HEROES

PLASMA & MATERIALS TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMAT)") else Response.Write("(Nasdaq: PMAT)") end if %> drove the lane and slammed home a $3 1/4 gain to close at $15 1/8 on announcing a "breakthrough" in semiconductor fabrication. The semiconductor equipment manufacturer said it will present results of tests using a proprietary deposition process that will improve the characteristics of insulating materials inside a semiconductor, one of the holy grails of improving performance. The technology came along with the company's purchase of Electrotech, which agreed to merge with Plasma & Materials last summer. If the process works as planned, the purchase price of 8.5 times earnings and 1.5 times revenues (on a run-rate basis) for Electrotech was well worth it.

Fingerprint verification company IDENTIX INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: IDX)") else Response.Write("(AMEX: IDX)") end if %> surged $2 1/8 to $12 7/8 after announcing that its TouchNe system will be incorporated into ORACLE's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> Universal Server. According to Identix, its security system eliminates the need for cards and remembering codes, since fingerprints have, after all, proved their worth in authentication. Teaming up with Oracle is a strategic win for the company because of the reach and the variety of applications addressed by the universal server. Hitching its wagon to Oracle builds Identix's installed base and either builds the bottom line or funds further sales, marketing, and development efforts without diluting shareholders.

It's official, Wall Street really doesn't hate auto-lenders! COLE TAYLOR FINANCIAL GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CTFG)") else Response.Write("(Nasdaq: CTFG)") end if %> rose $1 1/4 today to $19. In the last several weeks, the auto-lending business has witnessed both the MERCURY FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MFN)") else Response.Write("(NYSE: MFN)") end if %> and JAYHAWK FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JACC)") else Response.Write("(Nasdaq: JACC)") end if %> debacles. Even so, Wall Street cheered today when Cole Taylor announced it was closing its deal on the sale of their slow-growing banking businesses to focus solely upon auto-lending. This will mean more exposure to the possibly troubled auto-lending sector, but will also mean more opportunity for growth and profit. Evidently, both the company's management and Wall Street feel that the risk is worth the possible reward

QUICK TAKES: Subacute healthcare provider THERATX INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THTX)") else Response.Write("(Nasdaq: THTX)") end if %> gained $3 1/2 to $16 5/8 after agreeing to merge with VENCOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VC)") else Response.Write("(NYSE: VC)") end if %>... FIRST ENTERPRISE FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FENT)") else Response.Write("(Nasdaq: FENT)") end if %> gained $1 3/8 to $9 1/2 after the auto loan company reported Q4 earnings per share (EPS) of $0.05 and loan loss reserves of $0.47 per share... Life science research outsourcer TRIPOS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TRPS)") else Response.Write("(Nasdaq: TRPS)") end if %> rose $2 1/2 to $23 after reporting Q4 EPS of $0.32, beating estimates of $0.22 per share... PHOENIX INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PHXX)") else Response.Write("(Nasdaq: PHXX)") end if %> gained $2 3/16 to $22 1/4 after the banking software company reported fourth quarter EPS of $0.28, smoking estimates of $0.22 per share... OLYMPIC FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OLM)") else Response.Write("(NYSE: OLM)") end if %> rose $1 1/2 to $11 3/8 after the sub-prime auto lender said its finances are solid and that it intends to proceed with a $200 million call-in of a note and a $300 million debt issue... After filing to sell 20% of its Hartford Life unit in an initial public offering, ITT HARTFORD GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HIG)") else Response.Write("(NYSE: HIG)") end if %> moved up $3 1/8 to $78 3/8... BREED TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BDT)") else Response.Write("(NYSE: BDT)") end if %> rose $1 5/8 to $23 3/8 after Prudential Securities added the airbag equipment company its "single best idea" list... Broker/investment banker DONALDSON, LUFKIN & JENRETTE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLJ)") else Response.Write("(NYSE: DLJ)") end if %> gained $3 1/8 to $43 1/4 on takeover speculation... PROVIDENT COMPANIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PVT)") else Response.Write("(NYSE: PVT)") end if %> rose $2 7/8 to $52 1/4 on reporting Q3 EPS of $0.89, beating estimates of $0.79.

