HEROES

ST. JOE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SJP)") else Response.Write("(NYSE: SJP)") end if %> gained $10 1/8 to $73 1/4 today, the type of gain usually befitting some little tech stock with a vaporware news release. However, St. Joe is a large paper and industrial company that owns 3% of the real estate in the state of Florida. The company is restructuring to take advantage of its real estate assets, and yesterday announced the appointment of Peter Rummell as its Chair and CEO. Rummell will resign his position at DISNEY's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %> Imagineering unit, where he was responsible for Disney's theme park and resort development. Rummell's appointment created something in the neighborhood of $300 million today for St. Joe shareholders just on the strength of his experience at Disney. The day Stephen F. Bollenbach left his position as CFO at the company to join HILTON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HLT)") else Response.Write("(NYSE: HLT)") end if %>, Hilton's market cap grew over $450 million.

Shares of videoconferencing company C-PHONE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CFON)") else Response.Write("(Nasdaq: CFON)") end if %> shot up $2 1/2 to $7 today after the company announced its set-top box system for consumer videoconferencing. The system runs over regular phone lines rather than the current standard of ISDN, which most people complain is a hassle to set up. The company has set its initial retail price at $350 for one of the boxes, which plugs right into the back of a regular TV, plus $19.95 for a network subscription.The press release suggests that it's perfect for grandma to watch the new toddler, but grandma also has to shell out for the box and the subscription. The device also presents an interesting alternative for small business enterprises with neither the networking talent nor hardware and WAN connection for their own high-grade system.

QUICK TAKES: ENERGY VENTURES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EVI)") else Response.Write("(NYSE: EVI)") end if %> jumped $5 1/2 to $58 1/4 after Morgan Stanley started coverage of the oilfield equipment company with a "strong buy" rating, setting a 1997 earnings estimate of $3.15 per share... Seismic survey company VERITAS DGC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VTS)") else Response.Write("(NYSE: VTS)") end if %> gained $1 3/4 to $19 5/8 after a George Soros group filed with the SEC revealing its 5.6% stake... INGRAM MICRO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IM)") else Response.Write("(NYSE: IM)") end if %> gained $1 7/8 to $23 on the INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> Pentium MMX effect today... Headphone and loudspeaker company KOSS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KOSS)") else Response.Write("(Nasdaq: KOSS)") end if %> gained $3 1/8 to $9 3/4 on a 104% increase in Q2 earnings per share (EPS)... CADUS PHARMACEUTICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KDUS)") else Response.Write("(Nasdaq: KDUS)") end if %> gained $3 3/8 to $18 1/2 on yesterday's news that the company will extend its research agreement with BRISTOL MYERS SQUIBB <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMY)") else Response.Write("(NYSE: BMY)") end if %>... Electronics materials company SHELDAHL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHEL)") else Response.Write("(Nasdaq: SHEL)") end if %> rose $4 to $23 1/2 after announcing that chip-packaging company Asat has licensed one of its substrates... PRINTRONIX INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTNX)") else Response.Write("(Nasdaq: PTNX)") end if %> rose $1 3/4 to $16 3/4 after the printer company reported a 290% increase in Q3 EPS... Morgan Stanley boosted the shares of MOTOROLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> $2 1/8 to $63 5/8 with a rating upgrade in front of tomorrow's earnings release... TEAM RENTAL GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TBUD)") else Response.Write("(Nasdaq: TBUD)") end if %> gained $2 1/8 to $20 3/8 as the company is said to be ready to buy the Budget Rent a Car division of FORD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %>... Deathcare firm SERVICE CORP. INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SRV)") else Response.Write("(NYSE: SRV)") end if %> climbed $1 3/4 to $29 3/8 after calling off its bid for rival LOEWEN GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LWN)") else Response.Write("(NYSE: LWN)") end if %>, which fell $4 1/8 to $36 3/4 on the news.

GOATS

NETSCAPE COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> regressed $10 7/8 to $47 7/8 today as J. William Gurley at Deutsche Morgan Grenfell downgraded the shares to "accumulate" from "buy." Gurley believes that Netscape will meet or beat earning estimates of $0.11 per share this quarter, but that upside may be limited for the coming quarters. According to Dow Jones, Gurley also believes that Netscape's new per-seat pricing and a lengthening sales cycle may hold back sales comparisons at what has been to-date the world's fastest growing software company. As such, investors might have a hard time reconciling a price/sales multiple of 24 times (based on last night's closing price and completion of the quarter with $115 million in revenues). The company's earnings multiple is also pretty plump, but investors should recognize that the company expenses almost everything it does, rather than capitalizing its activities as other software firms do.

