HEROES

The Home Shopping Network, HSN INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HSNI)") else Response.Write("(Nasdaq: HSNI)") end if %>, gained $3 to $30 after acquiring a near-controlling interest in TICKETMASTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TKTM)") else Response.Write("(Nasdaq: TKTM)") end if %> through a stock swap with Microsoft co-founder Paul Allen, who traded his 47.5% stake in Ticketmaster for 11% of HSN's stock. HSN will buy the additional amount of stock necessary to consolidate Ticketmaster's results into its own income statement. Ticketmaster's ticket volume growth for fiscal year 1997, on a pro-forma basis, was 11%, which begs the question, "Where's the monopoly profit?" Ticketmaster says there is still lots of room for growth in off-site ticket sales -- selling tickets on TV is apparently one of the ways it aims to accomplish that.

Recreation products company COLEMAN CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CLN)") else Response.Write("(NYSE: CLN)") end if %> lit up $7/8 to $17 5/8 after announcing the retirement of its senior secured 1998 notes and its 2013 Liquid Yield Option Notes using cash obtained from issuing senior notes due in 2001. No telling what might happen if interest rates were to move in the other direction -- it wouldn't be so easy to refinance the debt on a perpetual basis, which a company can do if its operating income is sufficient to cover interest expenses. Majority shareholder Ron Perelman would start to feel a bit more pinched in supporting the various brand names he's accumulated.

INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> gained $6 1/4 to $161 after Merrill Lynch analyst Tom Kurlak issued yet another bullish forecast on the company, this time hitting on the long-range theme of building more value onto the Intel motherboard: "Core logic, LAN adapters, graphic accelerators, audio, video, modem, fax, and other features/peripherals are potential targets of opportunity for Intel longer term." Kurlak set out a higher 5-year earnings growth rate for Intel, to 30% compounded per year. Kurlak also hypothesizes that Intel will be growing its revenues per PC from $276 now to $550 in five years. "Combining a 15% ASP [average selling price] growth with 18-20% long-term PC unit growth means Intel's annual revenue growth rate would increase to more than 36% a year." Kurlak's $200 target price, at 21 times 1997 earnings estimates, isn't hard to see in that light.

QUICK TAKES: Banks and brokerages loved the Federal Reserve's inaction today, especially MERRILL LYNCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MER)") else Response.Write("(NYSE: MER)") end if %>, which jumped $5 to $104 5/8... MERRILL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MRLL)") else Response.Write("(Nasdaq: MRLL)") end if %> leapt $4 3/4 to $30 after the document management company reported Q1 revenues of $109.8 million and earnings per share (EPS) of $0.94, which rose 74% over last year's Q1 and topped the Zacks estimate of $0.62 per share... NASA contractor SPACEHAB INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPAB)") else Response.Write("(Nasdaq: SPAB)") end if %> launched $1 1/8 to $7 1/2 as the Space Shuttle-MIR mission, which used the company's Logistics Double Module, has gone well... ENAMELON <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENML)") else Response.Write("(Nasdaq: ENML)") end if %> gained $3 3/8 to $19 3/8 after the toothpaste company's product, which is supposed to reverse tooth decay, was featured on WABC-TV in New York... Oil and gas exploration company CROSS TIMBERS OIL CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XTO)") else Response.Write("(NYSE: XTO)") end if %> rose $1 7/8 to $18 7/8 after announcing its goal of increasing cash flow and proved reserves by 50% over the coming year... Semiconductor makers of all stripes had a nice day, for whatever reasons. Companies moving up today include NATIONAL SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSM)") else Response.Write("(NYSE: NSM)") end if %>, TRIQUINT SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TQNT)") else Response.Write("(Nasdaq: TQNT)") end if %>, XILINX INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XLNX)") else Response.Write("(Nasdaq: XLNX)") end if %>, ALTERA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ALTR)") else Response.Write("(Nasdaq: ALTR)") end if %>, LSI LOGIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LSI)") else Response.Write("(NYSE: LSI)") end if %>, and LATTICE SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LSCC)") else Response.Write("(Nasdaq: LSCC)") end if %>... Drug manufacturer ASTRA AB <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: A)") else Response.Write("(NYSE: A)") end if %> rose $3 1/8 to $45 3/8 after the FDA included some Astra patents for omeprazole in its "orange book," which covers patented generic drugs... FABRI-CENTERS OF AMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FCA.A)") else Response.Write("(NYSE: FCA.A)") end if %> stitched together a $1 1/4 gain to $22 3/4 after the fabric and crafts retailer reported Q1 EPS of $0.14, beating estimates of $0.08, and said it will redeem all of its $57 million in junior debt.... US AIRWAYS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: U)") else Response.Write("(NYSE: U)") end if %> climbed $2 3/4 to $37 7/8 after the airline announced it will buy back $126 million of its preferred stock from British Airways at a common share-equivalent price of $26.50... Scientific instrument maker THERMO BIOANALYSIS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TBA)") else Response.Write("(AMEX: TBA)") end if %> was boosted $1 1/2 to $15 1/8 by a Lehman Brothers "buy" rating. Lehman's analyst also upgraded hair removal laser company THERMOLASE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TLZ)") else Response.Write("(AMEX: TLZ)") end if %> from "venture buy" to "buy."

