HEROES

ZYCON CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZCON)") else Response.Write("(NASDAQ: ZCON)") end if %> rose $1 5/8 to $17 5/8 after the circuit board manufacturer called off its $16.50 a share deal to be bought by private investment group Hicks, Muse. Instead, the company has agreed to an $18 a share cash deal with circuit board maker/contract manufacturer HADCO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HDCO)") else Response.Write("(NASDAQ: HDCO)") end if %>. Instead of being challenged for circuit board preeminence by the addition of Zycon to Hicks, Muse's acquired businesses, which would have put Hadco in the industry's number two spot, Hadco is making a counter offer at a still attractive price. The competitive position of these companies was more thoroughly discussed in Monday's Evening News.

SANTA FE PACIFIC GOLD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLD)") else Response.Write("(NYSE: GLD)") end if %> shot up $3 to $14 7/8 today after NEWMONT MINING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NEM)") else Response.Write("(NYSE: NEM)") end if %> proposed a stock swap to join forces and become larger than reigning king gold producer BARRICK RESOURCES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ABX)") else Response.Write("(NYSE: ABX)") end if %>. The proposal calls for Newmont to swap 0.33 of its shares for each Santa Fe share, valuing the deal around $15.50 per Santa Fe share (not including debt assumed). In the past nine months, Newmont has seen its cash cost of production increase 17% as it has decreased production and gone to lower grade ore with lower gold prices. Some companies do the opposite to maintain profits. This deal would bring the company's cash cost per ounce of production under $215 per ounce, slightly lower than this year's $218 per ounce, but above 1995's $191 level.

CAVCO INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CVCO)") else Response.Write("(NASDAQ: CVCO)") end if %> gained $2 1/8 to $25 3/4 after announcing that CENTEX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CTX)") else Response.Write("(NYSE: CTX)") end if %> will buy 80% of the company for $26.75 a share. Centex, the largest builder of traditional homes in the country, will be making its debut in the manufactured homes business by acquiring the Cavco, which is a relatively small builder in that industry. Due to some of the overcrowding in the industry and the recent decline in the prices of FLEETWOOD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLE)") else Response.Write("(NYSE: FLE)") end if %> and CLAYTON HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMH)") else Response.Write("(NYSE: CMH)") end if %>, though, the strategic move gives Centex an entree without an overcommitment.

QUICK TAKES: Lawncare company BAREFOOT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BARE)") else Response.Write("(NASDAQ: BARE)") end if %> gained $2 19/32 to $15 11/32 after the company agreed to merge with SERVICEMASTER LP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SVM)") else Response.Write("(NYSE: SVM)") end if %> for $16 a share in cash or stock... EQUISURE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: EQE)") else Response.Write("(AMEX: EQE)") end if %> jumped $1 3/4 to $9 1/2 after the reinsurance company announced two contracts worth approximately $19.5 million in annual premiums over the next two years... Pharmaceutical company FOREST LABS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: FRX)") else Response.Write("(AMEX: FRX)") end if %> rose $2 1/8 to $31 1/2 as Furman Selz upgraded to the company to "buy" from "hold" after the company exploded yesterday when it said it will work down inventory... FOOTSTAR INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FTS)") else Response.Write("(NYSE: FTS)") end if %> moved up $3 3/8 to $25 7/8 after the Footaction/Kmart shoe store announced a 5.7% increase in November same-store sales... Prison operator CORRECTIONS CORP. OF AMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CXC)") else Response.Write("(NYSE: CXC)") end if %> gained $2 3/8 to $28 1/8 after the Washington, DC city council voted to cede the operation of one of its prisons to the company... ANCHOR GAMING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SLOT)") else Response.Write("(NASDAQ: SLOT)") end if %> jumped $5 to $46 after the company said it will look at strategic alternatives, including the sale of the company... Transportation company U.S. XPRESS ENTERPRISES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: XPRSA)") else Response.Write("(NASDAQ: XPRSA)") end if %> flew up $1 3/4 to $10 1/2 after the company announced a two year contract with employment outsourcing company EMPLOYEE SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ESOL)") else Response.Write("(NASDAQ: ESOL)") end if %>... BROOKS AUTOMATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BRKS)") else Response.Write("(NASDAQ: BRKS)") end if %> gained $2 5/16 to $16 11/16 after Merrill Lynch initiated coverage of the semiconductor equipment company with a "buy" rating... Natural ingredients personal care/cosmetics retailer GARDEN BOTANIKA INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GBOT)") else Response.Write("(NASDAQ: GBOT)") end if %> gained $2 1/8 to $12 after reporting a 17% increase in same-store sales... SIERRA SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SERA)") else Response.Write("(NASDAQ: SERA)") end if %> rose $2 3/8 to $16 1/2 after Soundview rated the communications chip maker to "short-term buy--long-term hold." As Infrastructure puts its, that's "AnAlYsT SpEaK" for you.

