HEROES
Hotel and casino operator ITT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ITT)") else Response.Write("(NYSE: ITT)") end if %> jumped $4 5/16 to $66 15/16 after the company announced Q2 earnings
per share (EPS) of $0.72 (excluding one-time events), right in line with
estimates. ITT also said it will split itself into three parts: a gaming
and hospitality company, a telephone directories company, and a technical
schools company. The company will also repurchase 30 million shares for $70
per share and call in $2 billion in debt. HILTON HOTELS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HLT)") else Response.Write("(NYSE: HLT)") end if %>,
which launched a $10.5 billion
bid for ITT in February, called the "scheme" a "smoke and mirrors" campaign,
saying ITT's executives are harboring an "anyone but Hilton" attitude. There's
no denying, though, that ITT is up an 18% since Hilton first came out with
its bid. About the only philosophical differences apparent to the casual
observer are the spin-offs that ITT wants to effect -- apparently Hilton
would sell those units and plow the cash back into core operations.
Maybe if LUCENT TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> were still part of
AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>, the Dow would have reached 8000 long before today.
The Bell Labs juggernaut rolled on today, gaining $5 7/8 to $88 5/8 to reach
a new high after reporting Q3 revenues of $6.3 billion and EPS of $0.33,
swamping estimates of $0.25. All of the company's major business groups reported
large revenue increases (except for the de-emphasized consumer products group),
with microelectronics revenues increasing 13.6% and systems for network operators
(carrier switching, wireless networks) revenues growing by 27.3%. Lucent
now trades at 35 times September 1998 EPS estimates, while competitor
NORTHERN TELECOM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NT)") else Response.Write("(NYSE: NT)") end if %> trades at 28 times 1998 estimates, and
MOTOROLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> is changing hands at 26 times 1998
estimates.
QUICK TAKES: CPU sovereign INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> gained $7 15/32
to $88 3/8 on reporting Q2 EPS of $0.92, beating estimates of $0.90. In its
conference call, Intel
told investors to expect flat to slightly higher revenues for Q3 as well
as flat to slightly down gross margins... Wintel co-ruler MICROSOFT
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> ran up $9 31/32 to $148 7/16 on Intel's results and in
anticipation of tomorrow's earnings release, when 1/4 of the world turns
to face Redmond, Washington... Thermal transfer
ribbon manufacturer INTERNATIONAL IMAGING MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IMAK)") else Response.Write("(Nasdaq: IMAK)") end if %>
jumped $6 1/2 to $23 after agreeing to merge with apparel identification
products and thermal transfer printer manufacturer PAXAR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PXR)") else Response.Write("(NYSE: PXR)") end if %> for $24 per share in Paxar stock... Healthcare information systems company
CERNER CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CERN)") else Response.Write("(Nasdaq: CERN)") end if %> ran up $5 1/4 to $26 3/4 on reporting
Q2 revenue growth of 36% and EPS of $0.10, which beat estimates of $0.07
and won an upgrade to "buy" from Smith Barney... MEDIMMUNE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MEDI)") else Response.Write("(Nasdaq: MEDI)") end if %> gained $5 5/16 to $24 15/16 after the biotech company reported success
in the Phase III trial of MEDI-493, a treatment designed to "prevent respiratory
syncytial virus (RSV) disease in high-risk infants and children." Merrill
Lynch raised its rating on the company to "near-term and long-term buy" from
"accumulate"... Communications semiconductor maker TRIQUINT
SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TQNT)") else Response.Write("(Nasdaq: TQNT)") end if %> gained $6 5/8 to $44 1/8 after announcing
a strategic alliance with a unit of ERICSSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ERICY)") else Response.Write("(Nasdaq: ERICY)") end if %> as well
as reporting Q2 EPS of $0.25, just above estimates.
Food packing company ULTRA PAC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UPAC)") else Response.Write("(Nasdaq: UPAC)") end if %> rose $1 1/4 to $8 3/8
after guiding investors to expect higher gross margins this quarter due to
favorable pricing in PETE resin and recycled material... THERAGENICS CORP.
