HEROES

Merger and acquisition activity in the healthcare field was rather heavy today. Eyeglass lens casting equipment company INNOTECH INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IIII)") else Response.Write("(Nasdaq: IIII)") end if %> gained $4 5/8 to $13 1/2 after agreeing to be acquired by JOHNSON & JOHNSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %> for $13.75 per share in cash. Medical equipment renter and service company UNIVERSAL HOSPITAL SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UHOS)") else Response.Write("(Nasdaq: UHOS)") end if %> gained $4 3/8 to $16 3/4 on announcing a merger with MEDIQ INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: MED)") else Response.Write("(AMEX: MED)") end if %> -- the deal values Universal at $17.50 in cash, while assumed debt will increase that value. In software, AMISYS MANAGED CARE SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMCS)") else Response.Write("(Nasdaq: AMCS)") end if %> rose $4 to $19 7/8 after agreeing to a stock swap with healthcare information systems dreadnought HBO & CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HBOC)") else Response.Write("(Nasdaq: HBOC)") end if %>. At 0.35 shares of HBO for each Amisys share, the deal valued Amisys at $22 per share as of last night. HBO fell $4 1/16 to $58 13/16 on the news.

Backbones were hot today, and we're not talking about Wide Area Networks or gigabit ethernet. SPINE-TECH INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPYN)") else Response.Write("(Nasdaq: SPYN)") end if %> gained $2 3/8 to $25 after Hambrecht & Quist raised its rating on the maker of spinal implants and instruments to "strong buy" from "buy," saying the company's new fusion cage for spinal fusions was being well received and that surgeons are being trained faster than expected. Diversified medical device company DANNINGER MEDICAL TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DANN)") else Response.Write("(Nasdaq: DANN)") end if %> rose $1 3/8 to $9 1/8 after the company pre-announced Q4 earnings per share (EPS) of $0.16 on record sales, which would crush the lone estimate of $0.11. Although the company recently made an acquisition in the orthopedic rental business, its spinal implant business, with its greater gross margins and sales growth of 137%, is propelling bottom-line expansion. Elsewhere in skeletal products, diagnostic/therapeutics company OSTEX <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OSTX)") else Response.Write("(Nasdaq: OSTX)") end if %> fell $1 to $5 3/4 on reporting a larger-than-expected Q4 loss.

MICRO WAREHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MWHS)") else Response.Write("(Nasdaq: MWHS)") end if %> gained $1 13/16 to $13 7/16 after the PC direct retailer reported Q4 EPS of $0.17, down from $0.22 per share in Q4 1995. Throw out the old statements of earnings, though, as an acquisition was made in 1996 and is reflected on statements as a "pooling of interests." The other reason to throw out the past statements is that the company has made a few accounting boo-boos. From 1992 to 1995 the company overstated earnings -- the final corrections to which were made public today. Apparently, sales and earnings weren't quite as bad as investors were expecting, as Micro Warehouse had pre-announced weakness in mid-December. Today's gain may have also been a reflection of the strength of INGRAM MICRO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IM)") else Response.Write("(NYSE: IM)") end if %>, the world's largest wholesale computer products distributor. Morgan Stanley raised its rating on that company to "strong buy."