GOATS

Computer services company ELECTRONIC DATA SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EDS)") else Response.Write("(NYSE: EDS)") end if %> dropped another $1 1/4 to $36 3/4 after revising downward second quarter earnings expectations for the second time in a month. EDS shares had plummeted after reporting disappointing Q1 earnings at the end of April. At that time, the company said it would be able to recover and hit the 1997 earnings estimates of $2.30 to $2.35 per share (before a restructuring charge). Today, though, the company put itself further behind the 8-ball, as it said Q2 EPS will come in at $0.43 to $0.45, below the mean estimate of $0.50. Now the company will have to achieve average quarterly EPS of $0.72 through the rest of the year to hit the earnings bogey. Unlike last time EDS pre-announced, competitor COMPUTER SCIENCES CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSC)") else Response.Write("(NYSE: CSC)") end if %> did not sell off, and, in fact, has recovered smartly from the $61 1/2 level it hit the last time EDS took it down.

Video chip maker C-CUBE MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CUBE)") else Response.Write("(Nasdaq: CUBE)") end if %> shares were nearly cut by a quarter today, losing $5 5/8 to $19 7/8 after the company pre-announced Q2 revenues of $70 to $75 million, down 25% sequentially, and EPS of $0.20 to $0.25, below the mean estimate of $0.40. In addition to product transition issues and pricing pressures, the company said a seasonal slowdown in demand for the end-products using its chips, primarily VideoCD players sold in China, was behind the revenue shortfall. In response, Alex. Brown lowered its rating on the company to "market perform" from "buy," and Robertson Stephens lowered its rating to "long-term attractive" from "buy."

QUICK CUTS: LONE STAR STEAKHOUSE/SALOON <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STAR)") else Response.Write("(Nasdaq: STAR)") end if %> was grilled for a $1 13/16 loss to $19 3/8 on same-store sales growth worries -- the company will hold a conference call tomorrow... Finally deciding to share information on why its stock price has been crumbling over the last four trading sessions, ILLINOIS SUPERCONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ISCO)") else Response.Write("(Nasdaq: ISCO)") end if %> said this afternoon that it is raising $10 to $15 million in working capital... PC and telecommunications contract manufacturer CMC INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMCI)") else Response.Write("(Nasdaq: CMCI)") end if %> lost $1 to $8 before releasing earnings following the market's close. Third Quarter EPS of $0.08 missed estimates of $0.11, but grew 60% year-over-year... GENCOR INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: GX)") else Response.Write("(AMEX: GX)") end if %> fell $1 7/8 to $24 7/8 despite appearing in Investor's Business Daily's "New America" column today.

FOOL ON THE HILL
An Investment Opinion by Randy Befumo

IT Consultants Converge

Information technology consulting firm THE REGISTRY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: REGI)") else Response.Write("(Nasdaq: REGI)") end if %> tumbled $7 1/2 to $49 after announcing a merger with RENAISSANCE SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RENS)") else Response.Write("(Nasdaq: RENS)") end if %>. Terms of the deal call for Registry to issue 7.8 million new shares, increasing its shares outstanding by more than 54%. In spite of Registry Chief Financial Officer Robert Foley's statement that the deal would not be dilutive, the 13% drop in Registry's share price indicates that investors believe otherwise. Renaissance Solutions was up $1 3/8 to $36 1/8 on news of the deal, with much of the shareholder premium evaporating along with the share price of Registry.

The stock deal brings together two relatively young public companies into one information technology (IT) consulting firm. Registry provides IT consulting on a contract basis, assisting in-house personnel with developing and building network systems and developing applications to support the network. With the acquisition of Renaissance Solutions, the company buttresses its core operation by adding Renaissance's Technology Services unit as well as complementary management consulting and business consulting services.

