HEROES

Education and training company NATIONAL EDUCATION CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NEC)") else Response.Write("(NYSE: NEC)") end if %> jumped $4 3/8 to $19 3/8 after publisher and retailing company HARCOURT GENERAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: H)") else Response.Write("(NYSE: H)") end if %> announced a $19.50 per share cash tender offer for the company. This offer tops that of SYLVAN LEARNING SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SLVN)") else Response.Write("(Nasdaq: SLVN)") end if %>, which last month offered 0.58 of its shares for each National Education share. Harcourt also said it will offer $14 per share for the outstanding shares of curriculum materials company STECK-VAUGHN PUBLISHING <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STEK)") else Response.Write("(Nasdaq: STEK)") end if %> that National Education doesn't already own. Steck-Vaughn was up $2 1/2 to $13. Should the two transactions go through, the two companies would add between 40% and 45% to Harcourt's publishing business revenues.

STUDENT LOAN MARKETING ASSOCIATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLM)") else Response.Write("(NYSE: SLM)") end if %>, or Sallie Mae, gained $5 1/2 to $113 1/4 as a proxy fight is brewing regarding the strategic direction of the company. One faction, the Committee to Restore Value to Sallie Mae, announced its slate of directors last week, which includes a former Sallie Mae CEO and a number of current Sallie Mae directors. The group wants to use the company's back-office capabilities to expand beyond just buying and servicing student loans and to get into the business of originating student loans when the company is completely privatized. Under its federally insured status, its returns on tangible assets and earnings are lower than a commercial institution would expect, but it has a higher degree of safety despite the number of students that default. Currently, that's not a problem for Sallie Mae, since the government insures those loans. One slate of directors is more worried about increasing returns while the other is worried about safety.

QUICK TAKES: Remote control maker UNIVERSAL ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UEIC)") else Response.Write("(Nasdaq: UEIC)") end if %> gained $1 to $5 3/8 on reporting a Q1 loss of $0.04 per share on flat revenues of $22 million... NATIONAL AUTO FINANCE CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NAFI)") else Response.Write("(Nasdaq: NAFI)") end if %> rose $1 1/4 to $7 5/8 after the non-prime auto lender said last night that it is comfortable with analysts' estimates for Q1 earnings per share (EPS) of $0.13 to $0.14... Aircraft interior components company BE AEROSPACE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BEAV)") else Response.Write("(Nasdaq: BEAV)") end if %> was boosted $3 3/4 to $23 7/8 after announcing it has completed an increase of its manufacturing capacity for 16-g aircraft seats to over 200,000 units per year... LEASING SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LSSI)") else Response.Write("(Nasdaq: LSSI)") end if %>, which fell apart on Monday after DELL COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> said it will form its own equipment leasing unit, rebounded $1 1/2 to $10 after the company said its board has authorized the repurchase of one million shares, or 12% of its outstanding stock... Biotech company CORTECS INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLVRY)") else Response.Write("(Nasdaq: DLVRY)") end if %> rose $2 3/4 to $22 1/4 after Nomura Securities reiterated its "buy" rating on the firm on expectations of success for the company's osteoporosis treatment... COLEMAN CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CLN)") else Response.Write("(NYSE: CLN)") end if %> gained $2 to $16 after the camping products company said it will close four factories and lay off 10% of its workforce... Small engine manufacturer BRIGGS & STRATTON CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGG)") else Response.Write("(NYSE: BGG)") end if %> powered $5 1/4 higher to $48 after reporting Q3 EPS of $1.60, which missed estimates of $1.95, but was mitigated by the company's decision to hold a Dutch auction tender for 20% of its shares at prices between $43 and $51 per share... TANDEM COMPUTERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDM)") else Response.Write("(NYSE: TDM)") end if %> rose $1 1/4 to $12 7/8 on receiving Cowne and Co. upgrade to "strong buy" from "underperform"... Defense company WHITEHALL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHT)") else Response.Write("(NYSE: WHT)") end if %> added $1 3/4 to $17 5/8 after announcing an Air Force C-130 aircraft maintenance contract worth up to $100 million or more over the next five years... Cigarette companies are in secret talks to cover "virtually all the industry's liability for smoking" according to Dow Jones. PHILIP MORRIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> gained $4 1/4 to $43 1/4, RJR NABISCO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RN)") else Response.Write("(NYSE: RN)") end if %> added $3 1/4 to $33 1/2, and LOEWS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LTR)") else Response.Write("(NYSE: LTR)") end if %> rose $5 3/8 to $91 3/4.... EQUIFAX INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EFX)") else Response.Write("(NYSE: EFX)") end if %> rose $2 1/2 to $30 1/2 after the credit card processor and credit bureau reported Q1 EPS of $0.31, a penny per share above estimates... Construction products company NORTEK INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NTK)") else Response.Write("(NYSE: NTK)") end if %> rose $1 5/8 to $21 1/8 after it reported Q1 EPS of $0.37, up 85% year-over-year... TIME WARNER INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TWX)") else Response.Write("(NYSE: TWX)") end if %> gained $3 1/8 to $43 7/8 on reporting strong cash flow growth of 27% in its first quarter.