GOATS

Prudential Securities' energy analysts must have woken up on the wrong side of the derrick this morning, as that firm downgraded a number of energy companies today. Among those downgraded to "sell" were CABOT OIL & GAS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COG)") else Response.Write("(NYSE: COG)") end if %>, down $1 7/8 to $16 7/8; LOMAK PETROLEUM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOM)") else Response.Write("(NYSE: LOM)") end if %>, down $2 1/8 to $18 1/4; and NEWFIELD EXPLORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NFX)") else Response.Write("(NYSE: NFX)") end if %>, which lost $3 to $20. The problem was industry-wide rather than company-specific, since few if any Wall Street analysts will put out a "sell" recommendation unless it can be explained by a sector judgement or a very dire company-specific situation. Since these three companies didn't suddenly become illiquid, the sector call based on valuation and the price of oil can be assumed without going too far out on a limb. Companies downgraded to "hold" were VINTAGE PETROLEUM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VPI)") else Response.Write("(NYSE: VPI)") end if %>, down $3 5/8 to $29 1/4, and BELDEN & BLAKE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BELD)") else Response.Write("(Nasdaq: BELD)") end if %>, down $3 1/4 to $21 1/2.

Is the "tech sector" correcting today? The action in the networking and PC companies appears to suggest that as investors unloaded shares today. Never mind that decreases in network interface card prices stimulate demand for PCs and other networking items (such as routers and other WAN interfaces). Another thing about today's action is that February usually brings about a post-holiday depression regarding growth prospects for PCs. That being said, a number of stocks in the PC industry were down, including INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>, which fell $4 5/8 to $151 3/4; GATEWAY 2000 <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GATE)") else Response.Write("(Nasdaq: GATE)") end if %> dropped $2 1/2 to $58 1/4; COMPAQ COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> lost $5 1/4 to $77 3/8; SEAGATE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %> ticked down $2 1/2 to $48; HEWLETT-PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> lost $2 3/4 to $49 1/8; DELL COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> shed $2 1/2 to $63 1/4; and disk drive maker QUANTUM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QNTM)") else Response.Write("(Nasdaq: QNTM)") end if %> fell $1 13/16 to $38 5/16.

QUICK CUTS: Intermodal marine containers lessor CRONOS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CRNSF)") else Response.Write("(Nasdaq: CRNSF)") end if %> dropped $2 3/8 to $4 1/8 after a number of board members, as well as the company's auditor, resigned... BROADBAND TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BBTK)") else Response.Write("(Nasdaq: BBTK)") end if %> lost $2 1/4 to $9 7/8 following last week's report of a greater-than-expected quarterly loss... Remote access server company PREMISYS COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRMS)") else Response.Write("(Nasdaq: PRMS)") end if %> fell $3 3/8 to $19 in wake of today's networking turbulence... TUBOSCOPE VETCO <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TUBO)") else Response.Write("(Nasdaq: TUBO)") end if %> lost $2 1/8 to $12 1/4 as the oil services company was dragged down by weakness in drilling stocks... Telco equipment company ECI TELECOM LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ECILF)") else Response.Write("(Nasdaq: ECILF)") end if %> fell $2 1/8 to $20 7/8 after reporting Q4 EPS of $0.37, a wee bit shy of estimates of $0.38... OAK INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OAK)") else Response.Write("(NYSE: OAK)") end if %> lost $1 1/4 to $19 1/2 as the telco equipment components supplier reported fourth quarter EPS of $0.30, falling short of estimates of $0.35... Oil driller CHESAPEAKE ENERGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHK)") else Response.Write("(NYSE: CHK)") end if %> didn't fare well with many in its sector falling, as it lost $3 1/8 to $19 7/8 itself. PRECISION DRILLING CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PDS)") else Response.Write("(NYSE: PDS)") end if %> also slid $4 to $42 1/4... DESIGNER HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DSH)") else Response.Write("(NYSE: DSH)") end if %> fell $2 1/8 to $11 after the company said it would delay the rollout of some portions of the DKNY jeanswear line due to problems with DONNA KARAN INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DK)") else Response.Write("(NYSE: DK)") end if %>... Contract manufacturer CENTENNIAL TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CTN)") else Response.Write("(NYSE: CTN)") end if %> lost another $2 3/8 to $16 1/2 as networkers fell, while communications chip maker LEVEL ONE COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LEVL)") else Response.Write("(Nasdaq: LEVL)") end if %> lost $3 1/8 to $19 7/8... GAYLORD ENTERTAINMENT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GET)") else Response.Write("(NYSE: GET)") end if %> fell $3 1/8 to $22 1/4 after agreeing to sell its Nashville Network and Country Music Television cable outlets to WESTINGHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WX)") else Response.Write("(NYSE: WX)") end if %> for $1.55 billion... VALUE CITY DEPARTMENT STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VCD)") else Response.Write("(NYSE: VCD)") end if %> lost $1 to $8 following last week's report of a 1% decline in January same-store sales... Seismic data company VERITAS DGC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VTS)") else Response.Write("(NYSE: VTS)") end if %> fell $2 to $16 7/8 along with the oil drillers... Life sciences equipment maker BIO-RAD LABS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: BIO.A)") else Response.Write("(AMEX: BIO.A)") end if %> lost $1 7/8 to $29 1/8 on continued fallout from last week's report of a 40% decline in pre-charge net income.

