HEROES
OPAL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OPAL)") else Response.Write("(NASDAQ: OPAL)") end if %> exploded today, rising $6 to $18 1/8 after APPLIED MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMAT)") else Response.Write("(NASDAQ: AMAT)") end if %> announced it was offering $18.50 in cash per share, or 2.3 times sales, to acquire Opal. Opal makes critical dimension scanning electron microscopes (CD-SEMs) used to measure chips at various points in the manufacturing process. Applied also snapped up shares of privately-held Orbot Systems, a company that makes automated optical inspection systems. The combination suggests that Applied is getting into the metrology and yield enhancement business, a segment of semiconductor capital equipment currently dominated by KLA INSTRUMENTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: KLAC)") else Response.Write("(NASDAQ: KLAC)") end if %>, which dropped $2 1/2 to $36 today. ASYST TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ASYT)") else Response.Write("(NASDAQ: ASYT)") end if %> was among the automation companies rising today, up $2 to $21 on speculation that Applied might be making more than two acquisitions.
PANENERGY CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PEL)") else Response.Write("(NYSE: PEL)") end if %> gained $1 3/8 to $43 5/8 after agreeing to merge with DUKE POWER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DUK)") else Response.Write("(NYSE: DUK)") end if %> in an all-stock transaction. Duke has been regarded as one of the better run utility companies in the country and is seen as being ready for deregulation, with 54% of its fuel coming from nuclear sources in 1995. Because of this, its power costs are low. Combined with PanEnergy, which supplies 12% of U.S. natural gas consumption and is looking forward to another cold winter, the deal makes for an energy force. Based on today's price for Duke, the deal values PanEnergy at $48 per share (based on 1.0444 shares of Duke for each PanEnergy share). PanEnergy holders receive more than a doubling of dividends, while Duke can look forward to opening up markets it can serve as both a natural gas company and as a power generation company.
Barron's had a busy weekend. Pharmaceutical information and marketing czar WALSH INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WSHI)") else Response.Write("(NASDAQ: WSHI)") end if %> jumped $1 to $8 after getting a plug in Barron's from David Talbot of HealthReform Partners. Talbot also talked up MEDCATH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MCTH)") else Response.Write("(NASDAQ: MCTH)") end if %>, up $1 1/4 to $15 3/4 today on strong volume. In an unrelated story about companies that develop network-protecting firewalls and other Internet security software caused some moves today as well. CHECK POINT SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CHKPF)") else Response.Write("(NASDAQ: CHKPF)") end if %> rose $2 3/8 to $24 1/4, RAPTOR SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RAPT)") else Response.Write("(NASDAQ: RAPT)") end if %> climbed $3 /4 to $22, SECURITY DYNAMICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SDTI)") else Response.Write("(NASDAQ: SDTI)") end if %> popped $2 3/4 to $40 1/2, and even ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ASND)") else Response.Write("(NASDAQ: ASND)") end if %>, which bundles security software with its network equipment, jumped $2 3/8 to $72 5/8.
BANKAMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAC)") else Response.Write("(NYSE: BAC)") end if %> jumped $5 3/8 to $103 1/8 after Smith Barney raised its target price to $115, citing possible expense cutting that could be announced and continuing the rally in financials. All kinds of banks were hitting 52-week highs, most notably JP MORGAN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JPM)") else Response.Write("(NYSE: JPM)") end if %>, rising $2 5/8 to $93; FIRST UNION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FTU)") else Response.Write("(NYSE: FTU)") end if %>, up $7/8 to $76 5/8; NATIONSBANK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NB)") else Response.Write("(NYSE: NB)") end if %>, climbing $2 1/8 to $104 1/4; WELLS FARGO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WFC)") else Response.Write("(NYSE: WFC)") end if %>, jumping $3 7/8 to $289 7/8; CHASE MANHATTAN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMB)") else Response.Write("(NYSE: CMB)") end if %> skipping ahead $3 7/8 to $95 3/8; and CITICORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> up $2 5/8 to $109 1/8. The fun was not just limited to regional, national and money-center banks, either. DEAN WITTER DISCOVER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DWD)") else Response.Write("(NYSE: DWD)") end if %> clambered ahead $1 3/8 to $68, FREDDIE MAC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FRE)") else Response.Write("(NYSE: FRE)") end if %> flapped up $2 1/2 to $113 1/2 , and LEGG MASON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LM)") else Response.Write("(NYSE: LM)") end if %> rose $7/8 to $39 1/8 -- all 52-week highs as well in credit cards, mortgages and brokerages.