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THRX)") else Response.Write("(Nasdaq: THRX)") end if %> moved up $4 1/4 to $28 3/4 after the maker of a treatment
for localized prostate cancer reported Q2 EPS of $0.15, crunching the mean
estimate of $0.10, on revenues of $6.2 million... Machine vision systems
company COGNEX <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CGNX)") else Response.Write("(Nasdaq: CGNX)") end if %> gained $4 1/16 to $35 3/8 on reporting
Q2 revenues of $36.3 million and EPS of $0.21, which beat the mean estimate
of $0.19... Trucking company YELLOW CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YELL)") else Response.Write("(Nasdaq: YELL)") end if %> drove $3
3/8 higher to $27 on reporting second quarter financials... Brazilian telephone
giant TELEBRAS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TBR)") else Response.Write("(NYSE: TBR)") end if %> gained $13 to $148, recovering from yesterday's
mini correction on the Bovespa bourse... Textiles company FIELDCREST CANNON
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLD)") else Response.Write("(NYSE: FLD)") end if %> moved up $2 5/16 to $21 5/16 after reporting Q2 EPS of $0.55
on flat revenues of approximately $271 million... Steel products and adhesives
company NS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSS)") else Response.Write("(NYSE: NSS)") end if %> jumped $1 11/16 to $16 15/16 on reporting
Q3 EPS of $0.32... AMERICAN PAD & PAPER CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AGP)") else Response.Write("(NYSE: AGP)") end if %> rose $1
15/16 to $22 on turning in Q2 EPS of $0.18, in line with estimates... Investment
bankers and brokers DONALDSON, LUFKIN & JENRETTE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLJ)") else Response.Write("(NYSE: DLJ)") end if %> picked
up $4 1/16 to $64 after reporting record earnings earlier this week and saying
the IPO outlook is good... Land-based drilling contractor NABORS INDUSTRIES
<% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: NBR)") else Response.Write("(AMEX: NBR)") end if %> added $2 3/4 to $30 7/8 on issuing a bullish outlook for
rig utilization as well as reporting Q3 EPS of $0.29, up 45% over last year
and $0.05 better than estimates.
GOATS
Disappointing again, wireless telecom infrastructure manufacturer ANDREW
CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ANDW)") else Response.Write("(Nasdaq: ANDW)") end if %> lost $5 5/8 to $27 3/8 after reporting a 5% order
decline from last year and somewhat anemic revenue growth of 10% year-over-year.
EPS from continuing operations of $0.27 missed estimates of $0.30. Revenue
growth of 10% is a slowdown from last quarter's year-over-year revenue growth
of 14%, which was exasperating enough for investors. Despite doing well in
broadcast, cellular, and land mobile products, reflecting the seasonal summer
strength, PCS was soft, which is surprising given the number of PCS towers
one sees springing up everywhere. Coming up in the September quarter, Andrew
has another tough comparison: it'll have to grow revenues 23% sequentially
just to achieve 10% year-over-year growth. Even so, Andrew might look attractive
to some, with a current valuation of 18 times 1998 earnings estimates, 2.9
times sales, and operating margins around 20%.
EASTMAN KODAK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> slumped $8 3/8 to $68 1/2 after the photographic
film and imaging products company reported Q2 EPS of $1.12, falling short
of estimates of $1.39 due to higher expenses for marketing its Advantix system,
the strong dollar, and losses in its digital imaging products lines. The
company said it sees difficulty in growing 1997 operating earnings past 1996
levels. Prudential Securities lowered its 1997 EPS estimate to $4.40 this
morning and reportedly will lower estimates to $4 now that Kodak's CFO has
confirmed that the company will cut prices 5% to hold onto, or gain, market
share from Fuji. The loss this quarter comes as a surprise to some, except
Salomon Brothers, which said last month it was getting "mixed signals" on
the quarter.
The country's largest hospital company, COLUMBIA/HCA HEALTHCARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COL)") else Response.Write("(NYSE: COL)") end if %>, was pummeled again today, dropping $4 15/16 to $34 after the feds stepped
up their investigation into the company's marketing practices. The probe
into the company's conduct is thought to be focused on billing practices
as well as doctors referring patients to captive labs and facilities, rather
than the most available facilities. The probe brings up an interesting question:
are doctors who own Columbia stock making referrals to Columbia facilities
because of greed or because the facilities are better. Hardly anyone thinks
the company built an empire on self-dealing. Columbia's 22% annual return
since 1990, then, might be attributed to its ability to grow earnings through
offering healthcare customers better solutions.
