HEROES
SUBURBAN BANCORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SBCN)") else Response.Write("(Nasdaq: SBCN)") end if %> gained $2 3/8 to $19 3/8 after announcing a merger pact with FIFTH THIRD BANCORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FITB)") else Response.Write("(Nasdaq: FITB)") end if %> in a deal valuing each Suburban share at 0.24357 shares of Fifth Third, or $20.64 as of last night's close. While Fifth Third has been growing through impressive commercial growth in Ohio and through its money management and transaction support subsidiaries, Suburban Federal Savings Bank is mostly a thrift, lending money for mortgages. The price-to-book value for the deal, at 1.14 times book, is much lower than for other mergers of financial institutions because of Suburban's lower return on assets and equity value. However, Fifth Third is paying a normal price-to-assets multiple, in the 14% of assets range, with a strategy of attracting more assets out of that customer base for other Fifth Third financial services.
Industrial process software company ASPEN TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AZPN)") else Response.Write("(Nasdaq: AZPN)") end if %> rose $2 to $31 5/8 after DOW CHEMICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DOW)") else Response.Write("(NYSE: DOW)") end if %> selected the company's software for worldwide use. Aspen markets its software systems to a number of different process-intensive industries, such as pharmaceutical, chemical, and petroleum refining companies. Its software helps companies track the flow of materials through manufacturing systems, meet environment compliance standards, and generally operate more efficiently. The company's $44 million quarterly sales are nicely balanced between software and services. While it can be seen as a growing capital equipment supplier, the service component of its business builds in more predictability to results. On a run-rate basis, Aspen is trading near its estimated growth rate, but it is not standing still with regard to acquisitions and growing into new industrial segments.
AGOURON PHARMACEUTICALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AGPH)") else Response.Write("(Nasdaq: AGPH)") end if %> climbed $4 3/4 to $80 1/2 after a halt in trading to allow for the dissemination of news that the FDA approved the company's VIRACEPT HIV treatment. The protease inhibitor acts to block the reproduction of HIV in the body and is delivered in a pharmaceutical form. The drug was approved in an accelerated FDA review process for high-priority treatments like HIV. Just before three o'clock this afternoon, the stock began trading and quickly shot up 20 points, where one poor buyer took in 400 shares at $96, before settling down to close at $80 1/2.
QUICK TAKES: Pay telephone company COMMUNICATIONS CENTRAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CCIX)") else Response.Write("(Nasdaq: CCIX)") end if %> gained $2 1/4 to $11 1/8 after agreeing to be acquired by PHONETEL TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: PHN)") else Response.Write("(AMEX: PHN)") end if %> in a stock swap valuing the company at $12.85 per share... IDT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IDTC)") else Response.Write("(Nasdaq: IDTC)") end if %> gained $1 1/8 to $6 7/8 after the telecommunications services company said it has extended a relationship to bundle and resell WORLDCOM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %> services... Digital imaging company APPLIED GRAPHICS TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AGTX)") else Response.Write("(Nasdaq: AGTX)") end if %> gained $4 1/2 to $32 1/8 after the announcing a 3.5-year contract with the automotive divisions of GENERAL MOTORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>... DSC COMMUNICATIONS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DIGI)") else Response.Write("(Nasdaq: DIGI)") end if %> gained $3 3/8 to $21 7/8 after the telecom equipment manufacturer and BELL ATLANTIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEL)") else Response.Write("(NYSE: BEL)") end if %> settled an antitrust lawsuit they had filed against LUCENT TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %>... Commercial-strength Internet provider PSINET <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSIX)") else Response.Write("(Nasdaq: PSIX)") end if %> moved $1 1/16 higher to $8 on a long-term rating upgrade to "buy" from Merrill Lynch... ORACLE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> gained $4 7/8 to $41 after reporting Q3 earnings of $0.29 per share (before a charge), right in line with estimates... Memory chip maker MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %> moved up $3 1/4 to $45 1/4 in front of Monday's earnings release... VENEZUELAN NATIONAL TELEPHONE CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VNT)") else Response.Write("(NYSE: VNT)") end if %> gained $2 1/8 to $30 3/4 after receiving word that it will be able to raise prices... Specialty metals company ALLEGHENY TELEDYNE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALT)") else Response.Write("(NYSE: ALT)") end if %> gained $1 3/8 to $28 5/8 after announcing that its Board has authorized a buyback of nearly 7% of outstanding shares... PENN TRAFFIC CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PNF)") else Response.Write("(NYSE: PNF)") end if %> gained $1 1/2 to $6 7/8 after Goldman Sachs rated the food distributor and grocery store company a "trading buy."
