HEROES

Healthcare services company VALUE HEALTH INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VH)") else Response.Write("(NYSE: VH)") end if %> jumped $2 1/4 to $20 after announcing an amendment to its merger agreement with healthcare provider COLUMBIA/HCA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COL)") else Response.Write("(NYSE: COL)") end if %>. In mid-January the two companies agreed to a stock swap exchanging 0.58 shares of Columbia/HCA for each share of Value Health. With the recent federal investigation of Columbia/HCA and the subsequent decline in its stock price, the value of the deal has fallen from valuing Value Health at $22.75 per share to about $18.38 yesterday. To make the deal work and bring the largest pharmacy benefit management company into the Columbia/HCA fold, the terms have been changed to an all cash acquisition at $20.50 per share.

HARLEY DAVIDSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HDI)") else Response.Write("(NYSE: HDI)") end if %> gained $3 3/4 to $38 5/8 after reporting first quarter earnings per share (EPS) of $0.53, beating the mean estimate of $0.49 per share. Amortizing a union labor agreement signing bonus over five fiscal years instead of taking the charge in this quarter and not counting a product liability settlement, EPS would have been $0.60 per share and operating earnings would have crushed estimates by an even wider amount. Unit shipments increased to 32,860 from 30,071 a year ago and 29,835 last quarter. The company also spooled up production of its Buell sport bikes, more than doubling output from a year ago. With a negligible increase in shares outstanding and a steady operating margin around 14.5%, operating income per share grew right along its 5-year forecast line at around 16%.

Machine vision systems company COGNEX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CGNX)") else Response.Write("(Nasdaq: CGNX)") end if %> rose $2 1/2 to $23 1/8 on reporting Q1 revenues of $28.1 million and EPS of $0.15, beating estimates of $0.13. While revenues were down from a near record $34.9 million a year ago, investors continue to focus on sequential revenue gains in capital equipment industries selling into the semiconductor and electronics manufacturing markets. Cognex recorded a 6.3% sequential increase from last quarter's revenues. The company said it is seeing a pickup in demand from key customers and that it may recover earlier than expected in 1997 -- magic words for investors in these industries over the last six months.

QUICK TAKES: Software test products company SEGUE SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEGU)") else Response.Write("(Nasdaq: SEGU)") end if %> made its way $1 3/8 higher to $10 1/8 after announcing that CISCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> has standardized on Segue's products for software development testing... IONA TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IONAY)") else Response.Write("(Nasdaq: IONAY)") end if %> rose $2 1/16 to $15 after the Zweig-DiMenna Special Opportunities fund filed a disclosure statement on revealing its above-5% stake in the Irish software company... Respiratory pharmaceuticals company DURA PHARMACEUTICALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DURA)") else Response.Write("(Nasdaq: DURA)") end if %> gained $5 3/16 to $34 after it reported Q1 revenues of $33.9 million and EPS of $0.19, up 141% and 73% respectively from Q1 1996.... ESC MEDICAL SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESCMF)") else Response.Write("(Nasdaq: ESCMF)") end if %> rose $3 1/2 to $29 1/4 after the FDA approved the company's Derma 20 laser system for marketing in the U.S.... SOFAMOR/DANEK GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SDG)") else Response.Write("(NYSE: SDG)") end if %> bounded $3 3/8 higher to $40 7/8, but the spinal implant device company said it didn't know why... Networking equipment company BAY NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAY)") else Response.Write("(NYSE: BAY)") end if %> climbed $1 3/8 to $18 1/4 before reporting Q3 operating EPS of $0.10, beating the mean estimate of $0.08 per share... PIER 1 IMPORTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PIR)") else Response.Write("(NYSE: PIR)") end if %> jumped $1 5/8 to $20 1/4 after the retailer told Dow Jones that it expects to report Q4 EPS of $0.37, above the Zacks mean estimate of $0.35 per share... Hospital and clinic operator COLUMBIA/HCA HEALTHCARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COL)") else Response.Write("(NYSE: COL)") end if %> rebounded $2 3/4 to $34 1/8 after announcing a $1 billion share buyback authorization... O'SULLIVAN INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OSU)") else Response.Write("(NYSE: OSU)") end if %> rose $1 to $14 after the pre-fab furniture company's President and two directors filed a report disclosing their purchase of company shares... Medical device maker U.S. SURGICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: USS)") else Response.Write("(NYSE: USS)") end if %> added $1 3/4 to $32 5/8 after a surgical team performed a successful triple coronary artery bypass using the company's Mini-CABG* instruments, which eliminate the need for a heart/lung machine... CARIBINER INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CWC)") else Response.Write("(NYSE: CWC)") end if %> jumped $3 to $51 3/8 after the company said its audio/visual systems division has been chosen by Westin Hotels & Resorts to be its preferred provider of A/V services and sales, possibly opening other opportunities for the meeting planning company.

