HEROES

Materials handling equipment maker RAYMOND CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RAYM)") else Response.Write("(NYSE: RAYM)") end if %> was lifted $4 1/4 to $26 as shareholder Metropolitan Capital has demanded that changes be made at the company. In an amended 13-G filing, Metropolitan revealed that its ownership of the company has been raised to 25%. It also has a voting agreement with director George Raymond, who owns almost 17% of the company. Raymond has stated his intention to maximize shareholder value, but the rest of the board apparently isn't as single-minded. With other investors such as Oppenheimer taking positions recently, it's probably a good bet that the "value-creation" investors will get the board seats they are seeking, and that strategic moves will be made in 1997.

HFNC FINANCIAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HFNC)") else Response.Write("(Nasdaq: HFNC)") end if %> gained $1 13/16 to $21 today after the mortgage and consumer lending institution declared a $5 per share special dividend. The company hopes that the IRS will treat the bulk of the dividend as a tax-free return of capital, rather than a taxable return on capital. In converting from a savings & loan (S&L) joint stock company to a holding company, HFNC brought in too much cash -- so rather than trying to push return on equity, the company believes its investors can find other opportunities on their own. Getting rid of the excess cash also raises the effective price that another company would have to pay to take over the North Carolina S&L. Investors responded by raising the valuation accorded to HFNC. Last night, it traded at 13 times book -- after the dividend, it will trade at 1.6 times book.

Embedded systems company RADISYS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RSYS)") else Response.Write("(Nasdaq: RSYS)") end if %> surged $6 7/8 to $40 5/8 after the company's auditor, Price Waterhouse, expressed an unqualified opinion on the company's financial statements for the last three years. That means, in essence, that the accounting firm has no reason to believe that the company has fudged on its financials, contrary to allegations made by a disgruntled former employee. The company was featured in a well-researched piece in Barron's earlier this year that concluded that the business Radisys bought from INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> had "zilch growth" in the year preceding the purchase. The article misses the point that a smaller company can frequently grow a niche business lost in the hurly-burly of such a huge corporation. Judging by the company's recent revenues and margins, there are probably better companies to pick apart as being overvalued.

QUICK TAKES: Diversified electronic equipment company HEWLETT-PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> jumped $2 3/16 to $54 3/8 on reporting Q1 net earnings of $912 million, beating estimates by $125 million... C.R. ANTHONY CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CRAU)") else Response.Write("(Nasdaq: CRAU)") end if %> gained $1 1/8 to $6 7/8 after the Midwestern department store chain announced it is in talks, possibly leading to a merger, with designer/retailer STAGE STORES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STGE)") else Response.Write("(Nasdaq: STGE)") end if %>... Specialty chemical company CATALYTICA INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CTAL)") else Response.Write("(Nasdaq: CTAL)") end if %> continued $3 1/16 higher to $11 3/4 based on its deal earlier this month to purchase a GLAXO WELLCOME <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLX)") else Response.Write("(NYSE: GLX)") end if %> facility... MIDDLEBY CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MIDD)") else Response.Write("(Nasdaq: MIDD)") end if %> rose $1 1/4 to $7 1/2 after the food preparation equipment company reported Q4 earnings per share (EPS) of $0.15 from continuing operations... Trucking, warehousing, and freight logistics company U.S. XPRESS ENTERPRISES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XPRSA)") else Response.Write("(Nasdaq: XPRSA)") end if %> rolled $2 1/2 higher to $16 after Alex. Brown raised its rating to "strong buy" from "buy," and increased FY 1998 earnings estimates... TECHNICAL CHEMICALS & PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCPI)") else Response.Write("(Nasdaq: TCPI)") end if %> produced a $1 1/8 gain to $10 after announcing a number of home use diagnostic products... North Carolina-based brokerage INTERSTATE/JOHNSON LANE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IJL)") else Response.Write("(NYSE: IJL)") end if %> tacked on $1 1/8 to $18 7/8 after announcing that it intends to call in $21 million of its convertible debt... VINTAGE PETROLEUM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VPI)") else Response.Write("(NYSE: VPI)") end if %> rose $2 1/8 to $32 1/4 on reporting Q4 EPS of $0.58, blowing by estimates of $0.47... Consumer finance company DELTA FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DFC)") else Response.Write("(NYSE: DFC)") end if %> tacked on $1 5/8 to finish at $23 1/4 on announcing two acquisitions... MIDCOAST ENERGY RESOURCES <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: MRS)") else Response.Write("(AMEX: MRS)") end if %> jumped $1 5/8 to $12 5/8 after announcing Q4 EPS of $0.35, which included a gain on the sale of a pipeline.

