HEROES

ACC CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ACCC)") else Response.Write("(NASDAQ: ACCC)") end if %> jumped $3 5/16 to $34 5/16 after the COMPETITIVE LOCAL EXCHANGE CARRIER (CLEC) announced that it will upgrade its switching capacity in New York State and Massachusetts. The Rochester company says it will add Class 5 ESS switches in New York City and Boston and upgrade their switching centers elsewhere. The top-of-the-line LUCENT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> Class 5 can support up to 100,000 lines apiece and are overtaxed in many areas due to internet dial-up sessions, which is the reason why companies such as ACC are finding more than enough room to grow in the $100 billion local exchange market. The company said that the extra capacity will double revenues in the coming year.

Computer telephony firm PREMIERE TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PTEK)") else Response.Write("(NASDAQ: PTEK)") end if %> went deep today, moving up $5 7/8 to $25 1/8 as the company signed an agreement with interexchange carrier/internet services firm WORLDCOM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WCOM)") else Response.Write("(NASDAQ: WCOM)") end if %>. This deal has major implications for Premiere, as WorldCom, formerly LDDS and currently the country's fourth-largest long-distance company, is heading toward the closing of its merger with MFS COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MFST)") else Response.Write("(NASDAQ: MFST)") end if %>. This deal will allow WorldCom to pick up what MCI <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MCIC)") else Response.Write("(NASDAQ: MCIC)") end if %> has developed for itself, namely automated data services and software systems that tie together communications devices and media. Those who hate voice mail would think of Premiere as Beelzebub incarnate.

ADVANCED MICRO DEVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMD)") else Response.Write("(NYSE: AMD)") end if %> leapt $3 1/4 to $24 7/8 today after the firm announced it will debut its K6 Processor earlier than expected. The K6 is AMD's equivalent of INTEL'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INTC)") else Response.Write("(NASDAQ: INTC)") end if %> Pentium Pro. CYRIX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CYRX)") else Response.Write("(NASDAQ: CYRX)") end if %> has been selling its own equivalent, the 686, for a number of months and has not come close to achieving price parity with the branded Intel product. Certainly the prospects for selling the K6 are much better than the X486 chips AMD has been kicking out of its central processor unit (CPU) division, but investors should restrain their excitement until they see what price the K-6 actually commands in the market. AMD will still have negative cash-flow in the fourth quarter. Prudential moved from "hold" to "buy" on the stock today, exacerbating the upward move.

QUICK TAKES: NOKIA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOK.A)") else Response.Write("(NYSE: NOK.A)") end if %> blasted ahead $7 to $58 after the Finnish cellular phone company posted a 20% increase in operating profits. MOTOROLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MOT)") else Response.Write("(NASDAQ: MOT)") end if %> and ERICCSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ERICY)") else Response.Write("(NASDAQ: ERICY)") end if %> also cashed in on the winnings, each rising more than 5% on the day... Feuding semiconductor equipment companies APPLIED MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:AMAT)") else Response.Write("(NASDAQ:AMAT)") end if %> and ASM INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ASMIF)") else Response.Write("(NASDAQ: ASMIF)") end if %> both gained more than 5% today as they agreed to a temporary truce on litigation involving patents on rapid thermal processing technology... A. SCHULMAN INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SHLM)") else Response.Write("(NASDAQ: SHLM)") end if %> rose $2 3/8 to $24 3/4 as analysts continue to upgrade the maker of resins and other compounds... INFORMIX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IFMX)") else Response.Write("(NASDAQ: IFMX)") end if %> continues to bounce back, rebounding $2 to $21, as the efficient market works out the company's growth plans for the next year... Catalog retailer LANDS END INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LE)") else Response.Write("(NYSE: LE)") end if %> moved up $2 1/4 to $24 7/8 on better earnings this quarter... AMERICAN EAGLE OUTFITTERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AEOS)") else Response.Write("(NASDAQ: AEOS)") end if %> rose $1 3/8 to $20 7/8 after regional brokerage Gerard Klauer upgraded the company to a "buy," as not everyone is pouting about Christmas pudding in retail... INLAND STEEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IAD)") else Response.Write("(NYSE: IAD)") end if %> rose $1 3/4 to $18 3/4 after signing an agreement for raw material coke and saying that the process imrpovement will improve costs... MICROCHIP TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MCHP)") else Response.Write("(NASDAQ: MCHP)") end if %> rose $2 3/4 to $45 7/8 after the company reported bullish October results at a Prudential Securities conference. Silly us, we could have read that in the company's October press release... Benefits software company ABR INFORMATION SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ABRX)") else Response.Write("(NASDAQ: ABRX)") end if %> added $4 1/4 to climb to $58 1/4 a day after the company announced that its Chief Financial Officer had resigned as a result of a disagreement with the company's Board of Directors...BLONDER TONGUE LABS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: BDR)") else Response.Write("(AMEX: BDR)") end if %> rose $1 5/8 to $10 1/4 on the strength of deal signings, a mention in this month's Individual Investor, and a quarterly earnings increase of 67%.

