HEROES

T. ROWE PRICE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TROW)") else Response.Write("(Nasdaq: TROW)") end if %> rose $1 7/8 to $37 1/8 after Business Week ran their weekly non-interactive look at what's hot and what might be taken over. T. Rowe Price landed there this week as one money manager says that it's a candidate to be taken over. In the last five years, T. Rowe has become one of the more well-known names in the mutual fund universe. Funds such as their no-load Index Fund appeal to 401(k) investors, while stars like Chip Morris with his Science & Technology Fund have demonstrated their abilities to generate market-beating returns. As attractive as the franchise would be for another financial institution, some investors might think that 4.75 times assets and 6.8 times book value is a little expensive for a take-out right now, notwithstanding T. Rowe Price's superior 24% return on equity this year.

Diversified semiconductor manufacturer ADVANCED MICRO DEVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMD)") else Response.Write("(NYSE: AMD)") end if %> gained $2 5/8 to $26 following yesterday's announcement that the company will layoff 250 employees. Cowen & Company responded with an upgrade to "buy" from "hold" today. Valuation-wise, AMD is looking a little pricey compared to other companies of its ilk. Even after numerous upward revisions in earnings estimates, the company is trading at 35 times 1997 estimates, compared to 17 times for INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> and 21 times for TEXAS INSTRUMENTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXN)") else Response.Write("(NYSE: TXN)") end if %>. The thinking behind such upgrades, though, is that AMD can generate higher earnings than currently estimated. However, estimates for 1997 would have to double from the current estimate of $0.75 per share to bring the forward multiple back in line.

QUICK TAKES: VERITY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VRTY)") else Response.Write("(Nasdaq: VRTY)") end if %> gained $2 1/2 to $18 3/8 after the information retrieval/catalog software company said earnings will come in at $0.02 per share, better than the loss the analysts have been expecting... Alternative energy company ENERGY CONVERSION DEVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENER)") else Response.Write("(Nasdaq: ENER)") end if %> rose $1 3/4 to $15 1/4 after the company was awarded $8 million to improve manufacturing of batteries for electric vehicles... ACE CASH EXPRESS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AACE)") else Response.Write("(Nasdaq: AACE)") end if %> gained $1 1/4 to $12 5/8 after the check-cashing services company said it has placed $20 million in debt with private investors, using that money to pay down bank debt... Radio broadcaster SFX BROADCASTING <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SFXBA)") else Response.Write("(Nasdaq: SFXBA)") end if %> moved up $2 7/8 to $28 3/4 after completing a swap of radio properties with Westinghouse <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WX)") else Response.Write("(NYSE: WX)") end if %>... SOFAMOR/DANEK GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SDG)") else Response.Write("(NYSE: SDG)") end if %> rose $2 5/8 to $31 1/8 as investors believe the company will be able to settle a lawsuit for allegedly selling defective products... Cable equipment company GENERAL INSTRUMENT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GIC)") else Response.Write("(NYSE: GIC)") end if %> gained $2 to $24 1/4 on fallout from the Baby Bells' abandonment of Tele-TV (discussed below in connection with CAI WIRELESS), which is a victory for cable companies and wireline broadcasting... NEWBRIDGE NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NN)") else Response.Write("(NYSE: NN)") end if %> rose $2 1/8 to $30 1/8 on announcing that a subsidiary has received a $30 million contract to install a wireless network in Saskatchewan.

GOATS

While we don't normally include stocks under $5 here, CAI WIRELESS SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CAWS)") else Response.Write("(Nasdaq: CAWS)") end if %> came into the lowlight today by virtue of its $1 3/16 drop, or 43%, to $1 9/16. The stock was demolished by word that NYNEX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NYN)") else Response.Write("(NYSE: NYN)") end if %>, BELL ATLANTIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEL)") else Response.Write("(NYSE: BEL)") end if %>, and PACIFIC TELESIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PAC)") else Response.Write("(NYSE: PAC)") end if %> are abandoning their Tele-TV interactive broadcasting venture, which involved CAI on the distribution side. In early October, the company's chief executive responded to a violent drop in share price by saying, "CAI continues to be the only independent MMDS company with a significant continuing investment by regional Bell operating companies..." CAI still has other deals going with wireless cable companies, but today's news means that right now telcos are more concerned with core markets than competing with cable companies.

CIRCUIT CITY STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CC)") else Response.Write("(NYSE: CC)") end if %> dropped $2 to $30 after reporting an 8% decline in same-store sales in November, compared with the same period in 1995. As many remember, 1995 wasn't a great year for personal computer (PC) retailers such as Circuit City and BEST BUY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBY)") else Response.Write("(NYSE: BBY)") end if %>. Circuit City ran up in anticipation of Christmas, hit its high that year in October, and declined thereafter. In PCs, the value-added lies in the software that makes them run; just as in television, it's Bill Cosby and Jerry Seinfeld that get rich, not the TV-maker. Unless PC retailers are prepared to go all the way and support the wide selection and the thinner business models that catalog or direct PC sellers can, this business model will be more trouble than it's worth.

QUICK CUTS: Software curriculum company TRO LEARNING <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TUTR)") else Response.Write("(Nasdaq: TUTR)") end if %> lost $3 3/8 to $18 1/2 after the company said it is delaying the release of its yearly earnings due to the continuation of its audit... COMPLETE MANAGEMENT INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: CMI)") else Response.Write("(AMEX: CMI)") end if %> dropped $1 1/4 to $12 7/8 after the medical practice management company said it sold 2 million shares of common stock, expanding current shares by 25%, as well as bonds to finance operations over the next year... Offshore company LEVIATHAN GAS PIPELINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEV)") else Response.Write("(NYSE: LEV)") end if %> slipped $3 to $42 after PaineWebber downgraded the company from "buy" to "attractive" today... COMSAT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CQ)") else Response.Write("(NYSE: CQ)") end if %> dropped $1 1/2 to $24 5/8 after the company asked the FCC to revisit its regulatory policies regarding the satellite industry as GM/HUGHES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GMH)") else Response.Write("(NYSE: GMH)") end if %> prepares to merge with PANAMSAT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPOT)") else Response.Write("(Nasdaq: SPOT)") end if %>.

