HEROES

Machine tool and industrial automation equipment company GIDDINGS & LEWIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GIDL)") else Response.Write("(Nasdaq: GIDL)") end if %> jumped $6 23/32 to $20 11/32 after holding company HARNISCHFEGER INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HPH)") else Response.Write("(NYSE: HPH)") end if %> commenced an all-cash tender offer for G&L for $19 per share. G&L fell apart last summer when it reported a weak book-to-bill ratio and pre-announced poor earnings for the rest of the year due to lackluster results at its Integrated Automation Division. Since then, the shares oscillated around the $13 1/2 level, but then fell further after G&L took a $64 million charge for restructuring the Integrated Automation unit and to satisfy problems customers were having with the company's products. In its recently announced quarter, the company began to bring things around, expanding gross margin and showing a better book-to-bill ratio. The stock didn't really respond to the earnings news, but it has certainly responded to the hostile offer. Harnischfeger fell $3 1/8 to $42 1/4 on the announcement.

Commonwealth Edison parent company UNICOM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UCM)") else Response.Write("(NYSE: UCM)") end if %> gained $1 1/4 to $21 3/8 after Morgan Stanley raised its rating on the company to "outperform" from "neutral" after Commonwealth Ed restarted its 809 megawatt Quad Cities 1 nuclear reactor on Thursday. Unicom also said last week that it will not reinvest in its Zion, Illinois nuclear facility and will move up the date of its decommissioning, causing reported earnings to be lower but allowing the company to shelter more of its income stream for reinvestment in other generation plants less prone to the regulation that wipes out much of the cost savings from operating a nuclear facility.

QUICK TAKES: CLARIFY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLFY)") else Response.Write("(Nasdaq: CLFY)") end if %> regained $1 23/32 to $9 7/32 after announcing a $1 million help-desk software installation for Toyota Motors... Application integration software company TRITEAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TEAL)") else Response.Write("(Nasdaq: TEAL)") end if %> added $1 1/8 to $7 5/8 after on announcing a licensing contract with IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>... Factory outlet real estate investment trust HORIZON GROUP INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HGI)") else Response.Write("(NYSE: HGI)") end if %> moved up $1 1/8 to $11 5/8 after announcing a new CEO and president... BBN CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBN)") else Response.Write("(NYSE: BBN)") end if %> gained $1 3/4 to $21 7/8 though the data network infrastructure and software company, which is rumored to be "in play," delayed the release of its earnings by a week... Former Atlantic Richfield unit LYONDELL PETROCHEMICAL CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LYO)") else Response.Write("(NYSE: LYO)") end if %> gained $1 1/8 to $19 7/8 on reporting Q1 EPS of $0.50, which beat estimates of $0.40 and increased 66% from last year's pro-forma results... OMNICOM GROUP INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OMC)") else Response.Write("(NYSE: OMC)") end if %> added $2 5/8 to $50 3/4 after a North Carolina judge ruled that the FDA cannot regulate cigarette advertising... AMERICAN EXPRESS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXP)") else Response.Write("(NYSE: AXP)") end if %> moved $3 higher to $64 1/8 on the strength of a Wall Street Journal piece discussing the company's credit card growth strategies... Cotton seed grower DELTA & PINE LAND CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLP)") else Response.Write("(NYSE: DLP)") end if %> rose $1 1/4 to $23 1/4 on a Smith Barney upgrade to "buy" from "neutral"... COUNTRYWIDE CREDIT INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCR)") else Response.Write("(NYSE: CCR)") end if %> rose $1 1/4 to $25 3/4 on a PaineWebber upgrade to "attractive" from "neutral."

GOATS

TIDEWATER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDW)") else Response.Write("(NYSE: TDW)") end if %> lost $4 1/8 to $40 after having a rough day on analyst downgrades. Both Donaldson, Lufkin & Jenrette and Robinson-Humphrey downgraded the oil services company on overcapacity concerns. These concerns were sparked by an announcement made by LITTON INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LIT)") else Response.Write("(NYSE: LIT)") end if %> that it would build 10 offshore supply vessels, with an option for seven more, for private company Edison Chouest Offshore. Tidewater said this capacity won't be coming on-line until a year and a half to three years from now, and in the interim, Tidewater will pay down debt related to its O.I.L. Ltd. purchase and that it will take measures to keep down capacity in the Gulf of Mexico. The company's Chair and CEO further announced that he was "sure that [investors] won't be disappointed" by this week's earnings report.

Also being hit in today's offshore drilling support vessel tumble was SEACOR HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CKH)") else Response.Write("(NYSE: CKH)") end if %>, down $8 3/4 to $40. The company was downgraded by Robinson-Humphrey to "short-term market perform" from "short-term buy." Another Gulf of Mexico oil services company, TRICO MARINE SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TMAR)") else Response.Write("(Nasdaq: TMAR)") end if %> was hurt equally hard, falling $8 3/4 to $36 1/2, as investors fear that the industry has crossed the line where the temptation to build new vessels has become too great to resist. Trico's profits shot up 2700% last year as dayrates went through the roof. Without shooting cash back to shareholders through stock buybacks or dividends, these companies will want to do something with the free cash flow that is now washing over the industry. For a good look at dayrates and capacity utilization in the drilling and services sector, check out GLOBAL MARINE's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLM)") else Response.Write("(NYSE: GLM)") end if %> SCORE updates on its website.

