HEROES

Billing and customer service outsourcing company USCS INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USCS)") else Response.Write("(Nasdaq: USCS)") end if %> moved up $3 to $19 1/2 on last night's first quarter earnings report, in which the company came through with earnings per share (EPS) of $0.21, up 75% over last year, on revenues of $71 million. The company's market share in the cable TV industry is an astounding 54% of all cable households. It also claims one-third of all cellular subscribers and one in ten landline phone customers in the country. Meanwhile, USCS is branching out into the utility industry, which itself wants to branch out into the communications business where it can. Bundled billing and customer service is one attraction for customers and one area in which economies of scale present competitive advantages. Merrill Lynch raised its rating on the stock the "buy," making it a "Focus One Stock of the Week."

AMATI COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMTX)") else Response.Write("(Nasdaq: AMTX)") end if %> rocketed $4 higher to $12 3/4 on rumors that the company is close to signing deals with a Chinese telecom company, possibly HONG KONG TELECOMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HKT)") else Response.Write("(NYSE: HKT)") end if %> Telecom, and GTE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTE)") else Response.Write("(NYSE: GTE)") end if %>, which has been testing the company's digital subscriber line (DSL) units for about a year. Some of the move may be attributed to a press release that came out earlier this week announcing a research collaboration between the company and German industrial giant Siemens. More important than the agreement to research an ATM to DSL interface is Siemens' agreement to market Amati's products, since the company's current marketing presence is not that comprehensive. Competitor WESTELL TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WSTL)") else Response.Write("(Nasdaq: WSTL)") end if %> made its move yesterday on the GTE contract speculation.

QUICK TAKES: Electronic components company C.P. CLARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CPCL)") else Response.Write("(Nasdaq: CPCL)") end if %> gained $2 1/8 to $11 1/8 after reporting Q4 revenues of $32.7 million, up 4.3% sequentially, and EPS of $0.16, beating estimates of $0.14, which also boosted BENCHMARQ MICROELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BMRQ)") else Response.Write("(Nasdaq: BMRQ)") end if %> $1 3/8 to $18 7/8... CMETATOOLS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MTLS)") else Response.Write("(Nasdaq: MTLS)") end if %> gained $1 5/8 to $10 3/4 after the Wall Street Journal said yesterday that the graphics software company possesses software that "may one day help reshape the world of computer graphics." Merger partner FRACTAL DESIGN <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FRAC)") else Response.Write("(Nasdaq: FRAC)") end if %> came along for the ride, gaining $1 1/2 to $8... Consumer products and services company CUC INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CU)") else Response.Write("(NYSE: CU)") end if %> gained $1 7/8 to $23 after Montgomery Securities initiated coverage with a "buy" rating... BW/IP INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BWF)") else Response.Write("(NYSE: BWF)") end if %> gained $1 3/8 to $17 5/8 after the fluid transfer and control company bought out the remainder of its Argentine joint-venture, which makes equipment for the oil and energy markets... MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %> gained $2 7/8 to $38 1/8 even as pricing on 64 MB DRAM chips has declined rapidly in recent weeks... Italian eyewear company LUXOTTICA GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LUX)") else Response.Write("(NYSE: LUX)") end if %> gained $4 3/8 to $64 3/4 after reporting Q1 EPS of $0.85, beating the sole estimate of $0.83... AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> added $1 7/8 to $47 as investors took it as a good sign that the company moved up its earnings report to this coming Monday... Semiconductor wafer inspection laser company UNIPHASE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UNPH)") else Response.Write("(Nasdaq: UNPH)") end if %> rose $5 1/4 to $45 after UBS Securities initiated coverage of the company with a "buy" rating... AMERICAN POWER CONVERSION CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: APCC)") else Response.Write("(Nasdaq: APCC)") end if %> gained $2 3/8 to $21 5/8 in slaying a major dragon -- HEWLETT-PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> is pulling out of part of APC's market... WEST MARINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WMAR)") else Response.Write("(Nasdaq: WMAR)") end if %> gained $1 7/8 to $27 7/8 after reporting a 2.6% decline in April same-store sales but a 49% increase in total April revenues.