FOOL ON THE HILL
An Investment Opinion by MF Templar

Jobs For Sale

One of the more interesting groups of companies that I keep an eye on is the for-profit education sector. Although the label seems all encompassing, there is really a lot of diversity among the various corporations that earn their keep in this business. The differences between one company and another can be so startling that it makes you pause and wonder whether or not you should even be classifying these companies together in the same group. Although firms in this particular niche of the market tend to have very different business strategies, they are united by one common thread -- they make students pay for their education and aim to make a substantial profit on that chunk of change.

Anyone who tracks initial public offerings on a more than casual basis knows that for-profit education was a hot industry group in 1995. Looking at the substantial price gains that shares in these companies have posted, it comes as no surprise that they were literally tripping over themselves to come public. Despite the fact that they often were selling very different products, these offerings are strange in that almost every company did quite well afterwards -- definitely not the trend when you have many of the same kind of companies come public at once. (Think of the rash of semiconductor equipment companies in 1995 and the teleservices companies this year for examples of how poorly a lot of hot companies coming public at the same time can fair.)

The class of 1995 stacks up as a pretty mixed bunch. LEARNING TREE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LTRE)") else Response.Write("(Nasdaq: LTRE)") end if %> debuted in December of 1995 at around $15. The company specializes in three-day seminars given on-site to client company employees for various software maintenance, programming and updating. APOLLO GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: APOL)") else Response.Write("(Nasdaq: APOL)") end if %>, which barely missed 1995 with a December 1994 offering, has a completely different for-profit business. Billing itself as the University of Phoenix, the company has campuses in more than 80 locations across the country catering to working adults who need certification, undergraduate or graduate degrees. The stock is very volatile as the father and son that started the company still hold more than 80% of the voting stock. ITT EDUCATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ESI)") else Response.Write("(NYSE: ESI)") end if %> was also a late December '94 baby, offering technical and postsecondary training geared to electronics and engineering-related design. The only real conventional colleges that are simply for-pay are DEVRY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DV)") else Response.Write("(NYSE: DV)") end if %>, public for more than three years, and STRAYER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STRA)") else Response.Write("(Nasdaq: STRA)") end if %>, which appeared for the first time this summer.

The most interesting of the bunch was part of the 1995 crop. COMPUTER LEARNING CENTERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLCX)") else Response.Write("(Nasdaq: CLCX)") end if %> came public in June of 1995 at around $8 a share, remained lethargic for a few months, and then shot up to the $20 level virtually overnight. Computer Learning Centers targets core computer proficiencies that employers are looking for. Instead of selling initial or continuing education, the company is actually in the business of selling jobs. Using innovative pricing that puts tuition at about half of a graduate's starting salary in a specific job, the company has been generating incredible same-school sales growth over the past few quarters -- touching 11% in the third quarter reported on Monday night. Furthermore, the company's Advantec Institute offers high-level training in formats much longer than Learning Tree, and much more specialized than anyone else in the industry. Courses include Certified Novell Engineer/Windows NT, Internet/Intranet Development, Oracle 7 Application Development, and UNIX C/C ++.

Strong growth at Computer Learning Centers has been overshadowed recently by problems with the company's Chicago Learning Center, which ran into federal education financing problems on September 30th. The Department of Education (DOE) revoked Computer Learning Center's Title IV status to grant loans under the Federal Family Education Loan (FFEL) and Federal Pell Grant programs because the default rate went above a proscribed limit for too long a time. Computer Learning had unsuccessfully tried to get the DOE to recognize its 1994 default rate, which was within tolerances. The Chicago Learning Center remains able to participate in the Federal Supplemental Educational Opportunity Grant program and the Federal Perkins loan program. Computer Learning said it would finance the loans itself and recently completed a small secondary offering that gives it ample cash to do this. This move combined with the opening of two new centers this quarter and the rapid growth of Advantec, it is no surprise the company soundly trounced estimates of $0.25 EPS by three cents earlier this week.

When looking at the valuation of Computer Learning Centers and other education providers, one must consider the federally regulated moat that surrounds the businesses. Unlike most lines of work, you just cannot up and start an education institution, for-profit or not. To be eligible to participate in Title IV programs, you need to be open for more than two years. To get students, however, you need to have that financing -- or take significant risks financing the student loans yourself. As a result, Computer Learning Center's only serious competition is the inefficient non-profit education institutions. Current estimates from two analysts are $1.06 EPS for this year and $1.29 next year. If the company can trade at 25 times forward estimates for fiscal 1997, only five quarters away, the price would be $32 1/4. Given the company's accelerating growth rate that hit 40% last quarter, this may not be hard to imagine -- particularly given that the firm came close to it a few weeks ago.

FOOL FEATURES

The Lunchtime News looks at Alan Greenspan's amazing ability to send the market into a tizzy. His speechifying made the lunchtime "Ups" writer's job pretty easy today, but the market rallied, and we put Dale back to work this afternoon.

This weekend, Fool's Gold features MF BudFox's excellent Iomega Retrospective. Other great features that you can find in Fool's Gold are: a Sector Snapshot on Security Software, the Weekend Research Center, timely technology news from the Electronic Engineering Times, and yet another excellent Fribble by MF Runkle, entitled, "Intel -- a 10X Change,"

CONFERENCE CALLS

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)

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

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)

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)

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

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