GOATS

FLUOR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLR)") else Response.Write("(NYSE: FLR)") end if %> fell $13 to $62 after the engineering and construction giant reported Q1 EPS of $0.73, missing estimates of $0.05 per share. Adding to earnings was a reduction in an accrued insurance liability. On the negative side, cost over-runs in the construction of two power generation facilities, for which the company charged a fixed price, were estimated and charged against earnings. Though the company didn't break out these numbers, it did mention its rather healthy backlog numbers. Backlog increased to $16 billion, or about three times the equity value of the company. With a market cap of one-third its backlog, the company still trades at something of a premium to MCDERMOTT INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MDR)") else Response.Write("(NYSE: MDR)") end if %> -- a company that competes with Fluor in power plant construction and government contracts -- which is valued at 28% of its $4.1 billion backlog.

HADCO CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HDCO)") else Response.Write("(Nasdaq: HDCO)") end if %> lost $8 to $46 1/2 after the circuit board manufacturer reported Q1 EPS of $0.81, beating estimates of $0.79. The big sell-off today was caused by the company filing a registration statement for the issuance of two million shares plus convertible debt, which will be used to cover long-term debt associated with the recent acquisition of Zycon. As explicated in the Evening News in early December, the two companies bidding for Zycon were bidding at pretty low prices. Doing an all-cash deal at that time made sense for Hadco, since its stock wasn't selling at premium multiples either. With today's drop in price, the plan of raising money through cheaper equity has been somewhat foiled if the price doesn't rebound. The move down today was helped by Alex. Brown lowering its rating to "buy" based on the dilution of the new shares.

QUICK CUTS: OPEN PLAN SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PLAN)") else Response.Write("(Nasdaq: PLAN)") end if %> lost $1 7/8 to $6 3/8 before trading was halted in the shares of the office equipment manufacturer for the dissemination of news this afternoon... Electronics equipment power supply maker ZYTEC CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ZTEC)") else Response.Write("(Nasdaq: ZTEC)") end if %> lost $1 5/8 to $13 1/4 after reporting Q4 EPS of $0.17, beating estimates of $0.16, on flat year-to-year quarterly revenues of approximately $52 million... Medical devices maker MEDTRONIC INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MDT)") else Response.Write("(NYSE: MDT)") end if %> fell $3 1/4 to $68 1/8 after reporting Q3 EPS of $0.54, missing estimates of $0.56... I-STAT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STAT)") else Response.Write("(Nasdaq: STAT)") end if %> continues to reel, falling $3 3/8 to $15 3/4 a day after Smith Barney cut its earnings estimates because of pricing concerns... QUAD SYSTEMS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QSYS)") else Response.Write("(Nasdaq: QSYS)") end if %> lost $2 1/8 to $11 1/4 after the electronics manufacturing capital equipment company said it might not be able to collect a $750,000 receivable from customer CENTENNIAL TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CTN)") else Response.Write("(NYSE: CTN)") end if %>... Telecom test equipment maker DIGITAL LIGHTWAVE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DIGL)") else Response.Write("(Nasdaq: DIGL)") end if %> slid $1 5/8 to $10 3/8 after reporting Q4 EPS of $0.01... YORK INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: YRK)") else Response.Write("(NYSE: YRK)") end if %> cooled $6 to $44 5/8 after the climate control systems maker reported fourth quarter EPS of $0.89, beating the First Call mean estimate of $0.82... Software tools developer ROGUE WAVE SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RWAV)") else Response.Write("(Nasdaq: RWAV)") end if %> fell $2 1/4 to $16 3/4 after the company announced that it has purchased one of its European distributors... UNITED MERIDIAN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UMC)") else Response.Write("(NYSE: UMC)") end if %> lost $2 3/4 to $32 1/8 after the oil driller announced year-end reserves additions and the completion of credit facility arrangements... Non-traditional consumer lender UNITED COMPANIES FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UC)") else Response.Write("(NYSE: UC)") end if %> slipped $1 7/8 to $28 3/8 on announcing Q4 EPS of $0.74, beating estimates of $0.71.