GOATS
Healthcare information systems company ENTERPRISE SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESIX)") else Response.Write("(Nasdaq: ESIX)") end if %> lost $2 5/8 to $25 after agreeing to be acquired by HBO & COMPANY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HBOC)") else Response.Write("(Nasdaq: HBOC)") end if %>. Because of the collar on the deal, there was no premium on yesterday's closing price for the stock. If HBO's average price in the 20 days before the closing of the transaction is below $60, the maximum premium Enterprise Systems shareholders will receive will be about 8%. Between $60 and $68 for HBO stock, the maximum premium received will be 8.6%. All told, shareholders will not receive a premium any larger than 15%. The collar is somewhat irksome to Enterprise Systems investors, who were expecting their company to grow earnings at an annual rate of 40% per year over the coming five years compared to a 30% growth rate for the much larger (and probably safer) industry leader HBO.
Golf driving range and pro shop company FAMILY GOLF CENTERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FGCI)") else Response.Write("(Nasdaq: FGCI)") end if %> lost $6 to $20 after reporting Q4 EPS of $0.04, missing estimates of $0.09. Family Golf's business is predicated on the concept of the "family golf experience," and has been at the forefront of the charge to repackage the traditional driving range into a full blown "recreational facility." The company's torrid growth rate over the past year has contributed to wild swings in its valuation -- it presently sits just a fraction from its all-time low. The company attributed its poor results to higher than expected depreciation costs in conjunction with additional taxes on shares issued back in July. The industry and company will be featured in this weekend's "Fool's Gold."
QUICK CUTS: Following yesterday's plunge, EMPLOYEE SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESOL)") else Response.Write("(Nasdaq: ESOL)") end if %> dropped another $9 to $6 3/8 after the employee leasing company delayed the release of its earnings and said earnings per share (EPS) would fall below estimates of $0.44 for the year... VACATION BREAK USA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VBRK)") else Response.Write("(Nasdaq: VBRK)") end if %> fell $4 3/32 to $9 3/4 after the Ft. Lauderdale Sun-Sentinel reported that the Federal Trade Commission named the company and 20 others in lawsuits alleging travel package and timeshare fraud... COMPUCOM SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMPC)") else Response.Write("(Nasdaq: CMPC)") end if %> fell $1 1/2 to $5 1/4 after announcing it will miss the Q1 EPS estimate of $0.12 due to temporary factors... Blood substitute products company SOMATOGEN INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMTG)") else Response.Write("(Nasdaq: SMTG)") end if %> fell $2 to $10 1/4 after Montgomery Securities lowered its rating to "hold" from "buy" on product introduction worries... AIRLEASE LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLY)") else Response.Write("(NYSE: FLY)") end if %> fell $2 7/8 to $14 3/4 after the master limited partnership announced that it will delist and wrap up the partnership rather than continuing as a regularly taxed corporation... Computer reseller VANSTAR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VST)") else Response.Write("(NYSE: VST)") end if %> -- formerly ComputerLand -- lost $4 1/8 to $9 5/8 on reporting third quarter results that missed earnings estimates and saying that it doesn't expect to meet similar estimates for the fourth quarter... FLUOR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLR)") else Response.Write("(NYSE: FLR)") end if %> fell $6 3/4 to $57 3/4 after Smith Barney downgraded the construction and engineering giant to "neutral" from "outperform," saying cost cutting programs will not be effective in advancing earnings... GALEY & LORD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GNL)") else Response.Write("(NYSE: GNL)") end if %> fell $2 to $15 3/4 after the textiles company said Q2 EPS will come in at the low end of analysts' estimates, near $0.32 per share... ADVANCED MICRO DEVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMD)") else Response.Write("(NYSE: AMD)") end if %> lost $2 7/8 to $44 1/2 after INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> filed suit against it and CYRIX <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYRX)") else Response.Write("(Nasdaq: CYRX)") end if %> for allegedly infringing upon the trade name "MMX"... READ-RITE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RDRT)") else Response.Write("(Nasdaq: RDRT)") end if %> fell $3 1/8 to $26 5/8 as disk drive shares had a tough go of things today, and as arbitrageurs unwound their positions in the company following the decision of APPLIED MAGNETICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APM)") else Response.Write("(NYSE: APM)") end if %> to call off its merger proposal.... ANCOR COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ANCR)") else Response.Write("(Nasdaq: ANCR)") end if %> lost $1 7/8 to $4 after it restated downward previously announced sales and cost of sales figures for Q4 and fiscal year 1996.