QUICK TAKES: Sneaker-maker CONVERSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CVE)") else Response.Write("(NYSE: CVE)") end if %> jumped $1 3/8 to $9 3/4 after Smith Barney raised estimates for fiscal 1997 to $0.55 earnings per share (EPS) from $0.10... GUESS?, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("GES:NYSE" & CHR(34) & ">(NYSE: GES)") else Response.Write("GES" & CHR(34) & " onClick=" & Chr(34) & "openWindow('http://quote.fool.com/uberdata.asp?symbols=GES', 'quotebox', 640, 460); return false;" & CHR(34) & ">(NYSE: GES)") end if %> popped $1 1/8 to $ 13 5/8 after announcing a joint anti-counterfeiting program with Levi's and Calvin Klein that targeted "kingpin" fake jean counterfeiters... A 5% price hike by steel-maker LUKENS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LUC)") else Response.Write("(NYSE: LUC)") end if %> caused a stock hike of $1 1/2 to $18 1/2 today... KLM ROYAL DUTCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KLM)") else Response.Write("(NYSE: KLM)") end if %> soared $2 to $27 after speculation started that the airline could buy back the slug of company shares the Dutch government holds... Defense contractor and capital equipment maker ESTERLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ESL)") else Response.Write("(NYSE: ESL)") end if %> rose $1 5/8 to $25 1/8 on an upgrade to "buy" from PaineWebber... AMERICAN WOODMARK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMWD)") else Response.Write("(NASDAQ: AMWD)") end if %> jumped $1 3/4 to $10 5/8 after posting earnings this morning... GT INTERACTIVE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GTIS)") else Response.Write("(NASDAQ: GTIS)") end if %> jumped $1 3/8 to $11 3/4 after buying Warner Interactive Europe... PCA INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PCAI)") else Response.Write("(NASDAQ: PCAI)") end if %> jumped $2 1/4 to $18 after reporting earnings and the acquisition of AMERICAN STUDIOS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMST)") else Response.Write("(NASDAQ: AMST)") end if %>, which was up $13/16 to $2 1/8... GREENWICH AIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GASIA)") else Response.Write("(NASDAQ: GASIA)") end if %> flew ahead $2 1/4 to $24 on strong earnings... PHILLIP MORRIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> jumped $3 1/4 to $105 1/2 after David Kessler resigned as head of the Food & Drug Administration (FDA)... Mortgage banker CITYSCAPE FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CTYS)") else Response.Write("(NASDAQ: CTYS)") end if %> rose $1 3/8 to $25 3/4 after it was reported that value investor Michael Price was buying.
GOATS
KCS ENERGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KCS)") else Response.Write("(NYSE: KCS)") end if %> was dunked for $7 1/4 to $34 7/8 after a Texas jury awarded TENNECO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TEN)") else Response.Write("(NYSE: TEN)") end if %> $143 million in a lawsuit. KCS Energy said it plans to file a motion to have the verdict set aside, but the damage to the market's confidence in KCS has been done. The litigation concerns alleged "enrichment" of KCS gas sold to Tennessee Gas Pipeline from November of 1993 to November of 1994. Enrichment is when you inject propane into gas in order to make it seem richer than it really is. KCS says it is innocent and that the verdict will not affect future sales of gas to Tennessee Pipeline, which are set to continue until January of 1999. As a result of the verdict, however, KCS is terminating a common stock offering and the previously announced acquisition of the oil and gas operations of MIDAMERICAN ENERGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MEC)") else Response.Write("(NYSE: MEC)") end if %>.
