HEROES
HEARTPORT INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HPRT)") else Response.Write("(Nasdaq: HPRT)") end if %> gained $2 15/16 to $20 1/4 after the
maker of minimally invasive cardiac surgery systems reported a 45% increase
in Q2 revenues of $4.7 million and a loss of $0.59 per share, right in the
neighborhood of analysts' estimates. The company said that the number of
procedures in which its Port-Access system was used doubled over last quarter.
The earnings release helped lift the shares from their recent drop, part
of which might be explained by the issuance of $86 million in convertible
debt and part of it by a Smith Barney research note that said the company's
products are hard to use. The reason why Heartport's SG&A (selling, general
and administrative) expenses are so high is because it is sending around
a bunch of surgical teams to train the procedures. The sequential increase
in procedures and revenues slightly relieved some investor anxiety over the
company's execution of its strategy.
CYRIX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYRX)") else Response.Write("(Nasdaq: CYRX)") end if %> gained $1 7/8 to $24 15/16 after the fabless
CPU company agreed to merge with NATIONAL SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSM)") else Response.Write("(NYSE: NSM)") end if %>
in a stock swap that valued Cyrix $27.22 per share as of last night. National
recently sold off its Fairchild Semiconductor unit, but still shows gross
margins less than 40% -- a commodity-like gross margin in the semiconductor
business. National will try to chase the gross margins of INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>, which by model are at least 25% greater than its own. Like Intel,
too, National will be following its "system on a chip" vision, where it will
try to get as many of its devices on the PC (or NC or appliances) motherboard
as it possibly can. That's why Intel did the CHIPS & TECHNOLOGIES
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHPS)") else Response.Write("(Nasdaq: CHPS)") end if %> deal, and that's why National will probably be looking
for other acquisitions once Cyrix has been assimilated.
QUICK TAKES: ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> gained $6 3/8 to
$53 1/8 and BAY NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAY)") else Response.Write("(NYSE: BAY)") end if %> moved up $1 1/2 to $31 3/4 after
banding together with PC card maker XIRCOM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XIRC)") else Response.Write("(Nasdaq: XIRC)") end if %> and CISCO
SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> to stimulate sales of 56K-enabled remote access
concentrators and flash-upgradable PC cards. Cisco added $1 7/8 to $79 1/4...
Data network semiconductor company GALILEO TECHNOLOGY LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GALTF)") else Response.Write("(Nasdaq: GALTF)") end if %> jumped $9 3/8 from its IPO price of $17 to close $26 3/8... Electro-optics
components maker GALILEO CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GAEO)") else Response.Write("(Nasdaq: GAEO)") end if %> coincidentally busted
$1 3/4 higher to $9 1/4 on no news besides having the same name as a really
hot IPO that involves networks and integrated circuits...
Getting a $6 7/16 boost to $130 9/16, CITICORP
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> was named a "Focus One" stock at Merrill Lynch. Money center
bridesmaid CHASE MANHATTAN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMB)") else Response.Write("(NYSE: CMB)") end if %> climbed $2 5/8 to $108 7/8
on the upgrade as well as on those wild bond traders driving down interest
rates.
ARADIGM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ARDM)") else Response.Write("(Nasdaq: ARDM)") end if %> gained $1 1/4 to $10 1/4 after the pulmonary
drug delivery systems company yesterday reported second quarter financial
results and updated investors on progress with its SmartMist and AERx systems...
Offshore contract driller CLIFFS DRILLING CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CDG)") else Response.Write("(NYSE: CDG)") end if %> rose $3
5/16 to $46 3/16 on reporting Q2 EPS of $0.89, smashing estimates of $0.55.
Daywork drilling operating earnings shot up as the result of better day rates
and higher capacity utilization... DISCOUNT AUTO PARTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DAP)") else Response.Write("(NYSE: DAP)") end if %>
moved up $1 5/8 to $20 11/16 on reporting Q4 EPS of $0.39 (beating estimates)
before charges for settling some nasty litigation with AIRGAS INC.