FOOL ON THE HILL
An Investment Opinion by MF Templar

Western Digital and the NC

Talk of a "network computer" by corporate frontmen like Larry Ellison of ORACLE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> and Scott McNealy of SUN MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %> is designed to put fear into the heart of Bill Gates, the proprietor of a small software concern in Redmond, Washington. The network computer -- monitors and keyboards with only a minimum of semiconductors and wires tied into a network -- is a concept designed to reduce the cost of ownership of corporate PCs by centralizing maintenance. Instead of having dedicated support people running from PC to PC to fight fires, one-quarter of the people can do twice the work if everything is on the server and employees are only dealing with workstations.

While this alternate vision of the computing future has caused MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> some misgivings, when Larry and Scott talk about a PC without a hard drive or other storage device, it is companies like WESTERN DIGITAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WDC)") else Response.Write("(NYSE: WDC)") end if %>, SEAGATE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %>, QUANTUM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QNTM)") else Response.Write("(Nasdaq: QNTM)") end if %> and STORAGE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STK)") else Response.Write("(NYSE: STK)") end if %> that actually stand to lose the most. These companies currently generate the majority of their net revenues by selling rigid drives measuring 3.5 inches, the standard size for a desktop PC. With 87.2 million of these units sold in 1997, it is clear that if anyone stands to lose if corporate America adopts the network computer, it is the people selling rigid drives, not a software company like Microsoft that also wants to run your server.

The storage industry has undergone massive consolidation in the past decade. More than 50 companies made hard drives a little more than a decade ago. Currently there are only 11 suppliers left, with just a handful of those accounting for more than 80% of the total drives sold. With the devastating wars for market share behind them, drive companies have begun managing the storage industry as a business, not as a pell-mell drive for market share. The company doing the most to reform corporate governance of storage companies has been Western Digital, whose shares are up from $17 a year ago to their current perch at $76 7/8, up $5 3/4 today. Understanding that all of its improvements to the business could be wiped out by the adoption of the network computer, Western Digital is striking back with a technology it calls SDX.

SDX, or storage drive acceleration, is a software development that allows the hard drive to become the data management device for the desktop PC. Instead of having the hard drive and separate storage devices like a CD-ROM drive, a removable drive, or a microfloppy drive all communicating with the computer, SDX allows the hard drive itself to directly go and grab information from the other peripherals. By allowing the peripherals to bypass the computer, you can load stuff faster and more efficiently "cache," or store, information from a CD or microfloppy on empty space on the hard drive. SDX potentially changes the debate about what should and should not go in the network computer by offering greater performance for any information that you would access with a peripheral drive -- particularly a CD-ROM player.

SDX also addresses something that many in the storage industry call the "X" factor dilemma. The name comes from the way CD-ROM speeds are measured, using a number and then the letter X to designate the velocity -- 4X, 8X, 12X, etc. Unbeknownst to many consumers, because multimedia software developers have to ensure that their software is backwards compatible, faster CD-ROM drives rarely translate into faster CD performance. Because the actual CD has to be configured to operate at the higher speed, the supply of CD-ROM software that can actually go at the highest speed possible on new CD-ROMs is very small. The system causes inventories to become rapidly obsolete, creating an unstable business model for the CD-ROM drive makers.

Because SDX improves CD-ROM performance, representing about four years worth of CD-ROM performance improvement, it could eliminate rapid CD-ROM obsolescence. With the CD-ROM manufacturers excited about the technology, Western Digital has approached its cross-license partners (IBM and Seagate) to also implement the technology. Although SDX is a direct assault on the idea of a computer without a hard drive -- something all other hard drive makers can empathize with -- it is also an extension of Western's effort to make reliability and quality just as important as price when it comes to selecting a hard drive. Because Western Digital believes that price alone is not enough to take market share, by emphasizing the performance of the hard drive as a data management device it gets to distinguish itself in a way that otherwise might not be possible.