GOATS

OAKLEY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OO)") else Response.Write("(NYSE: OO)") end if %> dropped $3 3/4 to $11 1/2 today after SUNGLASS HUT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RAYS)") else Response.Write("(NASDAQ: RAYS)") end if %> released its November same-store-sales results, which were down 9.9%. Oakley fell from $20 to $17 on October 17 when it released strong quarterly numbers. However, its largest customer, Sunglass Hut, was showing signs of a bloated inventory coming out of a weak summer season. At that time, some were pointing to Oakley's inventory turnover (cost of goods sold divided by average inventory) as a problem. Though a lower number isn't always a horrible sign, as a company like this needs to stock many different styles, turning the inventory only once during the busiest quarter of the year means "yellow light" to many investors. It means a company will write down those goods, they're managing the business poorly, or that inventory is overvalued.

Graphite electrode manufacturer UCAR INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UCR)") else Response.Write("(NYSE: UCR)") end if %> dropped $2 7/8 to $34 7/8 after the company said Q4 earnings will come in at $0.68-0.78 per share, below estimates of $0.81. The company said that shipments to steel mills in Europe and the Middle East were slower than expected this quarter. Steel prices have been weak due to lagging industrial production in Europe, but the company believes that it can still achieve earnings per share (EPS) growth of 55% this year. This is an impressive gain since the long-term growth of the market is only expected to be 1-2% per year. UCAR expects shipments to grow 6% in the coming quarter, and also expects to have pricing power of 7%+ this year. Pricing power is almost non-existent in many sectors of the economy, and the fact that UCAR has that latitude speaks to the specialty nature of its products.

Kid's clothing retailer GYMBOREE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GYMB)") else Response.Write("(NASDAQ: GYMB)") end if %> failed to benefit from any holiday season sales rush. Shares were down $4 5/8 to $23 1/8 today after the company reported same-store sales slumped 15% when compared to the same period last year. Alex. Brown and Morgan Stanley both cut their ratings on the company after it forecast profits of $0.38 EPS for the fourth quarter, below the $0.43 EPS they earned a year ago. Clothing is simply not selling as well as they anticipated, meaning that they will have a sales shortfall in the quarter although their margins will not fall as they did last year.

QUICK CUTS: Biotech company IMMULOGIC PHARMACEUTICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IMUL)") else Response.Write("(NASDAQ: IMUL)") end if %> lost $1 5/8 to $7 7/8 on news its chairman and chief financial officer have both flown the coop... GARGOYLES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GOYL)") else Response.Write("(NASDAQ: GOYL)") end if %> lost $1 to $8 5/8 on the bad news coming out of Oakley and Sunglass Hut today... Snack food baker/processor FLOWERS INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLO)") else Response.Write("(NYSE: FLO)") end if %> was deflated by $2 1/2 to $21 1/8 after Donaldson, Lufkin & Jenrette downgraded the firm to "underperform" from "market perform"... INTERVOICE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INTV)") else Response.Write("(NASDAQ: INTV)") end if %> lost $3 1/4 to $11 5/8 after the call automation firm pre-announced flat Q3 sales and EPS of $0.15-0.17, below estimates of $0.25 per share... Radio company SFX BROADCASTING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SFXBA)") else Response.Write("(NASDAQ: SFXBA)") end if %> lost another $2 7/8 to $25 7/8 as investors learn that Nomura Securities has bought 14% of the firm and not a different acquirer... PCA INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PCAI)") else Response.Write("(NASDAQ: PCAI)") end if %> lost $1 3/16 to $16 1/8 after the portrait studio company said it will suspend its dividend in preparation for its acquisition of AMERICAN STUDIOS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMST)") else Response.Write("(NASDAQ: AMST)") end if %>... Specialty retailer MEN'S WEARHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SUIT)") else Response.Write("(NASDAQ: SUIT)") end if %> lost $4 3/8 to $21 7/8 after reporting a November same-store sales decline of 3.3%... THE LEARNING COMPANY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLC)") else Response.Write("(NYSE: TLC)") end if %> declined $1 3/8 to $14 3/8 as investors wonder about the veracity of the claims made by GT INTERACTIVE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GTIS)") else Response.Write("(NASDAQ: GTIS)") end if %> yesterday.