INTEGON CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IN)") else Response.Write("(NYSE: IN)") end if %> fell $3 7/8 to $9 1/2 after reporting a huge operating loss of $2.19 per share in its first quarter. The nonstandard auto insurer totally missed on its estimation of loss reserves and in the premiums it charged its customers. Because of this, the company did away with its chief actuaries, who may be made scapegoats in the company's horrible performance. If the company's executives set premiums too low, then it's going to grow market share at the expense of taking on too much risk. Had the company reserved for the right amount of claims losses in prior quarters, then its earnings would have been worse. Taking out just the goodwill component on the company's balance sheet, it is still selling at 3.7 times tangible book value -- sort of hefty for a company in disarray.

QUICK CUTS: HVIDE MARINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HMAR)") else Response.Write("(Nasdaq: HMAR)") end if %> declined $4 3/4 to $16 1/4 on another offshore oil services company downgrade from Donaldson, Lufkin & Jenrette... Missing quarterly earnings estimates by $0.13, BOEING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> moved down $6 5/8 to $95 3/8, while merger partner MCDONNELL DOUGLAS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MD)") else Response.Write("(NYSE: MD)") end if %> lost $3 to $57 1/2... OUTBOARD MARINE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OM)") else Response.Write("(NYSE: OM)") end if %> was chopped for a $1 1/8 loss to $10 7/8 after the marine engine maker reported a loss of $0.36 per share on Friday and said that it is looking for a capital infusion... Mexican Coke bottler COCA-COLA FEMSA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KOF)") else Response.Write("(NYSE: KOF)") end if %> fell $2 3/4 to $33 1/2 after reporting a 29% decline in Q1 pre-tax earnings after accounting for inflation... CLIFFS DRILLING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CDG)") else Response.Write("(NYSE: CDG)") end if %> lost $4 1/8 to $62 after investor Appaloosa Management cut its stake in the offshore contract driller to 3.5%... Hambrecht & Quist lowered its rating on NIKE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %> to "hold" from "buy" on fears of a slowdown in demand for the company's products.

HELD

Energy construction firm MCDERMOTT INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MDR)") else Response.Write("(NYSE: MDR)") end if %> and its marine construction unit J. RAY MCDERMOTT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JRM)") else Response.Write("(NYSE: JRM)") end if %> were both halted today for dissemination of news that the parent company will restructure, that both companies will report large fourth quarter losses, and that they are investigating possible criminal offenses committed by employees.

FOOL ON THE HILL
An Investment Opinion by Randy Befumo

Income Rising

Income-oriented investors prefer bonds. For a fixed initial price, a bond will spit out regular, set payments. By focusing on the bonds of the government and large, blue-chip companies, investors can get a guaranteed stream of income to fund their lives. Retirement accounts chock full o' bonds dot the investment landscape, managed by investors who have been taught once or twice in their lives that stocks are an inherently speculative endeavor. These same investors, however, give up millions of dollars in income every year, while another sort of conservative, staid investor invests in rising income and leaves a chunk of equity behind to pass on to their heirs.

What are these investors buying? A newfangled derivative that gives you all the income of a bond but also allows you to participate in any changes in the value of the bond? Some new hundred year bond from a large corporation? Try plain ol' common stock. We are talking about the stock of the so-called "blue-chip" companies, companies that have managed to increase their dividend payout year-after-year for decades, through market crashes in the early '70s to market manias here in the '90s. While bond investors have been relegated to a fixed payout, investors who purchased common stocks back in the '70s are now receiving amounts close to their initial investment as their quarterly dividend payouts.

The problem here is one of investment mindset. Through the capital appreciation crazed '80s and '90s, investors have been conditioned to ignore the dividend component of common stocks. Whereas 20 years ago many investors would not have purchased a security unless it paid a dividend, today the dividend is de minimus -- it is the last thing anyone thinks about. Even as inflation eroded the value of the dollars bond investors have been getting paid, leaving them to desperately search for higher and higher yields, common stock investors have seen their payouts increase dramatically over the past decade. While income investors have taken a bath in once-conservative utility stocks since 1994, common stock investors have seen their relative payouts increase sizably over the same period.

Imagine two investors on January 2, 1987. Investor A purchases a ten-year bond from the U.S. government for $1,000 yielding 10%. Investor B purchases 166.7 shares of PHILIP MORRIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> for $1,000, or $6 per share. At the time of purchase, Philip Morris is yielding 4% and has a history of raising its dividend payout roughly 15% per year. Based on dividends alone, which investor would have received more income from their investment over the next ten years? For the purposes of simplicity, we will assume that both investors put their dividends under the mattress upon receipt. This does not account at all for the fact that Philip Morris stock has risen almost seven-fold over this ten-year period, but rather simply focuses on the growing dividend yield paid out by the company.