QUICK TAKES: Extended stay hotelier CANDLEWOOD HOTEL CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNDL)") else Response.Write("(Nasdaq: CNDL)") end if %> rose $1 to $11 1/4 after the company announced the appointment of two independent members to its board... AXENT TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AXNT)") else Response.Write("(Nasdaq: AXNT)") end if %> picked up $1 5/8 to $13 1/8 for the same reason... Search engine/web organizer EXCITE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> rose $1 13/16 to $16 7/8 after the New York Times ran a positive article on the entire sector, including YAHOO! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %>, which gained $2 1/4 to $31 3/8... DIALOGIC CORP. (Nasdaq: DLGC) dialed up a $3 3/4 gain to $32 3/4 after the computer telephony company reported Q4 EPS of $0.34, smoothing past estimates of $0.33... Clothing company DESIGNER HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DSH)") else Response.Write("(NYSE: DSH)") end if %> rebounded $1 5/8 to $12 5/8 after saying yesterday that it is delaying shipments of jeanswear licensed from DONNA KARAN INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DK)") else Response.Write("(NYSE: DK)") end if %>... WEATHERFORD ENTERRA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WII)") else Response.Write("(NYSE: WII)") end if %> bounced back $3 1/2 to $33 7/8, CHESAPEAKE ENERGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHK)") else Response.Write("(NYSE: CHK)") end if %> rose $1 3/8 to $21 1/4, and ANDARKO PETROLEUM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APC)") else Response.Write("(NYSE: APC)") end if %> spurted $4 1/4 higher to $62 5/8 following yesterday's fall in many drilling and oil service stocks... HMO company UNITED WISCONSIN SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UWZ)") else Response.Write("(NYSE: UWZ)") end if %> climbed $1 7/8 to $24 7/8 on reporting Q4 EPS (net of a charge) of $0.37... MAIL-WELL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MWL)") else Response.Write("(NYSE: MWL)") end if %> was delivered a $1 1/4 rise to $18 1/2 by investors following Jeff Vinik into the envelope maker's shares, and by the company's 38% increase in Q4 earnings (before charges in 1995)... Dutch consumer products giant UNILEVER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UN)") else Response.Write("(NYSE: UN)") end if %> jumped $10 to $178 1/8 after reporting earnings and announcing it will sell its specialty chemicals business... CHAD THERAPEUTICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: CTU)") else Response.Write("(AMEX: CTU)") end if %> moved up $1 1/4 to $13 after the oxygen supplies company announced a share buyback authorization... ASSISTED LIVING CONCEPTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: ALF)") else Response.Write("(AMEX: ALF)") end if %> climbed $1 1/8 to $18 7/8 Wheat First initiated coverage of the company with a "buy" rating... Impotence treatment company VIVUS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VVUS)") else Response.Write("(Nasdaq: VVUS)") end if %> rose $9 1/4 to $64 1/4 after the company reported a 30% increase in weekly prescriptions for its MUSE product compared to last week.

GOATS

AMERICAN POWER CONVERSION <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: APCC)") else Response.Write("(Nasdaq: APCC)") end if %>, the leading maker of uninterruptible power supplies for PCs and workstations, fell $4 7/8 to $23 5/8 after reporting Q4 earnings of $0.32 per share, up 78% from last year and 14% above analysts' estimates of $0.28. The company's gross margin was well above guidance of around 40%, and expanded almost 1.2 percentage points from last quarter. Inventory turns increased and absolute inventories dropped, while sales expanded 48% year-over-year. Having generated close to $150 million from operations through the fiscal year with $24 million plowed back into property, plant, and equipment, the company looks to be back on track. However, it still needs to perform exceedingly well to demonstrate why it now trades at a sizable premium to companies like DELL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> and GATEWAY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GATE)") else Response.Write("(Nasdaq: GATE)") end if %>.

Plastic eyeglasses lens maker SOLA INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SOL)") else Response.Write("(NYSE: SOL)") end if %> fell $2 5/8 to $25 1/4 after being shattered following last week's Q3 earnings report of $0.31 per share, which met estimates. The company warned, however, that estimated EPS of $0.62 for the fourth quarter would be hard to meet. The announcement was made in response to perceptions of slowing sales growth. Sola said it would miss earnings "slightly" because of programmed operating expense increases to introduce new products and penetrate the Chinese market. Given the competition within a mature market such as eyeglass lenses, the company's sales growth is admirable. Even if it misses fiscal year estimates by $0.10 per share, its trailing P/E ratio in three months will be 15.3 times, looking forward to estimated EPS growth of 28% for the year ahead and a projected five-year growth rate of 21% per year.

Embedded systems maker RADISYS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RSYS)") else Response.Write("(Nasdaq: RSYS)") end if %> plummeted $4 5/8 to $35 after the Cabot Market Letter issued a "sell" recommendation on its hotline, according to Dow Jones. In response, analysts at both Cowen & Co. and J.P Morgan said the fundamentals are still intact at Radisys, a sentiment echoed by the company's officers, who say that a lawsuit filed against the company alleging financial fraud is without merit. While the regular stable of Cabot stocks weren't really moving that much today, PRESSTEK <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRST)") else Response.Write("(Nasdaq: PRST)") end if %> fell $5 1/4 to $55 1/4. According to Technimetrics, Lutts's organization was the largest holder of Presstek as of the third quarter of 1996, owning just under 600,000 shares. Margin call, anyone?