HELD: Finance company THE THAXTON GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THAX)") else Response.Write("(Nasdaq: THAX)") end if %> pre-announced last Friday that it will report a Q4 loss of $0.07-0.14 per share due to the company's strengthening reserves against possible losses in auto financing.

FOOL ON THE HILL
An Investment Opinion by MF Templar

The Jagged, Downward Path

3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %> continued its jagged, downward path today, cratering at $37 1/4 -- down $13 1/2 (26.60%) on the day. The Santa Clara, California-based manufacturer of networking equipment announced massive price reductions of its network interface cards (NICs), low-end hubs and switches that will hit profit margins next quarter hard. This follows the January 28th comments to analysts by 3Com Chief Executive Eric Benhamou citing "slight weakness" in December, information that caused the company's shares to trade down decisively from the low $70s. Since January 21st, when the stock closed at $74 7/8 after trading as high as $77 during the day, the shares have fallen roughly 50%.

Compared to what had been anticipated, the third quarter ending February 28th looks pretty ugly. 3Com estimates sales will be somewhere between $770 and $810 million. While a nice gain from the $606 million the company booked in last year's third quarter, this is down sequentially from the $820.3 the company enjoyed last quarter. Profits look even worse. Analysts had been looking for something around $0.60 EPS after Benhamou's comments, roughly even with the $0.61 per share that the company earned in the second quarter. After today's price cuts, 3Com is forecasting profits in the mid-$0.40 to low $0.50 EPS range compared to $0.42 last year.

3Com is responding to INTEL'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> move last week to slash prices on its 10/100 megabit NICs by more than 40%. Depending on who you talk to, Intel and 3Com are either tied for first or 3Com has been gaining ground on Intel in recent months. 3Com says Intel is number two in the NIC market, holding about 30% of the market compared to 3Com's 40% market share. Publicly available documents reveal that for calendar 1996, both companies had 36% market share. Either way you slice it, Intel is looking to be number one in the market it created in 1994 when it launched the first Fast Ethernet cards.

Fast Ethernet 10/100 NICs allow computers to use either fast ethernet local area networks (LANs) to transmit data at 100 megabits per second or to downshift to handle older LANs that only go at 10 megabits per second. Until recently, the market has been dominated by 10 megabit NICs, with 10/100 NICs currently accounting for only about 15% of the $4.4 billion network-adapter card market. The price cuts by Intel and now 3Com potentially change this dynamic, however, given that 10 megabit and 10/100 megabit NICs sell for about the same price -- causing some analysts to call 3Com's current estimates low given the possibility that it may have to take a future price cut on 10 megabit NICs.

3Com has dropped its price for EtherLink XL 10/100 PCI NICs from $135 to $94 each in lots of 100. Last week Intel dropped its price on a comparable product from $159 to $99 in lots of 100, leaving 3Com the terrible choice of cutting prices and making up the lower margins on higher volume, or letting Intel take the number one spot. Intel's plan is to drive the NIC market to one ruled by volume and price, as its expertise with working with silicon will give it the advantage on those competitive terms. 3Com's response will be to continue adding software to its products while matching Intel's prices. How the price reductions on NICs as well as the price reductions on 3Com's lower-end hub and switch product line will effect 3Com's long-term financial model is anyone's guess, although right now it is clear the market is not all that sanguine.

3Com believes that smaller network card manufacturers such as ADAPTEC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADPT)") else Response.Write("(Nasdaq: ADPT)") end if %> will be affected the most by today's move -- a comment that caused Adaptec shares to fall $4 9/16 to $35 1/8 today. 3Com's price cuts in the low-end hub and switch market are viewed as most detrimental for NETWORK PERIPHERALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NPIX)") else Response.Write("(Nasdaq: NPIX)") end if %>, down $7/8 to$16 1/2, MRV COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MRVC)") else Response.Write("(Nasdaq: MRVC)") end if %>, off $1 to $27 3/8, and BAY NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAY)") else Response.Write("(NYSE: BAY)") end if %>, down only $5/8 to $18 7/8. These low-end products are what small- to medium-sized businesses currently use to build LANs, a market that 3Com has historically dominated in spite of recent incursions by CISCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> in order to increase its overall sales volume.