GOATS

After yesterday's unexplained plunge, VETERINARY CENTERS OF AMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VCAI)") else Response.Write("(NASDAQ: VCAI)") end if %> dropped another $15/16 to $9 7/16 today as investors and analysts rubbed the company's nose in its poor earnings for the past quarter. Operating income per share increased 11.5% from last year's third quarter before the company took a large restructuring charge. One of the things that is hard to miss is not the dilution that came from a 46% increase in shares outstanding, but that the company is simply not running as profitably as last year -- gross profit fell by 2.9 percentage points. To the company's credit, they did cut overhead costs by 1.2 percentage points. The Standard & Poor's analyst thought the company's 10% share buyback was a cheesy move in light of yesterday's "interesting" trading and said that he would have put a lower rating on the company than the "avoid" rating had VCA not issued that consolation prize.

No, we're not going to use any hairball cliches like "Earnings Sparkle at TIFFANY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TIF)") else Response.Write("(NYSE: TIF)") end if %>." Investors didn't think the numbers were so hot, either, as they dumped the shares for a $2 5/8 loss to $35 1/2 on ten times 30-day volume. While gross margin and operating margin increased nicely from last year, the company made the better progress in SG&A (sales, general, and administrative) expenses at the same time that it increased same-store-sales over last year's third quarter. Despite the fact that the company's numbers beat estimates, some wonder why the company still spends so much money on marketing when Tiffany is a retail franchise -- its mark is irreplicable. Others have speculated that holiday sales might lack luster (oops, couldn't resist). In any case, those who buy this stuff probably don't worry too much about getting a pink slip in their mailbox.

PHYSICIANS RESOURCE GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PRG)") else Response.Write("(NYSE: PRG)") end if %> may have beaten estimates by a penny, but somebody out there did not like the earnings. The stock slumped $2 5/8 to $21 7/8 in heavy trading after posting $0.21 earnings per share (EPS) in operating earnings for the quarter. Physician practice management services companies have come under pressure in recent weeks, lead by a drop in PHYSICIAN RELIANCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHYN)") else Response.Write("(NASDAQ: PHYN)") end if %>, which missed earnings estimates on October 28th. One possible cause of today's tumble could be the company's announcements that it will slow its acquisition spree and spend the next few months digesting the 17 practices it has purchased in the past few months.

QUICK CUTS: High pressure steel pipe/tubular products company NORTHWEST PIPE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NWPX)") else Response.Write("(NASDAQ: NWPX)") end if %> lost $1 1/4 to $15 1/2 after the company said that it will conduct a two million share secondary offering... JOHN ALDEN FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JA)") else Response.Write("(NYSE: JA)") end if %> lost $1 1/8 to $17 5/8 on the news that it is selling its annuity operations to SUNAMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SAI)") else Response.Write("(NYSE: SAI)") end if %>... Electronics contract manufacturer TECHDYNE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TCDN)") else Response.Write("(NASDAQ: TCDN)") end if %> lost $1 1/16 to $6 1/2 after reporting large decreases in sales and earnings in the third quarter... RISCORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RISC)") else Response.Write("(NASDAQ: RISC)") end if %> crumbled $2 to $4 3/8 on reporting that Q3 earnings fell 75%. Last month, some of the managed-care workers' compensation company's officers were subpoened by a grand jury looking into political contributions.

FOOL ON THE HILL
An Investment Opinion by MF Templar

Inbound Express

Teleservices has been on the mind of many a Fool since the Fool Portfolio made the decision to purchase ATC TELECOMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ATCT)") else Response.Write("(NASDAQ: ATCT)") end if %>. With the exception of APAC TELESERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: APAC)") else Response.Write("(NASDAQ: APAC)") end if %>, very little about the sector had crossed the desk of the Fool news room until this purchase was announced. In retrospect, this was a bit of an oversight as the industry itself is pretty huge. According to Direct Marketing Magazine, the teleservices industry has blossomed from $34 billion in 1984 to $77 billion in 1994, compound annual growth of 8.5%. The problem has been that until the past few years, almost all telemarketing was being done "in-house" and not being outsourced to other firms. As a consequence, there were almost no publicly traded telemarketing concerns to catch our attention.

Whatever the deficit was coming into 1995, the year or so has served to fill the void of public telemarketing firms. Seven of the eight publicly-traded firms that specialize in this line of industry have come public in the past fourteen months. SITEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SITL)") else Response.Write("(NASDAQ: SITL)") end if %> (June 1995) and APAC Teleservices (October 1995) have been public for more than the year, with SYKES ENTERPRISES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SYKE)") else Response.Write("(NASDAQ: SYKE)") end if %> (May 1996), PRECISION RESPONSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PRRC)") else Response.Write("(NASDAQ: PRRC)") end if %> (July 1996), ICT GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ICTG)") else Response.Write("(NASDAQ: ICTG)") end if %> (July 1996), TELETECH HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TTEC)") else Response.Write("(NASDAQ: TTEC)") end if %> (August 1996) and RMH TELESERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RMHC)") else Response.Write("(NASDAQ: RMHC)") end if %> (October 1996) having followed this year. ATC Telecommunications is the only publicly traded company in the teleservices industry that has been around for a while. The company acquired a small outbound telemarketing firm called Advanced Telemarketing Corporation in 1988, hired new managers in 1992 to run Advanced and has grown this line of work to consume the company's revenues over the past five years.