Remote access networker SHIVA COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHVA)") else Response.Write("(Nasdaq: SHVA)") end if %> was disarmed for a $15 1/2 loss to $19 3/8 after warning of a poor results for the third quarter. Blaming OEM customer IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> for an order pushout, the company said sales will fall up to 16% sequentially, to $48-50 million. That's a pretty huge slap in the face for investors looking at last quarter's sequential sales growth rate of 18% when adjusting for the sale of its Spider division in the second quarter. According to Data Communications, the remote access market grew 150% in 1996, so Shiva's impressive sequential growth actually lags the market. The return of Shiva shares to their 1994 split-adjusted IPO price may signal that one of the premier companies in remote access is being outflanked in this fast-moving market.

PREMISYS COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRMS)") else Response.Write("(Nasdaq: PRMS)") end if %> slipped $4 5/16 to $32 3/4 after the company announced Q3 earnings will be reduced by $0.09 per share due to a one-time royalty payment to Positron Fiber Systems. However, this reduction in earnings will cover a 3-year technology licensing agreement and should not worry investors, on its own, as a sign of underlying weakness in the earnings generating ability of the company. The company could have elected to stuff the charge over 12 quarters into its unbelievably large 65% gross margins, associating the revenues gained with an expense, and gradually reducing an asset called "technology license agreement." Many investors think the one-time expense is the prudent thing to do, rather than junking up the balance sheet -- Premisys might think otherwise after today.

QUICK CUTS: ALTERNATIVE RESOURCES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ALRC)") else Response.Write("(Nasdaq: ALRC)") end if %> lost $2 to $14 3/4 after forecasting weak Q4 earnings, possibly due to industry-wide margin pressures... Restating downward 1994-1995 sales and earnings, SYSTEM SOFTWARE ASSOCIATES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SSAX)") else Response.Write("(Nasdaq: SSAX)") end if %> was mauled $1 1/4 to close at $10 1/2... SUMMIT CARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUMC)") else Response.Write("(Nasdaq: SUMC)") end if %> fell $2 to $13 1/2 after the acute healthcare firm forecast Q2 EPS 33% below last year, not including a charge... Radiology contrast agent firm SONUS PHARMACEUTICALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SNUS)") else Response.Write("(Nasdaq: SNUS)") end if %> fell $3 5/8 to $30 1/2 despite making a flurry of positive press releases and appearing at the Hambrecht & Quist health conference today... DH TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DHTK)") else Response.Write("(Nasdaq: DHTK)") end if %> shed $4 to $18 after the transaction printer company said Q4 sales will be soft... Cutting to its rating to "outperform" from "buy," Smith Barney sent LA QUINTA INNS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LQI)") else Response.Write("(NYSE: LQI)") end if %> down $1 1/4 to $17... HAEMONETICS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HAE)") else Response.Write("(NYSE: HAE)") end if %> lost $2 3/4 to $16 3/4 after the medical products company said Q3 EPS will fall 15-20% below last year's $0.32... Engineering and design software company ANSYS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ANSS)") else Response.Write("(Nasdaq: ANSS)") end if %> lost $4 7/8 to $8, saying Q4 revenues will come in 10% below Street estimates... TIMES MIRROR COMPANY PEPS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TME)") else Response.Write("(NYSE: TME)") end if %> plunged $7 3/4 to $44 3/4 as the derivative is backed by Netscape stock... Las Vegas casino operator STATION CASINOS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STN)") else Response.Write("(NYSE: STN)") end if %> fell $1 to $9 1/8 after Oppenheimer cut its rating and estimates on the company... BEAZER HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BZH)") else Response.Write("(NYSE: BZH)") end if %> fell $1 1/4 to $17 on a Salomon Brothers downgrade... Acute care facilities RENAL TREATMENT CENTERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RXT)") else Response.Write("(NYSE: RXT)") end if %> lost $1 3/8 to $22 5/8 even though the company said it' is comfortable with Q4 estimates of $0.25 per share.

FOOL ON THE HILL
An Investment Opinion by MF Templar

My Bookshelf:
Part Two of a Few

SECURITY ANALYSIS is the bible of fundamental analysis. Originally published in 1934, the tome systematically lays bare the science of security analysis. Written with the assistance of co-writer David Dodd, Benjamin Graham's intellectual tour de force has yet to be equaled in the annals of investing. Written only a few years after the devastating stock market crash of 1929, Graham had one objective -- to make the investment process as safe as possible using knowledge of key factors about the business.