Calculating Investor A's take is pretty straightforward given that there is no reinvestment of dividends. A 10% return each year on a $1,000 investment is $100. Over ten years, an investor would have received $1,000 ($100 per year) back in come -- an amount equal to his initial investment in the bond. Not a bad return, 10% per year roughly approximates the 10.6% average return equities have produced, including dividends, since 1926. Investor B, on the other hand, would have received $7.51 per share in dividends, or $1,251.91. Based on income alone, the Philip Morris investor would have received 25% more over the ten-year period. In the last year, the effective yield a Philip Morris investor would have been earning based on his initial investment at $6 a share would have been 24.4%, more than twice what a 10% bond would have given him.

Lest investors allow their hearts to palpitate wildly at the thought of owning Philip Morris, the same dividend effect occurs in dozens of blue-chip stocks with histories of raising their dividend payouts over time. Although in the first few years the bond whoops up on the stock's dividends, over time the steadily rising dividend overtakes the bond and, in fact, begins to generate income relative to the initial investment that would be impossible to find elsewhere. An investor who bought Philip Morris in 1981 for a split-adjusted $1.75 would have been raking in $1.46 in dividends per share in 1996, an 84% yield on the initial stock price. You don't even see this kind of yield on D-rated junk bonds in danger of bankruptcy. On top of getting 81% of their investment back every year, these investors will also have something substantial to pass on to their heirs should they choose to, rather than spending down their precious capital in times when yields are too low, like the last three years.

If an investor can look beyond the fact that the actual stock prices have a tendency to change and focus on strong businesses that can deliver regular dividend increases, over periods of 10 years or more stocks will beat bonds in terms of income hands down. The longer the time period, the more significant the outperformance will be. Given the choice of tying up your money for 30 years to get 7.25% on a Treasury bond or parking an equal amount in a company like Chase Manhattan or Citicorp, an income-oriented investor might want to think twice before committing their money forever to bonds.

CONFERENCE CALLS

RAINFOREST CAFE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAIN)") else Response.Write("(Nasdaq: RAIN)") end if %>
(402) 222-9939

HEWLETT PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>
VERIFONE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VF)") else Response.Write("(NYSE: VF)") end if %>
Replay available from 4:15 PM EDT today through 8:00 PM EDT on 4/25, and from 10:00 AM EDT on 4/28 through 8:00 PM EDT on 4/30
(800) 633-8284 (reservation # 2699996)

UNITED COMPANIES FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UC)") else Response.Write("(NYSE: UC)") end if %>
(800) 475-6701 (code 336752)
(321) 365-3844 -- outside US

FORCENERGY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FGAS)") else Response.Write("(Nasdaq: FGAS)") end if %>
(800) 475-6701 (code: 338955) -- replay avail. through 4/29
(320) 365-3844 (code: 338955) -- replay (outside US)

MATTSON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MTSN)") else Response.Write("(Nasdaq: MTSN)") end if %>
(402) 220-6969 -- replay available through 5/6

GENZYME TISSUE REPAIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GENZL)") else Response.Write("(Nasdaq: GENZL)") end if %>
(402) 220-5189 (confirmation # 664581) -- replay through 4/30

MICROWARE SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MWAR)") else Response.Write("(Nasdaq: MWAR)") end if %>
(800) 633-8284 (code 2686530)

CANANDAIGUA WINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WINEA)") else Response.Write("(Nasdaq: WINEA)") end if %>
After 2:30 PM ET for 48 hours
(800) 677-7940

04/29/97 (Tuesday)
MORROW SNOWBOARDS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MRRW)") else Response.Write("(Nasdaq: MRRW)") end if %>
(402) 220-4250 -- replay through 5/6

THIS WEEK'S CONFERENCE CALL SYNOPSES

ATLAS AIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATLS)") else Response.Write("(Nasdaq: ATLS)") end if %> Q1 Conference Call
ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> Q1 Conference Call
SUN MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %> Q3 Conference Call
APPLE COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> Q2 Conference Call
C-CUBE MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CUBE)") else Response.Write("(Nasdaq: CUBE)") end if %> Q1 Conference Call

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Rogue In-Depth Insights

Looking for some meaty and insightful analysis of a timely business, investing or technology issue? Check out our Rogue missives -- where you can read Foolish musings on the best and worst of 1996, Warren Buffet, Teamsters, EDGAR, AOL, Alan Greenspan, Al Dunlap, Teletek, liquor advertising, disclosure laws, United Auto Workers, shareholder activism, Alta Vista, pension funds, Albanian pyramid schemes, Web-vertising, the Arms Index, CNBC, shorting, the SEC, cyber-cafes, Elaine Garzarelli, Jack Kemp, margin accounts, capital gains, George Soros, and much, much more. You can access Rogue via the Lunchtime/Evening News window's listbox.

Randy Befumo (TMF Templr), a Fool
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Dale Wettlaufer (TMF Ralegh), another Fool
Ups & Downs

Brian Bauer (TMF Hoops), yet another Fool
Editing