HEROES

Circuit board and systems designer and assembler JABIL CIRCUIT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JBIL)") else Response.Write("(Nasdaq: JBIL)") end if %> exploded $13 3/8 higher to $82 1/4 after announcing Q3 earnings per share (EPS) of $0.76, 130% higher than last year and $0.12 better than estimates. Operating margin improved from 5.2% in last year's third quarter to 8.9% this year. Jabil President Thomas Sanson said the company is planning for continued growth in revenues and operating income through the summer with good order growth from makers of PCs, peripherals, networking, and telecom equipment. Robertson Stephens raised its 1998 EPS estimate to $4.20 from $2.80. That estimate trumps the current highest 1998 EPS estimate for the company by 38%. SANMINA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SANM)") else Response.Write("(Nasdaq: SANM)") end if %> jumped aboard the Jabil train, gaining $6 1/2 to $66.

Dynamic random access memory (DRAM) chip-to-chip interface maker RAMBUS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMBS)") else Response.Write("(Nasdaq: RMBS)") end if %> was boosted $4 3/8 to $43 3/4 by an appearance in Investor's Business Daily's "New America" feature. The stock's movement today is a great illustration of some of the failings of the efficient market theory. The column didn't present anything new about the company, so if nothing new was learned, then the only variable left is "who learned about the company." This is why the market is only loosely efficient. No new information was generated today, but for a certain group of buyers, old information was "news" (to borrow from the word's etymological roots) to them.

In European news, Dutch electronics force PHILIPS ELECTRONICS NV <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PHG)") else Response.Write("(NYSE: PHG)") end if %> gained another $3 3/8 to $69 5/8 after yesterday's announcement that the company will merge its telephone manufacturing subsidiary with that of LUCENT TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %>. Analysts from European firms were busy sharpening their forecasts for Philips' 1998 earnings estimates last night. Some analysts said the venture will be profitable immediately while others focused on the revenue-generating possibilities for the combination, saying this gives Philips a beachhead in the U.S. Somewhat south of Eindhoven, ELECTRICIDADE DE PORTUGAL SA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EDP)") else Response.Write("(NYSE: EDP)") end if %> picked up another $2 1/8 to $36 5/8 after the Portuguese utility started trading in Lisbon and New York yesterday. The near-monopoly is selling at approximately 24 times earnings, 9 times cash flow, and 3.2 times revenues.

QUICK TAKES: Flat panel display maker KOPIN CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KOPN)") else Response.Write("(Nasdaq: KOPN)") end if %> gained $1 3/4 to $16 on announcing a supply and licensing agreement with Siemens, which will use Kopin components in phones and related products... NEW ERA OF NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NEON)") else Response.Write("(Nasdaq: NEON)") end if %> jumped $2 3/4 to $14 3/4 from its IPO price of $12 as the debut of the enterprise application integration software company was apparently well received... Website designers and developers NAVIDEC INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NVDC)") else Response.Write("(Nasdaq: NVDC)") end if %> rose $1 to $5 7/8 on announcing a website that appears to be a direct shot at AutoByTel... SCOPUS TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SCOP)") else Response.Write("(Nasdaq: SCOP)") end if %> gained $4 3/8 to $25 3/4 as various analysts covering the sales force software company have positive views of the company's Q1 prospects... Fiber-to-the-curb company BROADBAND TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BBTK)") else Response.Write("(Nasdaq: BBTK)") end if %> moved up $1 11/16 to $10 7/16 after presenting yesterday at the Bear Stearns technology conference... BONE CARE INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BCII)") else Response.Write("(Nasdaq: BCII)") end if %> jumped $2 to $13 1/2 after appearing in Investor's Business Daily's "New America" section, which said the company may be able to dominate the $180 million market for treating hyperparathyroidism in dialysis patients with its vitamin D product... Coffee roasters GREEN MOUNTAIN COFFEE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GMCR)") else Response.Write("(Nasdaq: GMCR)") end if %> perked up $1 1/4 to $8 5/8 after announcing that it will supply coffee to 183 Mobil On The Run stores, which are expected to grow to over 1200 outlets by the end of the five-year contract... PEP BOYS MANNY MOE & JACK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PBY)") else Response.Write("(NYSE: PBY)") end if %> rose $2 1/2 to $33 3/8 on announcing an auto parts supply agreement with the AutoNation unit of REPUBLIC INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RWIN)") else Response.Write("(Nasdaq: RWIN)") end if %>... Media services company FOUR MEDIA CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FOUR)") else Response.Write("(Nasdaq: FOUR)") end if %> added $1 to $8 1/8 on reporting Q3 EPS of $0.12, in-line with estimates... AZTEC MANUFACTURING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AZZ)") else Response.Write("(NYSE: AZZ)") end if %> added $1 3/4 to $14 7/8 after the international engineering firm reported Q1 EPS of $0.27, up 75% year-over-year and $0.03 better than the lone estimate reported to First Call... Consumer products retailer BEST BUY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBY)") else Response.Write("(NYSE: BBY)") end if %> bounced $1 1/2 to $13 1/4 after reporting a Q1 loss of $0.06 per share, better than the expected loss of $0.10 per share... Prison company WACKENHUT CORRECTIONS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHC)") else Response.Write("(NYSE: WHC)") end if %> picked up $2 1/8 to $25 3/8 on the strength Monday's announcement that it has signed a contract with the State of Pennsylvania to design, construct, and operate a 480-bed juvenile facility... Business forms and software company REYNOLDS & REYNOLDS CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: REY)") else Response.Write("(NYSE: REY)") end if %> rebounded $1 1/4 to $16 7/8 after yesterday's earnings warning... Medical products company U.S. SURGICAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: USS)") else Response.Write("(NYSE: USS)") end if %> rose $2 3/4 to $37 3/4 on signing a three-year pact to supply VHA Inc. with threaded fusion cage devices and other products for VHA's 1,500 healthcare organizations and 1,700 purchasing affiliates.