FOOL ON THE HILL
An Investment Opinion by MF
Templar
Premisys Unplugged
PREMISYS COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRMS)") else Response.Write("(Nasdaq: PRMS)") end if %> continued its rapid descent today, falling $3 3/16 to $8 1/16. The telecommunications equipment vendor stated that it would post a substantial loss in its upcoming third quarter, reversing expectations of a $0.24 per share profit that had been communicated to analysts. Premisys believes that it will show a loss of $0.10 to $0.14 per share, compared to a gain of $0.18 per share a year earlier, as the company completely missed its revenue targets. Premisys will report revenues of between $10 and $12 million, an unqualified disaster given that revenues in the prior four quarters were $26.3 million, $24.2 million, $22.5 million and $19.7 million. The revenue drop is a substantial new development that has many investors leaving the company for dead today.
The downward velocity of the company's stock is hardly a new development. The shares have been volatile since posting a high of $65 during the growth stock mania in May of 1996, but it was not until December that this volatility became one extended downward spiral, taking the stock from the mid-$50s to its current perch at $8 and change. When the company failed to best earnings expectations back on January 16th, the stock closed more than $4 lower the next day at $28 1/16. At that time, the drop in Premisys was linked to the company's failure to meet unofficial "whisper" numbers, although with the benefit of 20/20 hindsight some savvy investors might have seen the current debacle coming.
Named for the fact that it develops telecommunications equipment that can be installed on the user's premises, Premisys makes integrated access equipment that allows customers to have access to services that operate on a variety of platforms. Its core product is called the Integrated Multiple Access Communications Server (IMACS) and allows a user to switch between services that require asynchronous transfer mode (ATM), integrated services digital network (ISDN), Centrex and conventional telephone lines. The IMACS product is used by long-distance carriers, competitive-access carriers and wireless operators. The product is a niche device that has been highly profitable for Premisys over the past few years, driving the share price to extraordinary levels.
During the third quarter, the company lost one contract and had another large contract postponed -- two events that have loosed the company from its moorings. Premisys is hardly the first wireless systems supplier that has been whacked in the past few months. GLENAYRE TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GEMS)") else Response.Write("(Nasdaq: GEMS)") end if %> has crumbled since last summer, currently a shadow of its former self. Some of MOTOROLA'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> revenue growth issues are linked to its robust wireless systems business, which has been lagging in recent months as many see cellular and other wireless services slowing down in North America. Even the makers of premises-based remote access gear, like SHIVA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHVA)") else Response.Write("(Nasdaq: SHVA)") end if %>, have not enjoyed much strength of late. With ASCEND'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> remote access gear also in the competitive mix, it is no wonder that Premisys is seeing revenue growth issues materialize now.
With the revenue base apparently shattered and given the stock price drop between this quarter and last quarter, investors are simply bailing out of the shares. Even at $8 a share, the company has a market capitalization of $197.8 million. If this quarter is any indication of the next few, Premisys still trades at four to five times what it could earn in revenues over the next four quarters and is now bleeding cash. Although many analysts did make positive comments about the company's long-term prospects today, until the company establishes some visibility about its ability to generate revenues and earnings, the shares will continue to flag. The combination of macro issues for the entire wireless equipment segment combined with a complete implosion of Premisys' revenue base paints a dire picture that will require a lot of positive information to ease the minds of investors.
CONFERENCE CALLS
GENZYME TISSUE REPAIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GENZL)") else Response.Write("(Nasdaq: GENZL)") end if %>
Re: Carticel
(402) 220-4882 -- replay available through 3/14
TRO LEARNING <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TUTR)") else Response.Write("(Nasdaq: TUTR)") end if %>
(402) 220-2139 (code: 3137) -- replay until 3/19
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For a change of pace, instead of using this space to plead with you to purchase some of our modest Foolish wares, allow us to shift the spotlight to some books not written by Fools. That's right -- if you're interested in reading some other perspectives on investing, but are just not sure where to begin, or which books might be too far from your Foolish center, head on over to FoolMart (at keyword: FoolMart on AOL or here on our website. There you'll find a host of titles which pass Foolish muster. Many were recommended by our own MF Templar and are found on desks and shelves around Fool HQ. We've read 'em, we like 'em, and we recommend them to you, too. Included are titles by Peter Lynch, Mary Meeker, Michael O'Higgins, David Chilton, William J. O'Neill, and Chuck Carlson. The browsing is free, and the buying is easy!
Randy Befumo (MF Templar),
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Fool On the Hill
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Editing
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