HEROES

ORIOLE HOMES CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: OHC.B)") else Response.Write("(AMEX: OHC.B)") end if %> jumped $2 1/4 to $9 1/4 after BANKATLANTIC BANCORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BANC)") else Response.Write("(Nasdaq: BANC)") end if %> agreed to acquire a controlling interest in the Florida residential builder for $12 per share in cash. BankAtlantic Chair Alan Levan said, "The acquisition reflects our decision to diversify BankAtlantic Bancorp's sources of non-interest income, and to increase non-interest income revenues." This would seem to indicate that Levan thinks the bank can run the business better than the Levy family, which is selling it, especially considering that Oriole has run operating losses in three of the last four quarters and negative trailing net income of $9 million. Even though there are charges in the net figure, that still reduces the retained earnings, which would hurt the bank's capital position and capacity to lend should it continue. On the plus side, there's a ready market of borrowers in the home-buying base, should the bank want to take advantage of that connection.

HONG KONG TELECOMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HKT)") else Response.Write("(NYSE: HKT)") end if %> jumped $2 to $24 1/4, a new all-time high, as majority owner CABLE & WIRELESS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CWP)") else Response.Write("(NYSE: CWP)") end if %> will sell a 5% stake in the company to China Telecom for $445 million. The deal values the entire company at almost $9 billion, below its market capitalization of $27.4 billion, but Cable & Wireless's CEO told British news agency Reuters today that he thinks this is great for shareholder value: "...[T]his is a representation of the first significant occasion where a foreign telecommunications company has been invited into substantial work in mainland China," where only one in six Chinese have a phone line.

TELCO COMMUNICATIONS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCGX)") else Response.Write("(Nasdaq: TCGX)") end if %> surged $3 7/8 to $25 7/8 after signing a definitive agreement to merge with EXCEL COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ECI)") else Response.Write("(NYSE: ECI)") end if %>, the network marketing reseller of long-distance service. Formerly at the whim of companies with their own long-distance backbones, now EXCEL will control 100,000 miles of fiber optic cable. That will allow the company to offer not only commodity long-distance voice and fax service, but also data services for corporations. With the rights-of-way and conduits in place, it costs a heck of a lot less to upgrade networks than it does to lay entirely new fiber, so the backbone the combined company will own will probably be expanded in the future. If it can achieve the projected $100 million in cost savings and 1998 EPS of $2.05, it will have the financial wherewithal to do a heck of an upgrade within the first few years.

QUICK TAKES: Semiconductor and circuit board design software company AVANT! CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVNT)") else Response.Write("(Nasdaq: AVNT)") end if %> soared $3 7/8 to $25 after announcing an order from LUCENT TECHNOLGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> in the tens of millions of dollars range. The shares were halted on the Nasdaq and will trade on Monday... COVENANT TRANSPORT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CVTI)") else Response.Write("(Nasdaq: CVTI)") end if %> gained $2 1/8 to $18 1/8, which the company attributed to SOES traders... Credit card transaction company NOVA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NIS)") else Response.Write("(NYSE: NIS)") end if %> rose $1 5/8 to $20 5/8 after announcing the completion of its acquisition of CRESTAR FINANCIAL's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CF)") else Response.Write("(NYSE: CF)") end if %> merchant processing business... 99 CENTS STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NDN)") else Response.Write("(NYSE: NDN)") end if %> rose $2 7/8 to $30 on a Piper Jaffray rating of "strong buy" and a 1998 EPS estimate of $1.42... Mexico's largest construction company EMPRESAS ICA SOCIEDAD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ICA)") else Response.Write("(NYSE: ICA)") end if %> climbed $1 1/4 to $15 1/2 after acquiring 50% of Comercial del Plata Construcciones S.A, giving it access to South American markets... ULTRAFEM INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UFEM)") else Response.Write("(Nasdaq: UFEM)") end if %> gained $1 1/2 to $16 after the women's healthcare products company announced that CVS, Rite-Aid, and REVCO will distribute its INSTEAD product, adding 6,800 stores to that product's distribution channel... TRICO MARINE SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TMAR)") else Response.Write("(Nasdaq: TMAR)") end if %> tacked on $3 to $42 7/8 after Jeffries & Co. initiated coverage of the energy industry supply and support boat company with a "buy" rating... Time-share resorts company SIGNATURE RESORTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SIGR)") else Response.Write("(Nasdaq: SIGR)") end if %> rose $2 1/8 to $31 after signing a definitive agreement to acquire LSI Group Holdings, which owns 11 resorts located in England, Spain and Austria and claims 25,000 members... Financial companies of many stripes were up today, led by the likes of MERRILL LYNCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MER)") else Response.Write("(NYSE: MER)") end if %>, which gained $2 1/8 to $54 7/8, and FIRST UNION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FTU)") else Response.Write("(NYSE: FTU)") end if %>, which added $2 3/4 to $89 3/8.