GOATS

Retail enterprise software company GATEWAY DATA SCIENCES CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GDSC)") else Response.Write("(Nasdaq: GDSC)") end if %> dropped $2 1/8 to $4 5/8 after pre-announcing a Q1 loss of $0.15 to $0.20 per share, below analyst expectations. The software yearling also said that its reseller agreement with IBM will be expiring, and that may depress results. The company has had some difficulties with its transition from being a software company and retail computer systems integrator to being a pure software company. If it is successful in developing inventory control and point-of-sale application software based on Java, the field is pretty much wide open. Users of handheld devices in the retail industry are hungering for open software systems that will go across platforms, rather than the closed systems that currently dominate the industry.

PRINTRAK INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AFIS)") else Response.Write("(Nasdaq: AFIS)") end if %> lost $2 1/4 to $11 1/4 after the fingerprint identification systems company reported Q4 EPS of $0.11, in line with estimates. Cowen & Co. cut its rating on Printrak to "buy" from "strong buy." Despite the bad reputation that fingerprint identification companies have had over the years, most recently with the oft-repeated tale of Comparator Systems, Printrak has done very well for its investors over its corporate lifetime. With only about $16 million invested through equity offerings, $1.7 million invested through debt, and another $18 million invested through retained earnings, the company is far from a value destroyer, having fallen from its 52-week high above $15 and still holding a market cap of $115 million.

QUICK CUTS: CAMBRIDGE HEART INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CAMH)") else Response.Write("(Nasdaq: CAMH)") end if %> fell $2 to $7 1/2 after announcing a delay in a submission to the FDA concerning its device that measures heart waves... Medical device maker PERCLOSE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PERC)") else Response.Write("(Nasdaq: PERC)") end if %> lost $2 3/4 to $22 despite receiving FDA premarket approval for its Prostar suture closure system... Sub-prime mortgage lender AAMES FINANCIAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AAM)") else Response.Write("(NYSE: AAM)") end if %> lost $3 1/8 to $12 1/4 after reporting Q3 operating EPS of $0.40 before a gain on the mark-up of interest-only securities... NORTH AMERICAN VACCINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: NVX)") else Response.Write("(AMEX: NVX)") end if %> slid $1 1/2 to $19 3/8 on reporting a $0.38 loss per share in its first quarter... The mystery loser of the day was networking equipment company PAIRGAIN TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PAIR)") else Response.Write("(Nasdaq: PAIR)") end if %>, which splashed down for a $3 5/8 loss to $22 3/8.

FOOL ON THE HILL
An Investment Opinion by Randy Befumo

Low Barriers, Ripe for Competition

RICHEY ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RCHY)") else Response.Write("(Nasdaq: RCHY)") end if %> tumbled $2 5/8 to $7 1/2 today after the electronic components distributor reported first quarter earnings complete with a warning about future quarters. Chairman and Chief Executive William C. Cacciatore stated in a press release, "the second quarter's marketplace to date is presenting perplexing challenges." April bookings for the company are below levels achieved in the fiscal first quarter because customers have too much inventory. Although Richey is a relatively tiny distributor, this is the first sign of any weakness in the electronics distributors since late 1996.

Before readers clutch their chests in mock palpitations, Richey is not a bellwether for the industry by any stretch of the imagination. With only $224.7 million in revenues, Richey is tiny when compared to industry leaders like $6.7 billion ARROW ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARW)") else Response.Write("(NYSE: ARW)") end if %> and $5.3 billion AVNET, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AVT)") else Response.Write("(NYSE: AVT)") end if %>. However, despite the news of a recovery in the semiconductor and semiconductor equipment industries being put out by the investment media, many of the distributors of these components are still ailing.

Although Richey posted net profits of $0.18 per share, 38.5% above year ago levels, revenues actually decreased 2.7% to $56.8 million. The profit increase came almost entirely from a 1.7% improvement in operating margins because of the integration of a recent acquisition. Profits were off 14.3% from last quarter's $0.21 per share on $55.9 million in revenues after two quarters of improvement. Another negative development for Richey is the shift to a turns environment has not benefited its cost structure. Cacciatore said that orders for immediate delivery, known as "turns" business, have increased as a percentage of Richey's overall business, but they are not carrying the higher gross margins that this sort of enterprise has historically maintained.