Western Digital remains one of the most interesting stories in the storage technology universe. After eliminating non-core businesses like semiconductor manufacturing in 1995, the company vaulted to prominence in 1996 by improving earnings and gaining critical market share well above analyst expectations. Although this is in part due to the success of its direct PC manufacturing customers like DELL COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>, GATEWAY 2000 <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GATE)") else Response.Write("(Nasdaq: GATE)") end if %> and MICRON ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MUEI)") else Response.Write("(Nasdaq: MUEI)") end if %>, its superior asset management and improved quality has also played a large role. When Western reported second quarter earnings of $1.36 per share on January 13th, this was 47.8% ahead of consensus estimates at the time. If Western can continue to piggy-back the direct manufacturers and gain market share as well as getting broad support for SDX, then a lot of the potential negatives in the future could be neatly avoided.

Current estimates call for Western to earn $4.68 per share this year and $6.32 per share next year. Given that the company has already made $2.06 per share in the first two quarters, simply repeating the second quarter two more times would put the company at $4.78 per share. Stocking for holiday PC sales certainly drove part of the fiscal second quarter, but given projections of 16% to 20% in PC unit volume growth next year, reproducing this quarter may be entirely possible. Management has already said that Western will come in at the high end of third quarter estimates, which is currently $1.43 per share.

The $6.32 EPS estimate for next year assumes that Western can only improve profits by about 16% in 1998 from the quarterly run-rate established this quarter. This seems conservative given that Western's margins improve as its volume increases due to the high fixed costs and the large investment in plant, property and equipment to produce drives. Finally, the company has been using cash flow to repurchase shares, something that accelerates profit growth even further. In the second quarter, the company bought back 750,000 shares at an average price of $53 -- a pretty savvy investment considering the current price tag, and one that seems likely to continue given the strong cash flow. Trading at only 12 times the low earnings estimate for fiscal 1998, there could be more appreciation left in the stock despite the fact that it has increased five-fold over the past year.

CONFERENCE CALLS

HEWLETT-PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>
(303) 446-5399 (reservation # 2348408) -- replay avail thru 2/25

AT&T Capital
Through midnight, February 25.
(800) 475-6701 code: 331034

CCB FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCB)") else Response.Write("(NYSE: CCB)") end if %> and
AMERICAN FEDERAL BANK <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMBK)") else Response.Write("(Nasdaq: AMBK)") end if %>
To discuss merger agreement
(800) 839-4281, confirmation code # 313939

360 (DEGREES) COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XO)") else Response.Write("(NYSE: XO)") end if %>
(402) 220-3014 -- replay through 1/21

GENZYME CORP-TISSUE REPAIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GENZL)") else Response.Write("(Nasdaq: GENZL)") end if %>
(402) 220-6030 -- replay through 5PM on 2/25

WASHINGTON HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHI)") else Response.Write("(NYSE: WHI)") end if %>
(800) 696-1588 (passcode: 174613) -- replay

02/20/97 (Thursday)
SMARTALK TELESERVICES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMTK)") else Response.Write("(Nasdaq: SMTK)") end if %>
(800) 846-4265 -- replay starting @ noon for 48 hrs.

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
New -- Daily Stock Ideas!

So you've read the Fool's 13 Steps. You've got them under your belt and you're ready to start researching stocks in which to possibly invest. Where do you go for ideas? Well, we're happy to unveil an exciting new offering -- The Daily Double -- in which we introduce you to a stock which has doubled in the past year. Penning these handy reports are our own MF Uptrend and RgeSeymour. Pretty exciting, eh? How much does this cost? We're glad you asked, because it's available online for free! So head on over to our Stock Research button on our main screen and check out the Daily Double each day! Remember -- there may be no such thing as a free lunch, but here at Fooldom, we're giving you a free hunch -- every day! (E-mail subscriptions are available at FoolMart.)

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.