Dissension from within has shares of super-hot RADISYS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RSYS)") else Response.Write("(NASDAQ: RSYS)") end if %> down $7 7/8 to $43 1/8 today. Bruce Taylor, former vice president of operations, has filed a lawsuit alleging that Radisys misreported inventory and consequently overstated earnings prior to and after its initial public offering. Taylor claims he got canned when he reported this little nugget to top level company officials. Radisys completely denies the charges and stressed it has received an unqualified audit opinion for its financials from none other than Price-Waterhouse. The company says it put Taylor to pasture for unrelated reasons. Radisys has been a subject of scrutiny since a skeptical Barron's piece last week questioned whether or not the embedded computer components and subsystems maker was really in a growing market, given that Intel sold it a large unit for 0.5 times sales. An interesting one to watch.
QUICK CUTS: Merrill Lynch chopped semiconductor manufacturer ZILOG <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ZLG)") else Response.Write("(NYSE: ZLG)") end if %> to a "near-term neutral" rating, dunking the shares for $2 3/4 to $22 3/8... A flat quarter from supermarket chain ALBERTSON'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ABS)") else Response.Write("(NYSE: ABS)") end if %> dropped the shares $2 5/8 to $35 3/8... PERSONNEL GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PGA)") else Response.Write("(NYSE: PGA)") end if %> tumbled $1 7/8 to $21after its Chief Financial Officer resigned unexpectedly... Russian cellular provider VIMPEL COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VIP)") else Response.Write("(NYSE: VIP)") end if %> gave back $1 3/4 to $28 after its super-hot initial public offering on Friday... TRANSOCEAN OFFSHORE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RIG)") else Response.Write("(NYSE: RIG)") end if %> dropped $4 1/8 to $63 1/4 after Smith Barney trimmed fourth quarter and fiscal 1997 estimates... Biotech firm CHIRON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CHIR)") else Response.Write("(NASDAQ: CHIR)") end if %> dropped $3 3/4 to $18 1/8 after Goldman cut it to "market performer"... Remote access networking company SHIVA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SHVA)") else Response.Write("(NASDAQ: SHVA)") end if %> dropped $2 11/16 to $40 1/2 as buy-out rumors faded and competitor ACCESS BEYOND <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ACCB)") else Response.Write("(NASDAQ: ACCB)") end if %> came public... Recent initial public offering INTEGRATED LIVING COMMUNITIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ILCC)") else Response.Write("(NASDAQ: ILCC)") end if %> dropped $1 1/4 to $5 3/4 on no news.
FOOL ON THE HILL
An Investment Opinion by MF
Templar
Exciting America Online
AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> simplified its Internet Search Engine strategy today by swapping its WebCrawler property for approximately two million shares of EXCITE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: XCIT)") else Response.Write("(NASDAQ: XCIT)") end if %>, raising its ownership of Excite to 20 percent from 10 percent. Instead of running WebCrawler itself, America Online has decided to make Excite its exclusive Internet search and directory service for close to seven million members. According to PC-Meter, this move puts number two ranked WebCrawler together with number three ranked Excite, giving the combined company 44.1 percent of the directory market, substantially more than YAHOO! <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: YHOO)") else Response.Write("(NASDAQ: YHOO)") end if %> or LYCOS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LCOS)") else Response.Write("(NASDAQ: LCOS)") end if %>. Although some question the accuracy of the PC-Meter numbers, the fact that Excite is partnering with America Online as its exclusive search service makes for a potentially powerful combination. Excite anticipates that the deal will be cash flow positive, and in the market' estimation it incredibly enhances the prospects for the company. Excite to rose $3 3/4 to $9 7/8 today.
There is no question that the addition of Bob Pittman to America Online's management team spurred this deal on. Pittman, America Online's new Networks head honcho, currently sits on the board of Excite and is quite familiar with the business. By offloading WebCrawler onto a company that can focus on the search and directory business, Pittman can fully concentrate his efforts on America Online's core service without being involved in some peripheral Web operations. Given America Online's ten percent equity stake in Excite, which company to partner with was pretty much a no-brainer. America Online got WebCrawler around the time it purchased GNN in June of 1996. The company purchased WebCrawler for about $1 million and now has turned around and sold it for stock worth $19.75 million at the close, a tidy profit that more than makes up for the $11 million it spent to acquire the now defunct GNN.