QUICK CUTS: Help desk software company CLARIFY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLFY)") else Response.Write("(Nasdaq: CLFY)") end if %> lost $3 1/16 to $10 7/8 as Q2 EPS of $0.05, down 16% from last year,
didn't quite cut the mustard with analysts who were looking for EPS of $0.07...
NETWORK COMPUTING DEVICES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NCDI)") else Response.Write("(Nasdaq: NCDI)") end if %> slipped $1 1/2 to $8
1/2 on reporting Q2 EPS of $0.04 and saying it doesn't expect strong order
growth in the third quarter, according to Reuters... Extreme wear
company VANS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VANS)") else Response.Write("(Nasdaq: VANS)") end if %> was shot down for a $2 3/16 loss
to $13 9/16 on an H&Q downgrade to "hold" from "buy"...
Specialty printer and plotter manufacturer
ENCAD INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENCD)") else Response.Write("(Nasdaq: ENCD)") end if %> dropped $5 1/8 to $39 5/8 after reporting
Q2 EPS of $0.35, which beat estimates of $0.34. Prudential Securities downgraded
the shares to "hold" from "buy" based on price... Information technology
consulting company WHITMAN-HART INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WHIT)") else Response.Write("(Nasdaq: WHIT)") end if %> lost $3 7/8 to
$28 1/2 after it reported Q2 EPS of $0.11, up 10% sequentially... Mutual
fund manager PILGRIM AMERICA CAPITAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PACC)") else Response.Write("(Nasdaq: PACC)") end if %> slumped
$2 to $17 1/4 as unthankful investors didn't appreciate the company's Q3
earnings, which compared well with a loss last year.
FOOL ON THE
HILL
An Investment Opinion by Randy
Befumo
Storage Woes But a Memory?
Was it only June when investors were fretting about a cyclical downturn in
the storage technology business? Two consecutive earnings "revisions" by
industry giant SEAGATE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %> capped off by a quarterly
profit warning from thin-film media maker KOMAG <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KMAG)") else Response.Write("(Nasdaq: KMAG)") end if %> have
had investors running scared since June 2.
As the largest publicly traded drive manufacturer in the world, Seagate's
bad news on June 2 and again on June 17
was widely viewed as bad news for the entire industry, in spite of the fact
that Seagate's problems seemed to be concentrated in the high-end enterprise
storage business. When Komag appeared to provide independent confirmation
of Seagate's tales of woe on June 26,
rather than working out the cause, investors decided to head for the hills.
When Seagate finally got around to releasing its earnings last week, many
investors breathed a sigh of relief. Although the earnings were actually
worse than the second revised estimate, the financials were not horrific
and the damage seemed to be concentrated in the high-end drive business.
The storage technology business is divided into two main battlefields --
personal computer hard drives and hard drives for virtually everything else,
from servers to RAIDs to minicomputers. As prince of the high-end, Seagate
was the company most likely to be negatively affected by increased competition
in that arena from the likes of number three PC hard drive manufacturer
WESTERN DIGITAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WDC)") else Response.Write("(NYSE: WDC)") end if %>, which only entered the high-end business
last year. Although hardly out of the woods, Seagate shares have begun their
first sustained recovery since the company hit $54 1/4 on May 6th and bottomed
out in the low $30s a couple of weeks ago.
Quarterly earnings releases from the likes of 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 %> appear to have vindicated those
who read the Seagate problems as the inevitable result of competition at
the high end and not some disastrous downturn for the drive industry as a
whole. With 70% of the market share for the ultra-fine wires used to manufacture
drive head assemblies, Innovex is widely viewed as an excellent leading indicator
for the overall health of the drive market. When Innovex's
quarterly results
came in two cents ahead of expectations, it was an indication that overall
demand was solid, although competitive pressures might be causing some shifts
in market share among the major players. With revenues jumping 118%
year-over-year for Innovex, the wire business can hardly be called
sluggish.
The results from thin-film inductive head manufacturer Applied Magnetics
gave investors another opportunity to peek under the hood of the drive industry.