Investors are taking 3Com's demand issues in December and price cuts today as signs that the entire networking equipment sector is coming apart at the seams, helping to explain the widespread carnage among companies that only compete in the switching part of the equation, if at all. Combining 3Com's woes with the problems articulated by CASCADE COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCC)") else Response.Write("(Nasdaq: CSCC)") end if %> on January 23rd, namely flat sales of frame-relay products and growth in days sales outstanding (DSOs), market watchers are inferring a broad-based weakness. The failure of Cisco Systems to meet or beat the whisper numbers that had been making the rounds on the Street also confirms an underlying weakness in the group for many momentum players.

Among the other networking stocks down today: golden child of networking Cisco Systems slid $5 1/8 to $58, its lowest level since September of 1996. Remote access and carrier-class switch manufacturer ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> dropped $4 5/16 to $62 15/16; upscale switch maker CABLETRON SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CS)") else Response.Write("(NYSE: CS)") end if %> was slapped for $1 7/8 to $29; hub-maker U.S. ROBOTICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USRX)") else Response.Write("(Nasdaq: USRX)") end if %> dropped $5 1/8 to $61 7/8; asynchronous transfer mode (ATM) and LAN switch manufacturer FORE SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FORE)") else Response.Write("(Nasdaq: FORE)") end if %> was stunned for $2 5/16 to $27 3/16; and MADGE NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MADGF)") else Response.Write("(Nasdaq: MADGF)") end if %>, the red-headed step-child of the networking world, lost $1 1/16 to close at $12 3/8 in spite of reporting much better than expected quaterly earnings of $0.10 per share last week.

(As yours truly, MF Templar, has the dubious distinction of writing the Fool Portfolio report on this inauspicious day, I defer in-depth discussion of 3Com's valuation until 7:30 PM when the Fool Portfolio report goes up. Please stay tuned for further information.)

CONFERENCE CALLS

RAINFOREST CAFE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAIN)") else Response.Write("(Nasdaq: RAIN)") end if %>
(402) 222-9929 -- through February 11

CISCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>
(800) 633-8284 in USA
(303) 446-5399 elsewhere
passcode: 2338711#

ANN TAYLOR STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANN)") else Response.Write("(NYSE: ANN)") end if %>
(re: January sales)
(402) 351-9977 -- replay through 5:30 PM EST on 2/14

ALLIED SIGNAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALD)") else Response.Write("(NYSE: ALD)") end if %>
(800) 633-8284 (reservation # 2216671)
replay avail. thru 2/13

02/11/97 (Tuesday)
APPLIED MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMAT)") else Response.Write("(Nasdaq: AMAT)") end if %>
(800) 642-1687 (access code: 221082) -- replay after 5:30

FOOL FEATURES

The Fool introduces a new feature today -- the Daily Double. It provides a description and valuation of a company whose stock has more than doubled over the last six months. Each day, the Fool will review the business, talk about the cause of its doubling in value, and broadly consider valuation.

Our aim is two-pronged. We hope that by concentrating attention on spectacular recent performance, together we'll come to a more thoroughgoing understanding of how and why certain businesses rapidly double in value. But just finding and focusing on the doubles isn't fulfilling. Additional to that task, we'll venture out in search of a fair value for the business.

In the Lunchtime News today, MF Templar covered 3Com's big drop, which he elaborated on in tonight's Fool on the Hill. The company was down $13 3/8 to $37 3/8 following an announcement that they would miss analysts' third quarter earnings estimates.

ANOTHER FOOLISH THING
A New Fool Tool!

Valuations! Ratios! Factors! Rates! There are so many numbers tossed around Fooldom that it's easy to get lost, swimming in a sea of calculations, adrift on the waves of fractional roots, desperately searching for the shores of mathmatical reason. Okay, that might be a bit dramatic, but there are a lot of numbers to crunch. Enter Fooldom's brand-new and exciting ValuTool! This Foolish software package is a simple and powerful way to work with the vast amount of data necessary to determine the value of a stock. Give ValuTool the raw numbers and it'll compute many of the ratios and valuations that you read about as you wander through Fooldom and beyond -- The Foolish eight, the PEG strategies, and lots more! Spend more of your time researching and less of it doing calculations. Check out ValuTool in FoolMart today!

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

Brent Harris(MF Apollo),Guest Hero on Cole Taylor

THE DAILY NEWS CAN BE DELIVERED DIRECTLY TO ANY INTERNET E-MAIL BOX.