GOATS

CAPSTONE PHARMACY SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DOSE)") else Response.Write("(Nasdaq: DOSE)") end if %> lost $1 13/16 to $9 15/16 after the institutional pharmacy company announced a merger with the Pharmacy Corp. of America division of nursing home company BEVERLY ENTERPRISES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEV)") else Response.Write("(NYSE: BEV)") end if %>, which says it will spin off the combined company. The new company will have $900 million in revenues, a considerable step up from Capstone's $144 million revenues in 1996. The combined company will also assume $275 million in PCA debt. The companies believe the deal will be accretive to Capstone earnings by at least 10%. Capstone holders, however, might not be pleased mingling their company with a division of Beverly. In the last three years, Beverly has created little to no return to shareholders, while Capstone has returned 50% per year during that same period.

Money center bank CHASE MANHATTAN CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMB)") else Response.Write("(NYSE: CMB)") end if %> slipped $2 3/4 to $89 7/8 after reporting Q1 operating earnings of $2.01 per share on revenues of $4.15 billion, which the company says were a little light. Merrill Lynch lowered its rating on the company to "near-term accumulate" from "buy." CITICORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> also reported its first quarter results today, coming in with revenues of $5.6 billion and earnings of $2.01 per share. Both companies achieved returns on common equity in the 20% area -- excellent for such giant banks. Both companies also complained of worse credit card performance, though, which were negative spots on otherwise good performances for the quarter. Citicorp declined $2 1/2 to $104 3/8 on the day.

CADENCE DESIGN SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CDN)") else Response.Write("(NYSE: CDN)") end if %> fell $1 1/2 to $29 after the semiconductor design software company yesterday reported Q1 EPS of $0.37, which beat analysts' estimates. However, both Hambrecht & Quist and Needham and Co. downgraded the shares to "buy" from "strong buy," with Needham saying that the company is facing a transition period with its acquisition of Cooper & Chyan Technology. Needham raised its 1997 earnings estimate from below the mean of $1.71 per share to $1.77. In related news, AVANT! CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVNT)") else Response.Write("(Nasdaq: AVNT)") end if %>, which plunged yesterday because it was charged with criminal wrongdoing by the Santa Clara, Calif., District Attorney's office for allegedly stealing Cadence's software code, lost another $2 11/16 to $9 13/16 as bail was set at $100,000 for a number of Avant! executives.