America Online and Excite will jointly market advertising, a nice combination that allows anyone who wants to gain access to a large online audience to get access to both America Online's large audience and the people hanging out on the Web. America Online already is selling advertising space on the NETSCAPE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NSCP)") else Response.Write("(NASDAQ: NSCP)") end if %> home page, making one wonder whether or not the company is intent on becoming the advertising agency for online services instead of just the largest online service. Deep skepticism over America Online's ability to sell advertising still exists on Wall Street. Many naysayers point out that America Online has absolutely no experience in the rough and tumble world of advertising, painting executives as wet-behind-the-ears beginners who will get a comeuppance. As yet, these predictions of doom have yet to happen, with America Online's advertising revenue accelerating nicely on a quarter by quarter basis according to publicly-released earnings statements.
Before this combination, Yahoo! held the top spot according to PC-Meter, news that pushed the shares into the $20s last month. Far and away the most popular of the Internet search stocks, Yahoo! currently trades at more than 40-times trailing revenues. Unlike its strictly searching peers like Lycos and INFOSEEK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SEEK)") else Response.Write("(NASDAQ: SEEK)") end if %>, Yahoo! has been penetrating the individualized news and information space once marked off by companies like INDIVIDUAL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INDV)") else Response.Write("(NASDAQ: INDV)") end if %>. You can now get personalized news for stock portfolios as well as a customized "My Yahoo!" on the Yahoo! page -- incredible additions that will increase the attractiveness to Web browsers. Although Yahoo! is first with these additions, they do not exactly constitute an impenetrable moat around their business. Any of these other overcapitalized, cash-rich search engines can easily start to add the same services and most are already in the process of doing this.
The Excite/America Online combination greatly increases Excite's prospects, once viewed very dim when it was running head-to-head with Yahoo!, Lycos and WebCrawler. Excite has already shown itself to be quite opportunistic, snapping up Magellan when the search engine's public offering did not look like it was going to go quite as planned. Chief executive George Bell has articulated a strategy of being public first, getting the cash and then building the business afterwards, a program that seems to have served Excite well. Unlike Yahoo! and Lycos, Excite has also seen the value of partnering with a service in order to gain access to the plentiful hits. What are the potential ramifications of this deal? MICROSOFT'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MSFT)") else Response.Write("(NASDAQ: MSFT)") end if %> MSN, NETCOM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NETC)") else Response.Write("(NASDAQ: NETC)") end if %> and dozens of other online services might begin to try to find someone to partner up with for the dance. Although the valuations are far from compelling, the potential is rich for a company that solves the advertising equation. Despite criticism that America Online is an advertising amateur, they currently are selling more of it online than any other company and have made two smart deals with Netscape and Excite.
CONFERENCE CALLS
AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>, EXCITE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: XCIT)") else Response.Write("(NASDAQ: XCIT)") end if %>
Regarding today's deal
(800) 475-6701, starting at 2 PM EST until 11/26 at 2 PM
HEWLETT PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>
(303) 446-5399 (code: 2004539) -- replay (Through 8 PM EST on 11/25)
DSP COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DSPC)") else Response.Write("(NASDAQ: DSPC)") end if %>
Regarding the termination of their merger agreement with Proxim
(800) 475-6701 (code: 322545) -- replay available until 11/26
ANOTHER FOOLISH THING
Learn to value stocks painlessly! In the Industry Decathlon primer, MF Bogey takes readers by the hand and walks them through five stock valuation methods and ten financial ratios. While demystifying the Balance Sheet, Statement of Cash Flows, and Income Statement, Bogey demonstrates how to compare a bunch of companies in your industry of choice and find the most promising one. This is very useful stuff, folks! Check it out in FoolMart.
Randy Befumo (MF Templar),
a Fool
Fool On the Hill
Dale Wettlaufer (MF Raleigh), another
Fool
Heroes & Goats
Brian Bauer (MF Hoops), one more Fool
Editing
THE DAILY NEWS CAN BE DELIVERED DIRECTLY TO ANY INTERNET E-MAIL BOX.