HEROES

INTUIT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INTU)") else Response.Write("(NASDAQ: INTU)") end if %> rang up a $7 gain to close at $36 1/2 today as rumors wafted through the market that AMERICAN EXPRESS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXP)") else Response.Write("(NYSE: AXP)") end if %> is looking to acquire the software company. Following the company's sale of its Intuit Services Corporation, the company has become a pure-play in personal finance software geared towards consumers -- a much more compelling set of assets for another software firm like MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MSFT)") else Response.Write("(NASDAQ: MSFT)") end if %>. However, the decision to dump the network may have decreased its value to other potential acquirers such as CHARLES SCHWAB <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SCH)") else Response.Write("(NYSE: SCH)") end if %>, T. ROWE PRICE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TROW)") else Response.Write("(NASDAQ: TROW)") end if %>, or even something like KEYCORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KEY)") else Response.Write("(NYSE: KEY)") end if %> or NATIONSBANK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NB)") else Response.Write("(NYSE: NB)") end if %>. With an enterprise value around $1.45 billion, you could argue that the price might make a compelling value for a financial services company with a worldwide consumer base.

OBJECT DESIGN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ODIS)") else Response.Write("(NASDAQ: ODIS)") end if %> jumped $3 9/32 to $15 7/8 today after news broke that MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MSFT)") else Response.Write("(NASDAQ: MSFT)") end if %> would license the firm's ObjectStore PSE for Java. This is a blow to competitor VERSANT OBJECT TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VSNT)") else Response.Write("(NASDAQ: VSNT)") end if %>, which also makes object-oriented database software for Internet-related applications. Investors excited over the Microsoft combination might want to exercise some caution, however. LERNOUT & HAUSPIE SPEECH PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LHSPF)") else Response.Write("(NASDAQ: LHSPF)") end if %> surged as high as $50 in April on prospects for a similar deal [for their text-to-speech software], only to fall precipitously in the following weeks as the true financial value of the agreement came to light.

PAUL REVERE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PRL)") else Response.Write("(NYSE: PRL)") end if %> soared $3 1/4 to $29 3/4 today after the firm beat consensus expectations for the quarter. Paul Revere reported $0.41 in operating EPS versus $0.37 EPS estimates. The quarter's financials are somewhat complicated due to TEXTRON'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXT)") else Response.Write("(NYSE: TXT)") end if %> decision to sell its 83% stake in Paul Revere to PROVIDENT INSURANCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PVT)") else Response.Write("(NYSE: PVT)") end if %>. As part of the deal, Textron will contribute some working capital to Paul Revere, a move that not only helped out Paul Revenue but had Provident up $1 7/8 to $39 5/8 as well.

SIERRA HEALTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SIE)") else Response.Write("(NYSE: SIE)") end if %> moved up $3 7/8 to $27 1/8 as healthcare stocks in general had a very good day, even as investors try to gain a better grasp of the company's proposed merger with PHYSICIAN CORP. OF AMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PCAM)") else Response.Write("(NASDAQ: PCAM)") end if %>. The smaller (but more profitable) Sierra offered 0.45 shares of its stock for each Physician share. Sierra's CEO said the combined company would save over $7 million and would add to earnings by Q4 1997. Since Physician Corp. is the largest Medicaid HMO in Florida and is pretty much a financial basket case, Duff & Phelps placed Sierra on credit watch until the ratings agency makes a judgment as to the claims-paying ability of the combined entity. Looking at analysts' reactions, nobody really likes the merger, except for Sierra's CEO, who told Dow Jones yesterday ''I see tremendous upside potential in this deal."

Other healthcare companies moving today include OXFORD HEALTH PLANS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OXHP)") else Response.Write("(NASDAQ: OXHP)") end if %>, which reported a 65% increase in third quarter earnings per share and rose $4 5/8 to $51 1/2. HUMANA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HUM)") else Response.Write("(NYSE: HUM)") end if %> gained $1 3/4 to $19 1/2 after an expected decrease in earnings performance on a 64% increase in quarterly revenues. HMO PACIFICARE HEALTH SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHSY.A)") else Response.Write("(NASDAQ: PHSY.A)") end if %> jumped $7 1/2 to $75 3/4 as investors learned that the company has interim financing in place to go ahead with its acqisition of FHP INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: FHPC)") else Response.Write("(NASDAQ: FHPC)") end if %>. COLUMBIA/HCA HEALTHCARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COL)") else Response.Write("(NYSE: COL)") end if %> moved up $2 1/4 to $38 7/8 after the nation's largest hospital company reported an 11% year-over-year increase in same-facility revenues. UNITED HEALTHCARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UNH)") else Response.Write("(NYSE: UNH)") end if %> smoothed out a $3 gain to $40 1/8 on a "buy" recommendation and also on news that it has completed the first phase of its midwest integration.