Beginning with bonds and moving quickly to stocks, Graham and Dodd go over all of the angles. Articulating a comprehensive theory of fixed-value and common stock investment, they examine in detail the various factors that one should consider when valuing securities. Dividends, extraordinary items, depreciation, amortization, capital structure and balance sheet analysis are all described and defined in lurid detail. It is impossible to read Security Analysis and not come away with a deeper understanding of corporate finance and how it relates to investing.

On the downside, let's be frank -- Security Analysis is not an easy book to read. However, it remains one of the key textbooks for communicating fundamental analysis to millions of MBAs, in spite of the fact that it first saw print 63 years ago. I personally believe that reading and understanding most of Security Analysis would make a great benchmark for determining whether or not you are ready to start investing your money in specific investments. Sure, Graham is very value-biased in his investment philosophy, but looking for growth without focusing on the price you are paying is the golden road to underperformance.

BEATING THE STREET was Peter Lynch's follow-up to his best-selling book, One Up On Wall Street. Although many have accused him of writing the same book twice, his second time at bat allows him to add even more clarity to his basic message. Lynch, for those unfamiliar with the pantheon of investment gods, managed Fidelity's flagship Magellan fund for more than 20 years, compounding one of the most fantastic performance records ever. Although Lynch did not invent the "growth at a reasonable price" (GARP) approach to buying stocks, his unique spin on it allowed him to become one of the most successful portfolio managers ever.

Lynch's basic message in Beating the Street is quite Foolish -- you, an individual, can actually find great stocks before Wall Street does. Using a combination of intelligence, reflection, perseverance and discipline, it is possible for the average person to uncover great investments. Although many mistakenly boil Lynch down to "buy what you like," his real point of view is that products and services you use and enjoy are often provided by excellent companies. If you research these companies and find out whether or not the stock that corresponds to them is priced favorably, you have an outstanding chance at compounding market beating returns.

Although much is made of Lynch's connection to Magellan, I found the most helpful parts of the book were Lynch's lucid descriptions of various companies with superior products or services and what happened to the stock. Like little morality plays, these small dramas of stockpicking are rich with useful details applicable to anyone's style of portfolio management. Also, Lynch's description of how he turned his wife's IRA into a million dollar account by focused investing in the undervalued shares of FEDERAL NATIONAL MORTGAGE ASSOCIATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FNM)") else Response.Write("(NYSE: FNM)") end if %> serves as an example of how a focused portfolio of only a few stocks can create fantastic wealth.

WHAT WORKS ON WALL STREET was probably the most anticipated investment book of 1996. James O'Shaughnessey gained unprecedented access to Standard & Poor's Compustat database and back-tested the returns generated by various clearly defined investment approaches over the past 40 years. The book challenges quite a bit of the conventional wisdom about portfolio management and is a compelling, although statistically flawed work.

In What Works On Wall Street, O'Shaghnessey examines the performance of the highest and lowest price/earnings, price/sales, price/book value, relative strength, yield and earnings growth stocks over various periods, trying to find which types of companies tended to perform best. Although you can quibble with a lot of the data, the sheer magnitude of the task O'Shaghnessey has undertaken is impressive. His final, multi-factor strategies that generated the best investments over time are very interesting, particularly the Cornerstone Value approach, which is very similar to the Dow Dividend Approach with a few other bells and whistles.

O'Shaughnessey's book and its findings should be read, discussed and disputed by all investors. However much one can criticize the work for being too focused on the plight of professional money managers looking to pick fifty stocks and not individual investors looking to pick five, the information is valuable and compelling. The only warning that I would give to readers is to be aware of a methodological error in the way O'Shaughnessey does the statistics. Because of the time required, O'Shaghnessey and his team looked at how the 50 highest or lowest stocks in any particular group performed. Extrapolating the performance of extreme data points to the entire set of data being studied is not entirely correct, as there are many processes in nature where the middle actually does not act like the extremes. Mass and velocity in physics are one example, where super-light and super-dense objects both do not obey the laws of physics, while everything in between does. With this caveat, I think an investor can learn a lot from the book.

My Bookshelf, Part One.

CONFERENCE CALLS

SHIVA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHVA)") else Response.Write("(Nasdaq: SHVA)") end if %>
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available until Friday, 1/10
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FIRST TEAM SPORTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FTSP)") else Response.Write("(Nasdaq: FTSP)") end if %>
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1-800-633-8284 (reservation # 2329724)

ANOTHER FOOLISH THING
Painless Stock Valuations

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, demonstrating 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 at keyword: FoolMart on America Online or at our website (). You might also be interested in his weekly Industry Decathlon report, delivered by e-mail or fax. In it, Bogey examines a different industry each week and runs its top players through his decathlon to discover which one company looks the most attractive.

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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