QUICK CUTS: Franchisor STERLING VISION <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ISEE)") else Response.Write("(Nasdaq: ISEE)") end if %> fell $1 3/8 to $6 3/4 to the befuddlement of the company... CARRIAGE SERVICES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CRSV)") else Response.Write("(Nasdaq: CRSV)") end if %> withered $3 3/8 to $18 1/2 after the "post-life services" company reported Q4 EPS of $0.12 on a doubling in funeral services volume... Rumors regarding the progress of its conjugated estrogen products sent the shares of DURAMED PHARMACEUTICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DRMD)") else Response.Write("(Nasdaq: DRMD)") end if %> $1 3/4 lower to $10 1/8... BONDED MOTORS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BMTR)") else Response.Write("(Nasdaq: BMTR)") end if %> fell $1 7/16 to $8 3/4 after the automobile engine manufacturer undershot Q4 EPS estimates of $0.16 in reporting results of $0.11 per share... Internet search engine developer VERITY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VRTY)") else Response.Write("(Nasdaq: VRTY)") end if %> lost $1 7/8 to $12 3/8 despite making a number of partnership agreements this morning... ESS TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESST)") else Response.Write("(Nasdaq: ESST)") end if %> lost $4 1/4 to $26 3/4 as the CEO of archrival C-CUBE MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CUBE)") else Response.Write("(Nasdaq: CUBE)") end if %> appeared on CNBC's Squawk Box this morning... Information technology consulting company COMPUTER HORIZONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHRZ)") else Response.Write("(Nasdaq: CHRZ)") end if %> was weighed down $3 3/4 to $28 by speculation over its place in the Year 2000 race and comparisons to competitor KEANE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: KEA)") else Response.Write("(AMEX: KEA)") end if %>, which reported stronger-than-expected earnings today... DIANA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DNA)") else Response.Write("(NYSE: DNA)") end if %> fell $1 7/8 to $11 3/4, and the company said it has no idea why its stock is falling -- the networking company recently sold its meat and seafood subsidiary... Diversified financial firm FIRST AMERICAN FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FAF)") else Response.Write("(NYSE: FAF)") end if %> fell $3 1/2 to $38 1/4 even though Q4 EPS of $1.03 smashed estimates of $0.80... ANIXTER INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXE)") else Response.Write("(NYSE: AXE)") end if %> lost $1 3/16 to $13 5/8 after the networking company reported flat year-over-year Q4 EPS of $0.19... Temporary help firm ACCUSTAFF INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ASI)") else Response.Write("(NYSE: ASI)") end if %> was shaved $1 7/8 to $21 3/4 after reporting Q4 pro-forma net income of $0.20, beating estimates of $0.19... MOTOROLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> fell $4 to $63 1/2 as the Wall Street Journal's "Heard on the Street" column asked, "Are Motorola's best years behind it?"... Dental equipment company ION LASER TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: ILT)") else Response.Write("(AMEX: ILT)") end if %> lost $1 to $10 3/4 after reporting Q3 EPS of $0.06 on a 107% increase in quarterly sales.

HELD

CENTENNIAL TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CTN)") else Response.Write("(NYSE: CTN)") end if %> was held after announcing the sacking of its CEO and the possibility that earnings have been misstated. MF Templar covered the story in today's Lunchtime News.

FOOL ON THE HILL
An Investment Opinion by MF Templar

Toy Wars

GALOOB TOYS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: GAL)") else Response.Write("(AMEX: GAL)") end if %> shareholders are probably comparing George Lucas to Darth Vader at this very moment, as Galoob shares dropped $4 to $13 1/8. The creator of Star Wars has reportedly urged MATTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAT)") else Response.Write("(NYSE: MAT)") end if %> and Playmates to bid on the coveted Star Wars toy concession, a license that is now jointly held by HASBRO <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: HAS)") else Response.Write("(AMEX: HAS)") end if %> and Galoob. Hasbro will be making the large figurines that everyone knows and loves, while Galoob will be churning out miniatures. Chief Financial Officer Roger Kowalsky called speculation that Galoob might lose the Star Wars license "the worst bunch of baloney" in early December, the same month that Galoob issued more than two million shares in a secondary offering priced at $28 1/2.