The company could not pass up the opportunity to talk about its merger using management consulting lingo, stating that it would create a new "paradigm" of "integrated consulting" by offering services ranging from "strategy consulting" to "technology implementation." The companies believe that the combination will offer clients of both firms a more ample menu of services to choose from, invigorating sales through cross-pollination. This acquisition completes a string of eight such deals since Registry came public in June of 1996, first trading at $31 3/4.

Today's deal is valued at approximately $357.6 million in stock, net Renaissance's $23.1 million in cash and marketable securities. With Renaissance's $58.5 million in trailing sales, the deal works out to roughly 6.1 times sales. The four analysts who follow Renaissance estimate that it will earn $1.24 per share this year and $1.69 per share in fiscal 1998, compared to $0.78 per share last year. These numbers put the acquisition at 25.6 this year's estimates and 18.8 times next year's estimates, indicating that if these estimates do pan out, Registry might have paid a decent price. Last quarter, Renaissance increased earnings per share 130% on a 52.4% increase in revenues.

On a combined basis, the resulting company will have roughly 22 million shares outstanding valued at around $49 a stub, giving the company a market capitalization of $1.08 billion. Combined cash and marketable securities will be a relatively insignificant $58.4 million and long-term debt will be an even more insignificant $2.5 million, giving the company an enterprise value of $1.02 billion. With combined trailing revenues of $346.1 million, the combined company trades at 3 times sales. The disparity in the two companies' enterprise value-to-sales ratios could be part of the reason why investors are dumping shares of Registry on the concern that the deal is dilutive to earnings.

Despite Registry's much higher sales, Renaissance has significantly higher profit margins. Although Renaissance contributes only about one-fifth of the combined company's sales, analysts estimate that it will contribute about 40% of the combined earnings. With Registry getting 35% of the outstanding shares of the combined company, if it does hit its earnings estimates the company could be accretive to earnings. Based on the published estimates, five quarters out at the end of Registry's next fiscal year, the combined company should net $1.55 per share less the one-time charges resulting from the acquisition, $0.16 per share higher than the current estimates for Registry.

Although an improvement, this still puts the company at 31.6 times this estimate and makes it much less likely to be the object of an acquisition in the consolidating market for IT consulting services. While Registry is certainly one of the biggest kids on the block now and has consistently beaten earnings expectations by 10% or more over the past three quarters, the valuation will begin weigh on it as it finds it increasingly hard to find acquisition partners large enough to make a significant difference to the bottom line. Interested investors may want to approach this company a little cautiously at the current price.

CONFERENCE CALLS

DELL COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>
(800) 839-1826 -- replay available until 8:30 p.m. EDT on 5/21

HEWLETT PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>
(303) 446-5399 (reservation # 2554014) -- replay through 5/22

COMPUTER ASSOCIATES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %>
(888) 243-0816 (code: 3276) -- replay available after 6:30 PM EDT for 48 hours

APPLIED MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMAT)") else Response.Write("(Nasdaq: AMAT)") end if %>
(800) 642-1687 (code: 353749) -- replay

INTERNATIONAL RECTIFIER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IRF)") else Response.Write("(NYSE: IRF)") end if %>
(Re: Restructuring)
(800) 633-8284 (reservation # 2765732) -- replay

EDGE PETROLEUM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EPEX)") else Response.Write("(Nasdaq: EPEX)") end if %>
(402) 220-4831 -- replay available through 5/20

HOME DEPOT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HD)") else Response.Write("(NYSE: HD)") end if %>
(402) 220-3005 -- replay after 12:00 noon until 5/23

DAYTON HUDSON CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DH)") else Response.Write("(NYSE: DH)") end if %>
(800) 633-8284 (reservation # 2703946) -- replay from 12:30-5:00 p.m. EDT

ROSS STORES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ROST)") else Response.Write("(Nasdaq: ROST)") end if %>
(402) 220-1007 -- replay available from 5:00 p.m. EDT through 5/27 @ 8:00 p.m. EDT

THIS WEEK'S CONFERENCE CALL SYNOPSES

HEWLETT-PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> Q2 Call
STAPLES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %> Q1 Call
HADCO CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HDCO)") else Response.Write("(Nasdaq: HDCO)") end if %> Q2 Call
PAPA JOHN'S INT'L <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PZZA)") else Response.Write("(Nasdaq: PZZA)") end if %> Q1 Call
APPLEBEE'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: APPB)") else Response.Write("(Nasdaq: APPB)") end if %> Q1 Call
HELEN OF TROY LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HELE)") else Response.Write("(Nasdaq: HELE)") end if %> Q4 Call
WILLIAMS SONOMA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WSGC)") else Response.Write("(Nasdaq: WSGC)") end if %> Q1 Call