Healthcare didn't dominate the market's party today: NATIONAL SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSM)") else Response.Write("(NYSE: NSM)") end if %> jumped $1 3/4 to $21 on the strength of a Salomon Brothers upgrade to "strong buy". Dean Witter's analyst was pretty busy upgrading companies like TRIQUINT SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TQNT)") else Response.Write("(NASDAQ: TQNT)") end if %>, up $1 7/8 to $19 1/4; VITESSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VTSS)") else Response.Write("(NASDAQ: VTSS)") end if %>, up $1 7/8 to $36 1/4; LINEAR TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LLTC)") else Response.Write("(NASDAQ: LLTC)") end if %>, up $3 to $37 1/4; and MAXIM INTEGRATED PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MXIM)") else Response.Write("(NASDAQ: MXIM)") end if %>, up $2 7/8 to $37 3/4.

QUICK TAKES: PRIMARK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PMK)") else Response.Write("(NYSE: PMK)") end if %> rose $2 1/2 to $24 1/2 after reporting a 50% increase in continuing operations earlier this week, slightly assuaging investors' fears over near-term dilution due to new business ventures... Sunglasses-maker OAKLEY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OO)") else Response.Write("(NYSE: OO)") end if %> rebounded $1 5/8 to $15 1/2 after the California edition of the Wall Street Journal ran a piece on the company... Hospitality products supplier GUEST SUPPLY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GSY)") else Response.Write("(NYSE: GSY)") end if %> was up $1 1/4 to $15 3/4 on anticipation of earnings, which came out after the bell and were down for the quarter despite record revenues... Medical products supplier CYTYC CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CYTC)") else Response.Write("(NASDAQ: CYTC)") end if %> rose $2 1/8 to $14 1/8 on a positive ruling from the FDA regarding a marketing claim made by the company.

GOATS

Telephone network equipment supplier TELTREND <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TLTN)") else Response.Write("(NASDAQ: TLTN)") end if %> was ground down for another $6 1/4 loss to close at $26 1/4 today after hitting a high of around $56 this summer. MF Candide, Peter Bernhardt, reported in this morning with the following: "Yesterday is the first time since it went public in the summer of '95 that it hasn't beat EPS estimates soundly... [This disappointment stems from] lower-than-expected sales due to cutbacks in ordering at two key customers - BELLSOUTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BLS)") else Response.Write("(NYSE: BLS)") end if %> and US WEST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: USW)") else Response.Write("(NYSE: USW)") end if %>. Everyone following this sector knew BellSouth had cut back orders as they redeployed inventory from the Olympics, but news that US West is working off inventory through the end of the year is an unpleasant surprise."

PLANAR SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PLNR)") else Response.Write("(NASDAQ: PLNR)") end if %> dimmed $1 1/2 to finish at $10 1/4 after reporting disappointing earnings, lower gross margins, and a slowdown in revenues. Though the company operates in -- and is a leader in -- the ultra-hot flat panel display market, its enterprise value-to-earnings ratio is about 9, and a good deal of that is comprised of pure liquidity. Not only is Planar is turning a profit, they're doing it while investigating technologies like organic LEDs, and participating in collaborative projects, such as the one in which they're working on automotive displays with UNITED TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UTX)") else Response.Write("(NYSE: UTX)") end if %>. The culprit in this quarter's slowdown was slower government ordering, according to the Oregon company.

QUICK CUTS: Workers' compensation insurance company MEADOWBROOK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MIG)") else Response.Write("(NYSE: MIG)") end if %> plunged $10 3/4 to $15 5/8 after missing the consensus earnings estimate by a mile due to careless risk management in its surety unit... EMCARE HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: EMCR)") else Response.Write("(NASDAQ: EMCR)") end if %> fell $4 1/4 to $18 after the healthcare services outsourcer reported a 23% increase in earnings per share... Internet software developer FOREFRONT GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: FFGI)") else Response.Write("(NASDAQ: FFGI)") end if %> moved down $1 1/4 to $5 5/8 after the company reported a loss of $0.12 per share in its third quarter... STM WIRELESS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: STMI)") else Response.Write("(NASDAQ: STMI)") end if %> slipped $1 3/8 to $7 3/8 after spending a bunch of money with an equipment supplier yesterday... CONDUCTUS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CDTS)") else Response.Write("(NASDAQ: CDTS)") end if %> lost $1 to $8 1/4 after the superconductor products company lost money last quarter. Big surprise that must have been.

FOOL ON THE HILL
An Investment Opinion by MF Templar

MANUFACTURED WOES?

Manufactured home stocks fell back in unison today as investor anxiety about over-capacity in the industry continued to mount. Manufactured homes account for roughly one third of all homes sold in the United States. Demographic trends toward an aging population and childless couples combined with the outright affordability of manufactured homes have caused the manufactured homes industry to grow like wildfire for the last decade. However, Wall Street is beginning to see potential problems with the industry as more companies enter the crowded competitive field. Too many companies adding to their manufacturing operations could spell over-capacity, squeezing out the smaller players.