GOATS

Database monster ORACLE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> declined $3 1/16 to $50 5/16 after the company reported Q4 EPS of $0.54 (in line with estimates) on revenues of $1.95 billion. EPS increased 35% over last year on top of a 33% increase in revenues. Gruntal & Co. commented to Reuters that revenues came in below expectations but expense levels were a bit better than forecast. In the conference call, the company said applications revenue growth was the strongest part of its business, growing 78% during the quarter. Furthermore, applications licenses and services revenues made up 20% of 1997 revenue. Oracle also announced yesterday that it will grow in another vertical industry segment -- the downstream energy industry -- by purchasing British Petroleum's downstream systems. That gives the company a clear shot at building a position in the empty market for enterprise management software for the supply, distribution, and marketing of petroleum products.

BRODERBUND SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BROD)") else Response.Write("(Nasdaq: BROD)") end if %> investors suddenly became tentative about tomorrow's earnings release, dropping the shares for a $3 5/16 loss to $24 1/16. Expectations are pretty low with Q3 estimates sitting at $0.03 per share, down from a mean estimate of $0.22 only 90 days ago. During last quarter's conference call, the company said it did not expect Q3 operating expenses to decline following its normal seasonality because of the addition of the Living Books subsidiary and the number of new releases the company is working on for release in the second half of this year. The crucial factor for Broderbund will be to grow revenues, which is dependent to a certain extent upon gaining some pricing power in the retail channel and also generating some hits. Those who sold today need only wait 24 hours to see where the company is with those plans.

QUICK CUTS: Computer aided design software company MODACAD INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MODA)") else Response.Write("(Nasdaq: MODA)") end if %> lost $1 5/8 to $12 1/2 after the company said it was calling in its 2001 warrants and that holders of those securities will have to purchase shares or tender those warrants to receive $0.01 apiece... Networking products maker DATA RACE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RACE)") else Response.Write("(Nasdaq: RACE)") end if %> fell $1 3/8 to $13 3/4 after investors learned yesterday that a holder of 17.6% of the company plans to liquidate that stake as part of a larger personal financial restructuring... H&R BLOCK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HRB)") else Response.Write("(NYSE: HRB)") end if %> fell $2 3/4 to $32 after reporting its tax-season quarter's EPS of $1.90, missing estimates of $2.02. The company also announced the resignation of its chief financial officer... Satellite broadcaster BRITISH SKY BROADCASTING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSY)") else Response.Write("(NYSE: BSY)") end if %> lost $4 1/8 to $52 on antitrust concerns of the UK's Independent Television Commission... Flexible circuitry maker ADFLEX SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AFLX)") else Response.Write("(Nasdaq: AFLX)") end if %> lost $1 5/8 to $17 3/8 on another earnings warning from SEAGATE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %>, while component suppliers such as INNOVEX <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INVX)") else Response.Write("(Nasdaq: INVX)") end if %> and APPLIED MAGNETICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APM)") else Response.Write("(NYSE: APM)") end if %> also suffered. For more on Seagate, see tonight's Fool on the Hill... Disappointing those hoping for a takeover, PIPER JAFFRAY's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PJC)") else Response.Write("(NYSE: PJC)") end if %> CEO said the brokerage, investment banker, and asset manager plans on remaining independent, which took $1 1/8 off the company's share price to finish at $20 3/4... Automotive flexible circuitry manufacturer SHELDAHL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHEL)") else Response.Write("(Nasdaq: SHEL)") end if %> fell $1 1/16 to $18 7/16 after yesterday reporting an expected $0.19 per share loss for its third quarter.