QUICK CUTS: Computer telephony products company BROOKTROUT TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BRKT)") else Response.Write("(Nasdaq: BRKT)") end if %> lost $2 7/8 to $10 after reporting Q1 EPS of $0.14, missing the mean estimate of $0.16 per share... OLD AMERICA STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OASI)") else Response.Write("(Nasdaq: OASI)") end if %> fell $1 1/16 to $4 9/16 after the framing and craft stores company reported a loss of $1.24 in its fourth quarter, which contained heavy merchandise write-offs... Optoelectronics manufacturer II-VI INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IIVI)") else Response.Write("(Nasdaq: IIVI)") end if %> fell $4 1/8 to $20 after it reported Q3 EPS of $0.27, which beat estimates of $0.26... XCELLENET INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XNET)") else Response.Write("(Nasdaq: XNET)") end if %> slid $2 1/4 to $12 1/2 after the RemoteWare software developer reported Q1 revenues of $8.9 million and EPS of $0.14, which creamed estimates of $0.11 per share... Office equipment company IKON OFFICE SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IKN)") else Response.Write("(NYSE: IKN)") end if %> fell $2 7/8 to $23 1/2 after the company reported Q2 EPS from continuing operations of $0.37... APPLIED INDUSTRIAL TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APZ)") else Response.Write("(NYSE: APZ)") end if %> was cut down $2 5/8 to $30 after the industrial products distributor reported Q3 EPS of $0.55, falling short of the consensus estimate of $0.58... TOTAL PETROLEUM NORTH AMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TPN)") else Response.Write("(AMEX: TPN)") end if %> was dunked for a $1 15/16 loss to $9 9/16 after agreeing to merge with energy refiner and gas station company ULTRAMAR DIAMOND SHAMROCK CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UDS)") else Response.Write("(NYSE: UDS)") end if %> in a stock swap valuing each Total N.A. share at 0.322 shares of Ultramar Diamond.

FOOL ON THE HILL
An Investment Opinion by MF Templar

The Three Phases

Despite posting a strong first quarter that was in line with analysts' estimates, helpdesk software developer CLARIFY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLFY)") else Response.Write("(Nasdaq: CLFY)") end if %> plunged $9 11/16 to $7 1/16. Warning the Street that future sales would probably not be as strong as expected, the shares fell more than 55% in a staggering one-day drop. Clarify's results confirm rumored weakness among the producers of helpdesk software. As a group, the shares have been under incredible selling pressure for about six months since their profit margins and sequential growth peaked in the third fiscal quarter of 1996.

Today, Clarify warned investors that the fiscal second quarter would not meet current expectations. "Expanding our sales force is a challenge," said Chief Financial Officer Ray M. Fritz. "We expect little, if any, revenue growth rate for the second quarter over the first quarter in 1997." This news suggests that the current estimates of $0.11 EPS for the quarter will probably not come to pass. Instead of posting a 22% sequential increase over the first quarter, Clarify will probably show flat earnings growth quarter-over-quarter and could even show a decrease, given the emphasis the company put on expanding its sales force.

Clarify's fortunes exemplify the fortunes of the helpdesk software group, once among the anointed few on Wall Street. Names like REMEDY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMDY)") else Response.Write("(Nasdaq: RMDY)") end if %>, SCOPUS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SCOP)") else Response.Write("(Nasdaq: SCOP)") end if %>, THE VANTIVE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VNTV)") else Response.Write("(Nasdaq: VNTV)") end if %>, AURUM SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AURM)") else Response.Write("(Nasdaq: AURM)") end if %> and SIEBEL SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEBL)") else Response.Write("(Nasdaq: SEBL)") end if %> have all come public in the past 25 months, buoyed by strong sales in a growing market. Each of these companies makes so-called "helpdesk" software -- a database that helps a company keep track of marketing information relating to its customers. Packages like this automate customer support, defect tracking, sales, field, service, and internal help desk functions, letting it know what customers buy, what they like and don't like, and what their favorite colors are.

Helpdesk software allows a company to leverage its internal information in a more efficient manner, storing this collected knowledge in a common format that can easily be accessed. Sales for these small companies were initially red-hot and sequential increases in revenues and earnings were gigantic -- until the third quarter of fiscal 1996. As most of these companies began to approach $15 to $20 million in sales per quarter, they began to find that pushing through this sales level became increasingly difficult. Margins for many of the larger companies have also begun to contract from the high water mark. Clarify's profit margin in the recently reported quarter was 9.7% compared to 15.1% last quarter and 18.8% two quarters ago. The Vantive Corp. shows a similar downward trend, possibly the reason why an analyst at Donaldson, Lufkin & Jenrette issued a lukewarm recommendation on the stock last week.