FOOL ON THE HILL
An Investment Opinion by MF Templar

A Case of Mistaken Cause

Shares of OMNIGENE DIAGNOSTICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OMGD)") else Response.Write("(NASDAQ: OMGD)") end if %> plunged $5 13/32 to $7/8 today after the Securities and Exchange Commission (SEC) lifted a ten-day trading ban. Regulators concerned about potential stock manipulation involving the Internet issued the ban in order to be able to examine the situation. Given the response the stock showed today to the facts uncovered in the examination, one cannot help but conclude that the stock was manipulated. At the very least, the company's sickening drop clinched its right to the nickname "Oh, My God," an appellation derived from its ticker symbol OMGD.

Omnigene is the latest in a series of stock frauds that is being labeled as an example of "Internet hype," joining the ranks of names like SYSTEMS OF EXCELLENCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SEXI)") else Response.Write("(NASDAQ: SEXI)") end if %> and TELETEK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TLTK)") else Response.Write("(NASDAQ: TLTK)") end if %> as companies that had former members of management participate in systematic attempts to enrich themselves at the expense of other investors by talking up their stocks anywhere they could -- including online. A New York Times article called "Stock Hyped on Internet Resumes Trading" detailed the questionable history surrounding the company, its management and the stock's rise to prominence. Unfortunately, this is not the only questionable item in the article.

Omnigene Diagnostics was born when Omnigene Inc. sold its diagnostics unit to America Biodental Corporation in May of 1995. The company almost immediately fell apart after the transaction was completed. Chronically behind on rent and royalty payments, short of staff and under suit from its former parent, things were not going very well. Omnigene, perpetually short of money, was hard put to make payments to anyone -- prompting the eyebrows of one of its contractors to raise when chief executive Dominic Scacci drove up in a new car one day. The contractor discovered a list of friends and family that Scacci had been issuing shares to and promptly called the SEC to report a possible fraud.

Although the Times article focuses on message board postings regarding the company in the Investor's Network on America Online, the critical component to this manipulation -- like Systems of Excellence and Teletek before it -- came from offline. The third post in the America Online folder cites one Jerome Wenger, host of a syndicated radio program called "The Next Superstock" that almost exclusively focuses on speculative penny stocks short on cash but long on puffery. Wenger received an unspecified amount of Omnigene stock for his consulting services to "bring the company to the attention of investors," essentially inviting officials on his radio show and hyping the heck out of it.

Times reporter Leslie Eaton does a bang-up job detailing the activity on Investor's Network surrounding the stock, but falls critically short when discussing Wenger. To understand what has happened with Omnigene, it is absolutely critical to understand the role that Wenger has played in return for receiving shares of the company. The man went on a nationally syndicated radio program and promoted it as a solid idea. The third post in the Omnigene folder on the Investor's Network mentions him by name, and much of the later verbiage about the company that appears on the message boards is just paraphrasing what listeners heard on that show. Yes, the communication ability available using online services helped to spread the word about Omnigene. However, to call this company a "stock hyped on the Internet" completely ignores the unethical, if not criminal, role that Jerry Wenger apparently played in defrauding individual investors out of thousands of dollars.

A quick look at Omnigene's financials by the SEC allowed them to conclude that the company, far from being "a world leader" in the DNA test for detection of periodontitus, was really a company that was having major trouble paying its bills that was run by a former stockbroker "with a history of regulatory run-ins." That Wenger could promote this company on the radio in return for shares of the stock should be illegal. Rather than focusing on the pivotal role Wenger played, however, the Times article quickly degenerates into yet another in a series of offline screed about how you must be skeptical of everything you read online. The print version of the Times went as far as to showcase postings from the message boards in an attractive graphic over the article, space on the page where a picture of Jerry Wenger and an attempt to look at his checkered history promoting penny stocks on the radio might have been a much better attempt to get at the truth.