GOATS

ALLIANCE PHARMACEUTICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ALLP)") else Response.Write("(Nasdaq: ALLP)") end if %> lost $4 3/16 to $6 7/16 after the company suspended a Phase III trial of a therapy for pediatric patients with acute respiratory distress syndrome (ARDS) because of a substantial decrease in mortality rates in subjects included in clinical testing. Problem is, the decrease in mortality came in subjects in the control group -- those who were not treated with the company's LiquiVent liquid oxygen treatment. Because of the unexplained difference in the historical mortality rates for pediatric patients with this syndrome and the mortality rate in the control group, the company will postpone for up to six months the next step in a Phase II/III study for adults with ARDS. Oppenheimer downgraded the stock to "market perform" from "outperform."

PC card company XIRCOM INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XIRC)") else Response.Write("(Nasdaq: XIRC)") end if %> tumbled $3 3/8 to $12 today after reporting operating earnings of $0.22 per share in its second quarter, which missed the mean estimate of $0.23. The company said it has clear indications that it gained market share in the quarter, as unit volume increases for PC cards outstripped growth for mobile PCs in general. Xircom also said it will dispose of its Netaccess business, as its performance in the crowded remote access industry was well below that of its peers. Xircom now trades below the absolute minimum price at which INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> valued the company in January of this year when it acquired 12.5% of the company, as well as warrants to purchase another 7.5% for $52 million.

QUICK CUTS: Network software company OBJECTIVE SYSTEM INTEGRATORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OSII)") else Response.Write("(Nasdaq: OSII)") end if %> was cut in half, losing $4 1/32 to $4 1/32 after announcing that it expects Q3 revenues to decline about 27% from last year, which will result in an loss... SEQUUS PHARMACEUTICALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEQU)") else Response.Write("(Nasdaq: SEQU)") end if %> slipped $1 13/16 to $5 7/8 after the company's application for a supplemental New Drug Application, which would have allowed it to market one of its drugs for a purpose other than originally intended, was denied by the FDA... Semiconductor capital equipment company LAM RESEARCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LRCX)") else Response.Write("(Nasdaq: LRCX)") end if %> fell $6 5/8 to $26 7/8 after the company reported a larger-than-expected loss for the quarter. Before restructuring charges, results were essentially breakeven, but that didn't stop Lam from cratering and dragging merger partner ONTRAK SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ONTK)") else Response.Write("(Nasdaq: ONTK)") end if %> down $5 11/16 to $21 5/8... BIOCHEM PHARMA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BCHXF)") else Response.Write("(Nasdaq: BCHXF)") end if %> fell $4 to $18 3/4 after Hambrecht & Quist cut its estimates on the company... Semiconductor equipment company GASONICS INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GSNX)") else Response.Write("(Nasdaq: GSNX)") end if %> lost $2 1/8 to $11 on rumors that its book/bill ratio will fall... Internet organizer company EXCITE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> fell $1 3/4 to $9 3/4 after reporting a Q1 loss of $0.72 per share on revenues of $7.5 million -- Alex. Brown responded by downgrading the stock... Computer/telephony systems company BROOKTROUT TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BRKT)") else Response.Write("(Nasdaq: BRKT)") end if %> lost $2 1/4 to $12 7/8 before reporting record Q1 results after the bell... IKON OFFICE SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IKN)") else Response.Write("(NYSE: IKN)") end if %> was shredded for a $2 1/8 loss to $26 3/8 after the office equipment distributor reported Q2 EPS from continuing operations of $0.37, beating the First Call estimate of $0.36.

FOOL ON THE HILL
An Investment Opinion by MF Templar

Avanti! Slammed!

AVANT! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVNT)") else Response.Write("(Nasdaq: AVNT)") end if %> plunged $12 to $12 1/2 after charges of felony theft of trade secrets and conspiracy were leveled against the company by the Santa Clara County, Calif., District Attorney's Office. The developer of electronic design automation (EDA) software has been the subject of controversy since August of 1995 when CADENCE DESIGN SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CDN)") else Response.Write("(NYSE: CDN)") end if %> initiated a civil suit against the company on the same grounds.

"We think the District Attorney has been misled and misinformed,'' stated Avant! Chief Financial Officer John Huyett. Misinformed or not, the District Attorney is making four top Avant! executives post bail of $100,000, including Avant! Chief Executive Gerald C. Hsu. Where the civil suit itself did not persuade some on Wall Street to take Cadence's claim seriously, the initiation of a separate criminal action has made them stand up and take notice.