Although each company bills its particular set of offerings as unique, the reality is that the products are similar enough that in the minds of many customers, they are making a decision between one or the other. Consumer confusion has been further enhanced by the proliferation of competitors that have come out the woodwork due to the low cost of capital and a very receptive IPO market for this software segment. As market penetration began to increase, these companies have begun to actually compete against one another. The extraordinary valuations on these companies also have not helped matters, as the relative price paid for each dollar of sales or earnings has magnified the downside risk.

Like any other emerging industry, three phases of growth are relatively easy to spot in retrospect. The first is the booming furnace of growth ignited when the industry begins and dozens of companies begin to compete. High demand and low market penetration create ample opportunities, normally lasting two or three years. As the companies grow and become more successful, they begin to compete against one another at the margins, slowing down growth and causing them to fail to meet expectations. In this second phase, the industry begins to consolidate into a smaller number of larger players with more defined strategies. Slight errors here can cause disastrous consequences, as the pool of capital that is willing to fund these companies shrinks faster than the share prices. After a period of relatively dull performance, the market grows enough to allow the remaining, larger players to grow profitability again, initiating phase three.

A great example of this three phase dynamic appears in Peter J. Tanous' Investment Gurus in an interview with MFS Growth manager John Ballen. Ballen uses the office superstores in a prescient example, detailing how OfficeMax, Office Depot, Office Club, Staples and BizMart did well until they started to run up against one another. The industry then quickly consolidated into just OfficeMax, Staples and Office Depot. Although the ultimate market potential for this industry had not changed, 1989 and 1990 represented a lull in the stock price appreciation for the remaining three as they digested acquisitions and refined their growth strategies. Whether you are talking about databases or dog food, the three phases of growth that leave two to four large players seems to play out again and again. For helpdesk software specifically, investors should prepare for a lull and look to purchase shares of the companies that have the best shot of being one of the ultimate survivors once the valuations become more rational given the near-term prospects.

CONFERENCE CALLS

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

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

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

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

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

FREDDIE MAC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FRE)") else Response.Write("(NYSE: FRE)") end if %>
(402) 220-0381 -- replay from 8:00 AM EDT on 4/16 through 4:00 PM EDT on 4/18

04/17/97 (Thursday)
IOMEGA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %>
(800) 633-8284 (reservation # 2593689)
Replay from 6:30 PM ET through 4/23

04/17/97 (Thursday)
MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>
(800) 456-5304 (passcode: 1017) -- replay through 4/21

04/17/97 (Thursday)
SHIVA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHVA)") else Response.Write("(Nasdaq: SHVA)") end if %>
After 6:00 PM EDT
(800) 458-7879 (code: 679903) -- replay

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

WE DELIVER - Get The Evening News delivered
straight to your E-mailbox every evening.


ANOTHER FOOLISH THING
New and Improved Spreadsheet

Fooldom is all about interactivity and do-it-yourself investing, right? Right. What fits in better with such a tradition than the Dow Dividend Spreadsheet? Developed by our own industrious TMF Templr, this is a living, breathing spreadsheet -- one you can manipulate and tinker with. It offers returns and dividends for all 30 stocks in the Dow Jones Industrial Average for 36 years (1961 through 1996), as well as returns for all eight Dow Dividend Strategies -- year by year. This allows you to test out any hypothesis in your search for the ultimate investing approach. Construct what-if scenarios and test them. What if you only bought the 17th-highest-priced stock each year for 35 years? What if you bought all but the lowest-yielding stocks? What if... The spreadsheet is available at keyword: FoolMart for AOL Fools and at FoolMart on our website (http://www.fool.com). It will be delivered to your e-mailbox electronically in your preferred format (Excel 4.0, 5.0, 6.0, or 7.0 only).

Randy Befumo (TMF Templar), a Fool
Fool Plate Special

Dale Wettlaufer (TMF Raleigh), another Fool
Ups & Downs

Brian Bauer (TMF Hoops), and yet another Fool
Editing