FOOL ON THE HILL
An Investment Opinion by Randy Befumo

Seagate Scrunched

Two weeks after SEAGATE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %> had to pour water on the fire of investor expectations, it is out dousing those flames again. The company announced that its fourth quarter would fall below even the already revised expectations due to continued weakness in customer demand for the company's high-end storage products. Seagate further disclosed that it was also having internal production problems that would hamper gross margin. The combination of lower-than-expected revenues on its high-end products coupled with production problems will have a "significant impact" on earnings during the quarter.

Investors took the news badly, drop-kicking the shares $5 1/4 to $36 1/4 in one particularly bloody trading session. With revenues expected to be even with last year's $2.0 billion and profits expected to be well below current estimates of $0.94 per share, the drubbing Seagate is receiving comes as investors begin to question what the heck is happening in the high-end of the drive business. After issuing its second earnings warning in as many weeks, it seems apparent that somebody in the corporate boardroom has been blind sided by market demand for its large, enterprise-class storage components.

Problems with reading the market are not necessarily a new thing with Seagate. In 1987, the company spent more than $290 million to expand capacity for 5.25 inch drives just as the market was beginning to move to 3.5 inch drives. Although it quickly adjusted in 1988, Seagate founder Finis Conner had already left Seagate to found a new company that had booked $113 million in revenues selling 3.5 inch drives. In the end, Conner decided to come back to the Seagate fold last year when Seagate acquired Conner Peripherals. The company's occasional hubris as Al Shugart has built his empire has landed it in hot competitive water before when it has underestimated market trends or competition. This time around, the pain seems to be coming from Seagate competitors WESTERN DIGITAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WDC)") else Response.Write("(NYSE: WDC)") end if %> and QUANTUM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QNTM)") else Response.Write("(Nasdaq: QNTM)") end if %>.

While some may be busily spinning Seagate's problems as boding ill for the "tech" sector, whatever that is supposed to mean, the reality of the high-end storage business is that renewed vigor from two major names has changed the competitive dynamic. High-end storage components are used in devices made by companies like EMC TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMC)") else Response.Write("(NYSE: EMC)") end if %>, STORAGE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STK)") else Response.Write("(NYSE: STK)") end if %>, and IBM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> for use in servers, workstations, minicomputers and RAIDs (redundant arrays of inexpensive disks). With Quantum busily executing a turnaround and Western Digital firing up an enterprise storage unit that it expects to profit from starting this quarter, the new capacity in this particular niche seems just as likely the cause of Seagate's ailments than any "tech" slowdown or summer solstice.

Given this possible interpretation of the Seagate news, it is not really a surprise that Western Digital only declined 4% and Quantum slipped 3% while Seagate shares were off 13%. Although some traders dumped anything with storage on the label, the volume in Seagate, at more than four times normal levels, was clearly well in excess of Western and Quantum, which both barely managed to top their normal daily trading volume. Put another way, for the majority of Western and Quantum holders, the Seagate news appears to have been a company specific non-issue. When it comes time for Western and Quantum to report come July and August, we will see whether or not this conclusion was the right one to draw.

CONFERENCE CALLS

MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %>
(402) 220-1003 -- replay

ORACLE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %>
(402) 220-4217 -- replay available from 8 p.m. EDT until 6/18

ADOBE SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADBE)") else Response.Write("(Nasdaq: ADBE)") end if %>
after 8:45 p.m. EDT for 3 days
(800) 633-8284 (reservation # 2805001)

06/19/97 (Thursday)
BRODERBUND SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BROD)") else Response.Write("(Nasdaq: BROD)") end if %>
(800) 642-1687 (ID#427430) -- replay available through 6/23

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