Although they have flagged recently, the last twelve months have been nothing short of spectacular for teleservices firms that specialize in telemarketing -- at least those that have been public that long. APAC has climbed from $15 to $46 1/4, Sitel has surged from around $6 to $19 1/2 and ATC Telecommunications has gone from around $3 to its current perch of $17 11/16, up $11/16 on the day. The more recently public have not fared quite as well, however. Precision Response has faired well, climbing from $18 to $36, as has TeleTech Holdings, rising from $16ish to the low $30s and Syke Enterprises, lumbering ahead from $33 to $45. ICT Group is the most powerful disapointment, down to a mere $5 1/4 after opening at about $20 a stub. RMH Teleservices has not done that well, either, having come public so close to ATC's "disappointment" of a few weeks ago when it actually had the audacity to only make earnings estimates. RMH is down to $7 1/2 from the $11 it appears to have first traded at in late October.

Why are telemarketing firms so hot? Because they are part of that big outsourcing wave everyone is talking about. Companies in a variety of industries have begun to realize that running large call centers internally is not a core competency. As a consequence, they are beginning to partner up with firms specializing in teleservices in order to gain the benefits of personalized direct marketing in the most cost-effective manner, leaving them to concentrate on their main line of business. Even companies pioneering entire new industries like AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> have seen the need to outsource some call center management. A press release from the company today explained that 100 of the 300 positions cut recently will be replaced in a contract with ATC Telecommunications. America Online has further stayed with the cutting edge by making the contract with ATC for "inbound" telemarketing services rather than "outbound" telemarketing.

The distinction between inbound and outbound is as simple as who makes the phone call, but has a lot of implications with the viability of these businesses. Inbound means that you are receiving the calls, outbound telemarketing means that you are making the calls. Inbound telemarketing is sort of like hiring people to do your customer service. Some companies, like ATC, even go as far as to encourage employees to think they are also an employee of the customer that is doing the contracting. Outbound telemarketing is the sort of telemarketing we all know and hate. Cold calls in the middle of dinner pitching insurance products, cold calls on your phone at work urging you to sign on now with a credit card and get the most beneficial rate. Outbound telemarketing positions have high employee turnover because people like to make these calls even less than they like to receive them, it seems.

Whereas outbound telemarketing is a "commoditized" business, meaning that there are very few competitive advantages one firm can offer over another, inbound services are much different. It does not take much training to have people call up consumers and hawk various products. However, there is a lot of training involved when you have consumers calling in and asking basic customer service questions. Unlike the temporary agencies, which will loan workers to companies who need inbound telemarketing help, companies like ATC offer customers the whole enchilada -- phones, software, trained people, the works. These relationships take time to build up and even more time to replace. Whereas you can change who does your outbound work at the drop of a hat, the firm doing your inbound work is one that you might be stuck with for a time. For investors interested in the sector, finding out how much of a prospective buy's work is inbound makes a lot of sense.

FOOLISH FEATURES

BR-RING! No, that's not the dinner bell, it's my cell-phone. That's right, Nokia was the Fool Plate Special in The Lunchtime News. Nokia surprised analysts and investors, doing tasty things for other wireless communications stocks.

Earnings Central has new calls from Borders Group, Conso Products, and Dell. Earnings Central is a great place to keep track of stocks you know, and also discover some good ones that you haven't heard about.

CONFERENCE CALLS

11/14/96
AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>
(to discuss their recent news release)
available until 11/20 at midnight
1-800-475-6701 (conf. ID 321481)

11/14/96
MEADOWBROOK INSURANCE GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MIG)") else Response.Write("(NYSE: MIG)") end if %>
1-800-227-7118 -- replay (avail 11/14 thru 5PM on 11/18)

11/14/96
WOOLWORTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: Z)") else Response.Write("(NYSE: Z)") end if %>
1-800-222-9743 -- replay (avail. 11/14 after 11AM to 4PM on 11/21)

ANOTHER FOOLISH THING

Fool Port Reports via E-mail!

It's another great idea whose time has come. Self-mowing lawns? A 24-hour Ross Perot cable channel? Pigeons trained to collect litter? Nope -- even better. We're excited to be able to offer for your convenience (okay, okay, and for our pockets!) the nightly Fool Portfolio reports, delivered via e-mail subscription. For a measly $24 per year (less than a dime a day), we'll have the FoolPort report winging its way to you as soon as it gets posted online. No more remembering to look for it, or reading it online, or wondering if you've missed one -- now it can be waiting for you each weekday evening. For more information, or to order, hop over to FoolMart.

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

Dale Wettlaufer (MF Raleigh), Lover of Voice Mail
Heroes & Goats

Brian Bauer (MF Hoops), one more Fool
Editing

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