GOATS

RAID storage systems and tape drive systems maker STORAGE DIMENSIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STDM)") else Response.Write("(Nasdaq: STDM)") end if %> lost $3 11/16 to $6 5/16 after pre-announcing a 10% to 15% decline in first quarter revenues and a loss per share, missing estimates of $0.17 per share, due to a litany of complaints about industry pricing and staffing levels. Salomon Brothers, one of the underwriters of the company's recent IPO, lowered its rating on the company to "buy" from "strong buy." The company said softness in the market for Intel-based networking was partly to blame, as was price erosion in drive components. The other things weighing on operating expenses were higher R&D, marketing, and sales recruiting and training expenses. Macro trends might be more evident in the results of larger companies, and maybe that's the case here, but this causes one to wonder just how often a company will come out and say, "We just didn't execute this quarter."

Call center helpdesk software company VERSATILITY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VERS)") else Response.Write("(Nasdaq: VERS)") end if %> slid $2 3/8 to $11 3/8 after announcing Q4 revenues of $8.9 million and EPS of $0.12, up 50% over last year and $0.01 better than estimates. While gross margin improved to 79% this quarter from 73% a year ago, Merrill Lynch downgraded the shares this morning to "near-term accumulate" from "near-term buy."

QUICK CUTS: MICRO LINEAR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MLIN)") else Response.Write("(Nasdaq: MLIN)") end if %> plunged $5 5/16 to $14 1/2 today. The semiconductor maker was unwilling to offer a comment on the drop... LCD projector maker IN FOCUS SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INFS)") else Response.Write("(Nasdaq: INFS)") end if %> slid $2 1/8 to $24 1/8 even though it announced a two-year OEM agreement with nView... Glad Bag, STP Oil Treatment, Simonize, and cat litter company FIRST BRANDS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FBR)") else Response.Write("(NYSE: FBR)") end if %> fell $3 3/8 to $22 5/8 after guiding down Q4 EPS estimates as much as 42% below the current mean estimate of $0.48. The company also forecast soft earnings growth for the first half of 1998... European chipmaker SGS-THOMSON N.V. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STM)") else Response.Write("(NYSE: STM)") end if %> slid $4 3/4 to $75 3/4 on pre-announcing sequential revenue growth in Q2, but flat EPS around $0.65, below estimates of $0.85... AKSYS LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AKSY)") else Response.Write("(Nasdaq: AKSY)") end if %> sank $3 1/8 to $5 3/4 after the developer of a home dialysis machine said that the application for FDA approval of that device will be delayed by nine months.