While many of Richey's problems can be written off as company specific, the news from Arrow Electronics has not been overwhelmingly positive either. Although the company has recovered from its disappointing 1996 earnings, first quarter earnings of $1.00 per share for the giant were 10% below last years $1.11 per share. Demand has improved in the company's semiconductor pricing group, but margins continue to be relentlessly depressed by the competition in the segment. Certainly part of Richey's problem with not seeing gross margins expand for the turns business is due to the fact that other companies are desperate enough for business that they are willing to do it for less, forcing Richey to cut prices to compete.

Given the number of players in the distribution business, even though some names like Arrow and Avnet appear cheap relative to their forward earnings estimates, the whole group appears ripe for ongoing pressure on margins. The barriers to entry in this business are very small, and some companies have sought to distinguish themselves by adding assembly and contract manufacturing businesses, but unless these account for more than a third of revenues, it is not even worth mentioning. Investors who have been tempted by some of the bargains in the group should pay careful attention to the deterioration of Richey's cost structure in spite of its rapid acquisitions and diversification into the assembly side of the business in an attempt to add value-added services.

CONFERENCE CALLS

PEPSICO INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PEP)") else Response.Write("(NYSE: PEP)") end if %>
(800) 577-6980 (code: 03160)

THE MONEY STORE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MONE)") else Response.Write("(Nasdaq: MONE)") end if %>
(800) 964-4236

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

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

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

US WEST MEDIA GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UMG)") else Response.Write("(NYSE: UMG)") end if %>
Replay available through 8PM ET on 5/2
(800) 839-5620
(719) 448-2012 (International callers)

SEAGRAM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VO)") else Response.Write("(NYSE: VO)") end if %>
1:00 PM EDT
(800) 558-5253 (reservation # 529689) -- replay available through 9PM
ET on 5/2

05/01/97 (Thursday)
RED ROOF INNS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RRI)") else Response.Write("(NYSE: RRI)") end if %>
From 1:00 PM EDT through 5:00 PM on 5/2
(800) 633-8284 (reservation # 2614549) -- replay

MENTOR GRAPHICS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MENT)") else Response.Write("(Nasdaq: MENT)") end if %>
(201) 633-1010 -- replay

INSIGNIA FINANCIAL GROUP INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IFS)") else Response.Write("(NYSE: IFS)") end if %>
(800) 275-3210 -- replay through 5/2 beginning each hour on the hour

INFORMIX <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IFMX)") else Response.Write("(Nasdaq: IFMX)") end if %>
Available until 5/16
(800) 839-8790 -- replay

ATC COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATCT)") else Response.Write("(Nasdaq: ATCT)") end if %>
(303) 267-1037 (code 195584)
Replay available until Friday

05/02/97 (Friday)
GENZYME (regarding purchase of Seprafilm from Cleveland Clinic)
(402) 220-9054 -- replay through 5/9 at 5:00 PM EDT

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
INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> Q1 Conference Call
RAINFOREST CAFE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAIN)") else Response.Write("(Nasdaq: RAIN)") end if %> Conference Call
SPRINT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FON)") else Response.Write("(NYSE: FON)") end if %> Q1 Conference Call
MOTOROLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> Q1 Conference Call
SILICON GRAPHICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGI)") else Response.Write("(NYSE: SGI)") end if %> Q3 Conference Call
PRIME MEDICAL SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMSI)") else Response.Write("(Nasdaq: PMSI)") end if %> Q1 Conference Call

WE DELIVER - Get The Evening News delivered
to your e-mailbox every evening!


ANOTHER FOOLISH THING
Free Trial Alert -- The Industry Snapshot

Ever wish you had the time to study different industries, looking for possible investments? Well, let us do the work for you! The Motley Fool is pleased to unveil our new Industry Snapshot. Each week, the six-page information feast offers you an overview of an industry, a closer look at a handful of major players in the industry, an in-depth examination of the most promising company in the group, and several tables of financial numbers so that you can compare the companies yourself. Complementing this product is its own online area featuring more information on the companies and industries. The weekly Industry Snapshot is available by e-mail or fax. Check it out in FoolMart.

***And for a limited time only, sign up for a free two-week trial via e-mail -- just send a note to [email protected].***

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

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

Brian Bauer (TMF Hoops), Fool Three
Julia Wilson (TMF Delete), Fool Quatro
Editing