The facts are simple -- investors should be skeptical of all writing, whether it appears offline, online, as graffiti on bathroom walls or in a column called "Fool On the Hill" in the Motley Fool. The fact is, no single source of information has a monopoly on the truth, and every source of information is biased by its own preconceptions. The Times has consistently printed sensationalistic silliness about the Internet without even pausing to consider the systematic manipulation that occurs every single day in questionable newsletters and overblown radio shows across America points simply to intellectual sloth. The message boards are right there and easy to get to -- it is much easier to write an article about what is there than to actually call Wenger or try to get a transcript of whatever he happened to fabricate about Omnigene on the air.

Much like a Dow Jones wire story a few weeks back stating that IOMEGA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IOMG)") else Response.Write("(NASDAQ: IOMG)") end if %> was up because postings in the Motley Fool reported CNBC Technical Analyst John Murphy said the stock was going to $35, there is a dangerous stupidity that seems to settle on print reporters whenever they write about anything online. To actually have the foremost source of business information on the planet spit out a wire story that said Iomega was up because online postings said somebody on TV said something, and not to simply see what the person on TV said, is letting the tail wag the information dog. Yes, online is a medium for communication and all sorts of bad information gets spread there. But so is radio, so is television, so is the telephone -- and frankly, so is the newspaper.

Wenger's role in Omnigene was to actively promote a company in spite of questionable financials to anyone who would listen -- much like the role of the newsletter SGA Goldstar in the Systems of Excellence situation, also labeled an "online hype" stock. The funny thing is that most of these things seem to start offline, yet the press wants to focus on the online part because it is sexy. The fact is that the hype started offline. It's just that one of the places the hype ended up happened to be online. An article about how hype started on a radio show fed on itself online would have been fine. An article that sensationalizes online postings at the expense of not critically examining the root cause of an event that has cost individuals thousands of dollars of savings is not. Hopefully, at some point newspapers will be able to figure out this simple equation.

FOOL FEATURES

The winners of the AOL Members' Choice Awards were announced last night, and the Fool walked away with the award for Best Live Series for the 13 Steps to Investing Foolishly. We'd like to thank everyone who attended the series, and everyone who voted for it. You love us! You really, really love us!

In the Lunchtime News, the Fool Plate Special examines the possibility of Hughes Electronics selling off its defense electronics business. The defense electronics industry has been consolidating for a while, and this might be another step down that path.

CONFERENCE CALLS

12/05/96
ZYCON<% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZCON)") else Response.Write("(NASDAQ: ZCON)") end if %>, HADCO<% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HDCO)") else Response.Write("(NASDAQ: HDCO)") end if %>
On Hadco's acquisition of Zycon
(800) 633-8284, code 2245912

12/05/96
ANNTAYLOR STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANN)") else Response.Write("(NYSE: ANN)") end if %>
(November Sales Results)
(402) 351-9977 -- replay

12/05/96
SERVICE MERCHANDISE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SME)") else Response.Write("(NYSE: SME)") end if %>
(holiday update message, 5-10 minutes)
(402) 280-9014 (until 12/17)

12/05/96
SMART MODULAR TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SMOD)") else Response.Write("(NASDAQ: SMOD)") end if %>
after 5:30 p.m. EST
(800) 625-5288 (passcode: 155716) -- replay

ANOTHER FOOLISH THING

Special Holiday Gift Packs!

You can't give many better gifts to your loved ones than a nudge in the direction of financial independence. With only a few shopping days left until the Great Murksneeveling, if you haven't loaded up on gifts for your loved ones for Plankity-Plankity Day, you may be in trouble. That is, unless you hop over to FoolMart, where our holiday gnomes have assembled some special deals for you. They've put together carefully-bundled packages for college students, parents & grandparents, friends & neighbors, and Fool fanatics -- all offering you a special, limited-time discount over our regular prices. You can even mix and match and create your own bundle!

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.