FOOL ON THE HILL
An Investment Opinion by Randy Befumo

How to Buy $12 in Cash for $5 7/8

CHILDREN'S BROADCASTING CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAHS)") else Response.Write("(Nasdaq: AAHS)") end if %> leapt $2 1/4 to $5 7/8 today after the downtrodden producer of radio shows for pre-teens announced the sale of a number of radio stations throughout the U.S. With a market capitalization of little more than $18 million yesterday, news that the company had made a significant strategic change and sold all of its AM radio stations to Global Broadcasting Corp. for $72.5 million caused a number of investors to take another look at the company. Until today, Children's Broadcasting owned and operated more than 32 stations, running programming for children on them 24 hours a day.

Under terms of the deal, Children's Broadcasting will sell all of its AM stations, including one only acquired yesterday in Arizona, to Global Broadcasting. With only 5.9 million shares outstanding as of its last reported fiscal quarter, this slug of cash accounts for almost $12.28 a share. So with more than $12 in cash per share, why is the stock only at $6 1/8 today? Despite the huge influx of capital, Children's Broadcasting unfortunately has a number of issues that it has to work through before it can become cash flow positive -- the most important of which is the fact that one of its biggest customers announced last year that it was becoming a competitor.

The company's woes began almost a year ago on June 28, 1996, when it announced that its revenues would not meet expectations for the fiscal year. A month later the company announced that it had hired Southcoast Capital to assist it in possibly selling the company, sending it's shares up 12.5%, but the devastating revelation on July 30th that ABC Radio was canceling its contract with Children's Broadcasting quickly knocked the stock price down to $6 1/8. Although the stock did recover somewhat initially, when word broke that ABC Radio's parent, DISNEY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %>, had terminated the contract to start its own network of children's radio stations with a format similar to Children's Broadcasting, the shares went as low as $3 and change, and except for a slight blip in January have not looked back since.

Despite the company's decision in September to sue ABC Radio and Disney over the decision to start their own radio network, claiming unfair competition because of information they gathered while they were still a customer, until the sale of the AM stations there was really nothing to recommend Children's Broadcasting to anyone. Declining revenues and negative cash flows suggested that the business model was flawed, even if the economic value of the actual radio stations was not being reflected in the company's market capitalization. Children's jacked up its long-term debt by getting regular cash infusions to keep going, the most recent of which was $15 million in financing in November of 1996. Additionally, the company filed to sell five million shares in February even though the stock was below $5 a share, highlighting the urgency of its working capital needs.

After Children's Broadcasting closes the Global Broadcasting Corp. deal, it will have ample working capital to develop a new business modeled around providing programming to radio stations that it does not own. The company will significantly reduce its operating costs by removing the overhead of the radio stations from its cost structure, implying that the $72.5 million cash infusion should keep the company afloat for some time. Even if you look at the cost structure prior to the divestiture of the radio stations, $72.5 million could have supported it for more than seven years at the current rate of expenditures. Although Children's Broadcasting has yet to prove that its new business model is viable or that it can intelligently deploy the cash that it has on hand, for investors willing to do the due diligence and talk to the company and ask the right questions, it is certainly more appealing that it was yesterday.

CONFERENCE CALLS

DIGEX INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DIGX)") else Response.Write("(Nasdaq: DIGX)") end if %>
(Re: Agreement to be acquired by INTERMEDIA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICIX)") else Response.Write("(Nasdaq: ICIX)") end if %>
(800) 633-8284 (ID # 2832850) -- replay available for 24 hours

06/09/97 (Monday)
BOEING BUSINESS JETS (A joint venture between GE and BA)
(News conference for major business announcement)
(800) 633-8284 (code: 2815407) -- replay from 8:00 p.m. EDT

THIS WEEK'S CONFERENCE CALL SYNOPSES

NOVELL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NOVL)") else Response.Write("(Nasdaq: NOVL)") end if %> Q2 Call
CIRCUS CIRCUS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CIR)") else Response.Write("(NYSE: CIR)") end if %> Q1 Call
INTUIT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTU)") else Response.Write("(Nasdaq: INTU)") end if %> Q3 Call
PETSMART <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PETM)") else Response.Write("(Nasdaq: PETM)") end if %> Q1 Call

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