It is because of this dire prophecy that a number of the stocks are down today: CAVALIER HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAV)") else Response.Write("(NYSE: CAV)") end if %> tumbled $1 7/8 to $15; CHAMPION ENTERPRISES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHB)") else Response.Write("(NYSE: CHB)") end if %> slipped $1 7/8 to $20, AMERICAN HOMESTAR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HSTR)") else Response.Write("(NASDAQ: HSTR)") end if %> dropped $2 1/4 to $16 1/4; OAKWOOD HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OH)") else Response.Write("(NYSE: OH)") end if %> gave back $1 1/4 to $23 1/2; PALM HARBOR HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHHM)") else Response.Write("(NASDAQ: PHHM)") end if %> was doused for $1 1/8 to $25 3/4; and SOUTHERN ENERGY HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SEHI)") else Response.Write("(NASDAQ: SEHI)") end if %> left behind $1 5/8 to $12 3/4. Almost all of these companies are small- to medium-sized players in the manufactured home industry that concentrate on manufacturing the homes instead of providing integrated home building and financing services. Currently names as diverse as NOBILITY HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOBH)") else Response.Write("(NYSE: NOBH)") end if %>, BELMONT HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BHIX)") else Response.Write("(NASDAQ: BHIX)") end if %>, FLEETWOOD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLE)") else Response.Write("(NYSE: FLE)") end if %> and SCHULT HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SHC)") else Response.Write("(NYSE: SHC)") end if %> are all adding capacity to their factories, heightening the fears of too many competitors.

This week's freefall at Belmont Homes represents for some a fulfillment of this prophecy. Belmont Homes reported third quarter earnings two cents shy of consensus estimates and stated that fourth quarter numbers would be flat or below last year's $0.33 EPS -- a revelation that has sent the shares down from $23 7/8 on Friday to $10 7/8 today, a decline of more than 50%. The problem seems to be of a short-term nature -- Belmont expects higher labor costs in the fourth quarter from the opening of two new plants in Conway, Arkansas. The costs are concentrated on training all of the new workers for the plant, not with an inherently higher operating cost structure. However, the market reacted to the Belmont announcement as if it were getting squeezed out of the industry entirely. Belmont is a small player in the industry, selling mobile homes priced from $18,000 to $45,000 in 20 states from West Virginia to Texas, so they could be one of the first to get pushed from the ring if competition gets fierce.

Some companies have responded to the potential fall-out of the smaller players by moving to become larger. Champion Enterprises recently completed a merger with fellow manufactured home builder Redman Industries, issuing 17.3 million shares. Champion stated at the time the merger was completed that it remains committed to generating 20% annual revenue growth over the next three years. Goldman Sachs added Champion Enterprises to its recommended list yesterday, a move that has questionable significance. The last time Goldman moved Champion to the list on September 24th, the stock rallied from the $19 range all the way up to $23 before pulling back in the last few days. Another example of aquisition as means to improve market position is American Homestar's recent purchase of a small competitor, Guerdon Homes.

The actions of larger firms like industry-giant Fleetwood Enterprises does not support growing worries about potential over-capacity. Fleetwood reported last week that sales for its second quarter were only up six percent, including its sizable recreational vehicle (RV) business. Fleetwood's sales were driven by strong RV sales, with revenues split about 50/50 between manufactured homes and RVs in the quarter. In spite of relative weakness in manufactured homes, it is adding 15% to its manufacturing capacity to help them keep pace with demand. This leads one to the conclusion that the flat sales growth in the manufactured home segment could be the result of a capacity constraint, meaning they just cannot make any more of the darn things.

The bad scenario does not necessarily have to happen the way everyone is fearing, though. All of today's selling might be a little overdone. Manufactured homes component makers like DREW INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DW)") else Response.Write("(NYSE: DW)") end if %> have been adding capacity as well, signaling, much like Fleetwood's addition, that there just may be a lot of demand. About half of the market for modular homes is comprised of so-called childless "empty-nesters" and retirees, a demographic group has been growing by leaps and bounds and is expected to be 35% to 40% of the nation's total population by the end of the decade. Manufactured homes just make more sense for these people as the homes become more and more sophisticated, given that they are cheaper. None of the manufactured homes companies have publicly stated that they see a slowdown yet, but an investor should probably do some due diligence work on this, checking the rate of growth of these players over the past few quarters, to confirm whether or not management is just blind to any decrease. If this is not the case, the fall over the past few days represents some serious buying opportunities in the group.

FOOLISH FEATURES

Well, election day is over, and California's Proposition 211 is dead. Today's Lunchtime News takes one last look at the measure and why it's failure to pass is good for investors.

On Monday, we sent intrepid Foolish reporter Dale Wettlaufer (MF Raleigh) to the Apple Computer 1997 Analysts Meeting, and we've got his take on it for your perusal. Read about their product strategies, financial model, alliances and more.

Earnings Central has the latest conference call coverage on such fast-growers as Cisco, Atlas Air, and Rainforest Cafe, not to mention a bunch of interesting stocks that you may not have heard about yet.

CONFERENCE CALLS

None

ANOTHER FOOLISH THING

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Randy Befumo (MF Templar), a Fool
Fool On the Hill

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Heroes & Goats

Selena Maranjian (MF Selena), on more Fool
Editing

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