There has been a lot of excitement over Galoob in recent months due to investor enthusiasm about some of the movie licenses the small San Francisco-based firm has garnered. When the company announced on December 18th that fiscal 1996 earnings would be double those of fiscal 1995, the company stressed, "Galoob... has never before had the toy rights to any current motion picture." The company will market product lines based on six films that will be released in 1997: Star Wars, The Empire Strikes Back, Return of the Jedi, Men in Black, Starship Troopers and an animated feature called Anastasia. Additionally, Galoob also will make toys related to The Real Adventures of Jonny Quest, Turner Broadcasting's updated version of the popular TV cartoon hero.

Galoob rocketed to the low $30s from the mid-teens a year ago on the strength of its Sky Dancers and Micro Machines product lines. At the time, analysts described Sky Dancers as one of the few toys targeted at girls. Micro Machines, similar to Mattel's Hot Wheels or Tyco's Matchbox concession, is one of the few branded toy lines not owned by one of the big two, Hasbro or Mattel. Many investors believed that on the strength of its core product line and the host of licenses that Galoob had nailed down, it stood an excellent chance of growing earnings at a speedy rate as well as potentially being acquired in the continuing industry consolidation. Even though more than two million shares were issued at $28 1/2 in early December, the stock shot up to $33 before turning around and heading straight down.

Herb Greenberg reported on December 17th that Galoob was falling for two reasons, outlining them in his Business Insider column in the San Francisco Chronicle. Greenberg alleged that "the company's hottest product -- Sky Dancer -- is losing its ability to generate lofty sales." A boy's version of the toy called Dragon Flyz was apparently found marked down at a number of toy stores, the kiss of death in retail. Greenberg also raised the ugly specter of the Star Wars license going away, something we are seeing repeated today. Greenberg finally pointed out that eight insiders, including the chief executive, sold shares within two months of the secondary offering -- a mixed signal at best.

Galoob responded quickly in a press release the next day saying that U.S. retail sales of its toys were up more than 34% compared to last year in spite of the shorter holiday season. The company also stated it saw 1996 sales in the $280 to $290 million range compared with $220 million last year, putting earnings per share (EPS) at between $1.20 and $1.25, excluding a one-time charge. At this level, the company would more than double 1995 earnings of $0.60 per share despite increasing the shares outstanding by 48%. The company stressed that they had "delivered three consecutive years of sales and earnings increases," and anticipates "another year of record sales in 1997."

Unfortunately for Galoob, it stressed that this growth will be driven by Micro Machines and the Star Wars license -- now rumored to be open to the highest bidder. The company also admitted that Sky Dancers sales will decline "significantly." It is clear that investors believe that a fourth year of record growth will be hard to attain without the contribution of those critical movie rights. Current earnings estimates of $1.53 per share for next year assume that Galoob will maintain the license. Now selling at less than 9 times this estimate, the stock may be rather cheap should Galoob manage to keep the license. However, it is difficult to understand why institutions were paying $28 1/2 a share for Galoob last month. It is almost certainly these same institutions that are dumping the shares today out of frustration and disappointment. The cash from the secondary offering strengthens Galoob's balance sheet, enabling it to possibly win a bidding war for the Star Wars license if it should come to that. At less than one times sales net the cash from the recent offering, investors with a tolerance for risk might be interested in checking out these shares.

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.

ANOTHER FOOLISH THING
Bust the Tipsters Debuts!

Hear ye! Hear ye! Fooldom is beside itself with delight as it debuts the exciting new game, Bust the Tipsters! It is hailed by many at Fool HQ as, "The most amazing interactive and educational game featuring a Foolish hero and evil stock manipulators and misimformers ever!" Check in and try to solve a new case every day, aided by Motley Fool as he tries to foil the villainous Dr. Mortimer Stocktout, Mo-Mental, The Churner, the Smile and Dial sisters, Cold Call Pete, Pork Belly, The Whisper and The Talking Head. This fun new game pays off with education, amusement, and prizes from FoolMart. You'll find Bust the Tipsters in the Fool's School and in our Games area, with new cases six times a week. Enjoy!

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.