craig has had a pretty checkered history. Its shares opened 1995 in the $5 range and climbed to the recently-attained $18 level after it turned around company-owned operations and made them profitable again. It is the systematic share repurchases combined with better operating results which have improved earnings -- overall revenues have only recently risen back to 1994's $380 million. The company has not even come close to 1993's profits of $1.35 EPS on quite a few more shares, with actual operating earnings for fiscal 1996 still almost 40% below 1993. The company has done a tremendous job with cash flow, however, which it has used to fund systematic share repurchases.
Before the Redux news hit, estimates for earnings next year stood at $1.30 EPS, or about nine times the current quote. The company's intermittent operating performance makes it really difficult to handicap the future with any confidence, although the tests that show leads up 30% when done in conjunction with Redux suggest that the weight-loss drug could actually prove a tonic to the fat-reducing industry. Certainly based on its operating cash-flow of more than a buck and fairly low multiples, it is something to consider.
ANOTHER FOOLISH THING: The Dow Dividend Spreadsheet
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That busy MF Templar has been at it again. This time he's developed a handy spreadsheet covering the thirty Dow component stocks from 1961 through 1995. That's right -- 35 years of data, and best of all, it's in an Excel worksheet. That means that you can play with it on your computer and back-test the Dow Dividend Approach, as well as any other Dow approaches you can think of. Construct what-if scenarios and test your hypotheses. What if you only bought the 17th-highest-priced stock each year for 35 years? What if you bought all but the lowest-yielding stocks? What if...
The spreadsheet includes individual returns and dividends for each Dow stock as well as returns for all eight Dow Dividend Strategies -- year by year. The spreadsheet contains one worksheet for each year, including all the stocks on the Dow Jones Industrial Average and their returns for each year. The spreadsheet is available in FoolMart for AOL Fools. Those not on AOL can contact MF Attila at [email protected]. NOTE: This is an extremely large spreadsheet which will take approximately 14 minutes to download using a 28.8 modem and 28 minutes for a 14.4 modem. Though this may seem like a long time, it is minimal when compared to the 200+ hours it would take to compile this information yourself. The spreadsheet will be delivered to your e-mailbox electronically in your preferred format (Excel 4.0, 5.0, 6.0, or 7.0 only). AOL 3.0 for Windows users can click here to go directly to FoolMart.
Transmitted: 8/21/96
Randy Befumo (MF Templar),
a Fool
Fool On the Hill
Selena Maranjian (MF Selena),
a Fool
Heroes & Goats & Editing
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