The company is in the midst of a raging controversy over where head technology
is going in the future. Competitor READ-RITE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RDRT)") else Response.Write("(Nasdaq: RDRT)") end if %> has already
made the jump to volume production of magnetoresistive (MR) heads, whereas
Applied Magentics has only recently begun production of the new MR technology.
In fact, Applied is continuing to push ahead on advancing thin-film inductive
technology, offering customers samples of 2.1 gigabyte per 3.5-inch disk
in conjunction with media that has been optimized for inductive thin film
head characteristics. As WESTERN DIGITAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WDC)") else Response.Write("(NYSE: WDC)") end if %> is the only major
drive manufacturer still using thin-film inductive heads almost exclusively
and is a big customer of Applied, it is no surprise that in the two days
since the Applied announcement, shares of Western Digital took off --
particularly given that Western Digital's earnings were due today after market
close.
In fact, investors were so optimistic about Western's upcoming results that
the company's shares were up as high as $44 1/2 today before slipping back
to end the day up $11/16 at $41. This advance was fueled by Western's decision
to make the Vice-President in charge of the Personal Storage division, Kathy
Braun, Chief Operating Officer and President of that division. The thinking
was that if she was going to be promoted to COO and President, the quarter
must of have been a great one for Western's main business of making personal
computer hard drives. After the market closed, Western Digital reported earnings
of $0.95 per share, up from $0.36 per share in the year ago period and a
penny below consensus estimates of $0.96 per share. Although missing the
estimates by a penny may undo some of the recent gains in Western Digital,
the company is certainly a long way off from the $26 to $29 a share it traded
at in the beginning of June.
Given the solid results from the hard drive companies and equally sound
performance of the stocks over the past month, it now appears that investors
see personal computer hard drive manufacturers as a way to participate in
the rapid growth of the PC industry without buying the PC manufacturers,
Intel or Microsoft, which carry much higher valuations.
CONFERENCE CALLS
HARLEY-DAVIDSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HDI)") else Response.Write("(NYSE: HDI)") end if %>
(402) 222-9905 -- replay
APPLE COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %>
(816) 650-0766 (Password: Apple Conference Call) -- replays on 7/16 @ 7:00
p.m. and 9:00 p.m. EDT, and on 7/17 @ 12:00 noon EDT
FREDDIE MAC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FRE)") else Response.Write("(NYSE: FRE)") end if %>
(800) 475-6701 (access #348319) -- replay through 7/16
FORD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %>
(703) 736-7362 -- replay at 2:00 p.m. EDT on 7/17
ADVANTA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADVNA)") else Response.Write("(Nasdaq: ADVNA)") end if %>
(402) 222-9910 -- replay through 7/17 midnight
360 COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XO)") else Response.Write("(NYSE: XO)") end if %>
(402) 220-3014 -- replay available through 7/23
ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %>
(800) 475-6701 (code: 348047) -- replay through 7/25
07/17/97 (Thursday)
SPRINT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FON)") else Response.Write("(NYSE: FON)") end if %>
(800) 659-4363 -- replay at 10:30 a.m. and 2:30 and 4:30 p.m. EDT
(816) 650-0613 -- replay number for international callers
07/17/97 (Thursday)
IOMEGA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %>
(800) 633-8284 (code: 2854533) -- replay through 7/21
07/17/97 (Thursday)
SUN MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %>
(800) 633-8284 (reservation # 2689889) -- replay through 7/20
(303) 248-1201 (reservation # 2689889) -- replay for international callers
07/17/97 (Thursday)
APPLIED DIGITAL ACCESS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADAX)") else Response.Write("(Nasdaq: ADAX)") end if %>
(402) 220-6028 -- replay available for 7 days
07/17/97 (Thursday)
MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>
(800) 456-5304 (code: 1017) -- replay through 7/21
(402) 344-6835 (code: 1017) -- replay for international callers
THIS WEEK'S CONFERENCE CALL SYNOPSES
SHAW GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGR)") else Response.Write("(NYSE: SGR)") end if %>
Call
ASCEND <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %>
Call
INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>
Call
SEAGATE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %>
Call
WE
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IT'S DOUBLE/TROUBLE!
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Ups & Downs
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