In spite of this new action on the criminal front, Cadence is not letting up at all. ''Cadence will continue to press its own civil action against Avant! in federal court,'' said Cadence Chief Executive Joseph B. Costello in a prepared statement. The reason why Cadence is being so persistent in the "place and rout" code in question is that it is Cadence's "crown jewel," according to Cadence Chief Financial Officer Ray Bingham, used in products that account for 55% of its $741.4 million in trailing revenues.

Although a judge denied an injunction against Avant! in mid-March that would have halted them from selling any products with the tainted code, the fact that the products could be discontinued as a result of the lawsuit might have a chilling effect on purchase decisions by major semiconductor manufacturers. EDA software is an advanced variation of classic computer-aided design (CAD) software that is used by semiconductor manufacturers to design semiconductor chips. Unlike a word processing application, swapping from one type of EDA software to another is a nightmare of incompatible formats and differing interfaces -- in spite of the fact that some of the code might be shared.

The drama between Avant! and Cadence has been playing out in slow motion over the course of the last two years. It all began in 1995, when Cadence alleges that an Avant! consultant named Mitsuru Igusa provided the company with stolen computer code that now forms the basis of its ArcCell family of products. Part of the basis of Cadence's suit was an independent evaluation at the behest of Cypress Semiconductor Chief Executive T.J. Rodgers, which found that the code was copied. "Our CAD manager has compared your software to the [Avant!] software we have been evaluating," Rodgers wrote in a letter to Cadence. "He found almost indisputable evidence that your software has been copied."

After filing its initial civil suit, Cadence urged the authorities to get involved -- which they did when they raided Igusa's house in early 1996. At the time, authorities found Cadence codes in a computer and subsequently charged Igusa with six counts of misappropriating trade secrets. Further complicating the drama was a power outage on the West Coast that knocked out power to Avant!'s corporate offices, making it appear as if the company had disappeared on a very critical day. Rumors of an injunction spread throughout the Street and Avant! shares plunged to the $12 range -- about where they trade today.

Although the stock began to recover in the months after the initial raid on Igusa's house and the civil suit was filed, the evidence against Avant! continued to mount. In May of 1996, Barron's reporter Cheryl Strauss Einhorn revealed that she had found three personal checks for $5,000 each made out to Igusa and signed by Shiao Li Huang, the personal secretary to Avant! Chief Executive Gerald Hsu. Although Huang and Igusa could theoretically know one another casually, the fact that Igusa was paid $15,000 by the personal secretary of the company to which he allegedly delivered some pirated code does not look good. With skepticism about a negotiated settlement rising, investors unfamiliar with the intimate details of Avant!'s product line and the lawsuit should probably stay away.

CONFERENCE CALLS

CASCADE COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCC)") else Response.Write("(Nasdaq: CSCC)") end if %>
(800) 938-0941 (code: 319193) -- replay through midnight 4/15

ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %>
(800) 475-6701 (code: 336995) -- replay through 4/18 (North America)
(320) 365-3844 (code: 336995) -- replay through 4/18 (International)

INTEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>
(402) 280-9021 -- replay through 4/18

TEXAS INSTRUMENTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXN)") else Response.Write("(NYSE: TXN)") end if %>
Replay available after 12:00 noon ET for 24 hrs
(800) 633-8284 (code: 2433757)

360 COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XO)") else Response.Write("(NYSE: XO)") end if %>
(402) 220-3014 -- replay through 4/22

SUN MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %>
(800) 633-8284 (reservation # 2584848) -- replay avail through 4/22

APPLIED DIGITAL ACCESS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADAX)") else Response.Write("(Nasdaq: ADAX)") end if %>
(402) 220-6032 -- replay through 4/22

04/16/97 (Wednesday)
FREDDIE MAC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FRE)") else Response.Write("(NYSE: FRE)") end if %>
(800) 938-0928 -- replay from 8:00 AM EDT on 4/16 through 4:00 PM EDT on 4/18

04/16/97 (Wednesday)
FORD MOTOR CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %>
(703) 736-7228 -- replay at 2:00 PM EDT on 4/17

04/16/97 (Wednesday)
APPLE COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %>
(816) 650-0613 (password: Apple Conference Call) -- Replays on 4/16 at 7:00 PM EDT and 9:00 PM EDT, and 4/17 at 7:30 AM EDT and 12:00 noon EDT

THIS WEEK'S CONFERENCE CALL SYNOPSES

NIKE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %> Q3 Conference Call

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