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARG)") else Response.Write("(NYSE: ARG)") end if %>, the settlement of which the company announced yesterday... Modular
classroom construction company MODTECH INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MODT)") else Response.Write("(Nasdaq: MODT)") end if %> advanced
$4 1/2 to $16 1/2 after reporting Q2 EPS of $0.35, beating estimates of $0.20,
on more than 200% revenue growth... DATASTREAM SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DSTM)") else Response.Write("(Nasdaq: DSTM)") end if %>
picked up $5 to $25 1/2 after the facilities maintenance and management software
company reported a 118% increase in Q2 revenues of $16.8 million and EPS
of $0.28, beating estimates by $0.02.
STANFORD TELECOMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STII)") else Response.Write("(Nasdaq: STII)") end if %> gained $3 3/8 to $23 1/4
after agreeing to partner with French company ALCATEL ALSTHOM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALA)") else Response.Write("(NYSE: ALA)") end if %> to provide point-to-multipoint wireless telecommunications systems...
CD and DVD press NIMBUS CD INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NMBS)") else Response.Write("(Nasdaq: NMBS)") end if %> jumped $1
11/16 to $13 3/8 after signing an agreement to become a MICROSOFT
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> authorized replicator... Solid waste handler AMERICAN
DISPOSAL SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADSI)") else Response.Write("(Nasdaq: ADSI)") end if %> rose $3 1/4 to $28 on reporting Q2 revenues
of $27.8 million and EPS (before extraordinary items) of $0.10, which beat
estimates of $0.08... Optical measurement systems maker ZYGO CORP.
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ZIGO)") else Response.Write("(Nasdaq: ZIGO)") end if %> added $4 to $35 1/2 after announcing yesterday an all stock
deal to acquire measurement products maker Digital Instruments, which recorded
revenues of $50 million last year, according to Reuters... SONUS
PHARMACEUTICALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SNUS)") else Response.Write("(Nasdaq: SNUS)") end if %> jumped $3 3/4 to $34 1/2 after the FDA
said it will consider ultrasound contrast agents as drugs and not devices,
which clears the way for the company's contrast agent EchoGen to be considered
for use in cardiology and radiology applications... NEXTEL COMMUNICATIONS
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NXTL)") else Response.Write("(Nasdaq: NXTL)") end if %> rose $1 5/16 to $23 after Craig McCaw exercised options
to buy another 15 million shares of the wireless communications company's
stock.
GOATS
Companies beating earnings expectations today but taking their lumps anyway
include SHARED MEDICAL SYSTEMS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMED)") else Response.Write("(Nasdaq: SMED)") end if %>, which fell $5
1/2 to $54 1/8 after the healthcare information systems company reported
Q2 service and systems fees revenue growth of 11% and EPS of $0.57, slightly
better than the mean estimate of $0.56. Computer systems integrator, data
center management company, and software developer COMPUTER DATA SYSTEMS
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CDSI)") else Response.Write("(Nasdaq: CDSI)") end if %> skidded $3 7/8 to $28 7/8 after reporting Q4 EPS of $0.50,
which beat the single estimate of $0.48.
Cable TV billing software CSG SYSTEMS INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSGS)") else Response.Write("(Nasdaq: CSGS)") end if %>
plunged $5 1/4 to $23 7/16 on reporting Q2 revenue growth of 35% and pro
forma EPS (before acquisition-related charges) of $0.17, which matched estimates.
Investors dropped the stock today because of bugs in version 1.1 of CSG Phoenix,
the company's customer management software for "the converging communications
industries." CSG says it is working with customers on testing the products,
but investors who would like to find out more about it had better find themselves
a job as a securities analyst in the next few days so they can listen to
the conference call, as those are the only people CSG allows to participate
in its call.
INTERNATIONAL NETWORK SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INSS)") else Response.Write("(Nasdaq: INSS)") end if %> slid $5 1/4 to $23 1/2
after the data networking integrator and services company reported Q4 revenues
of $30.5 million and EPS of $0.08, beating estimates of $0.07. Even though
the company grew quarterly revenues over 100% and nearly tripled per-share
earnings, its net margin of 9% and a P/E of 120 as of this morning weren't
building the firmest of bases under the stock's price. Pulling the lynchpin
from under the stock this morning was the company's underwriter Morgan Stanley,
which cut its rating on the company to "neutral" from "outperform." At 53
times 1998 earnings estimates, some would say the stock is still looking
pricey for a company that must count more on installed bases and momentum
than proprietary knowledge as its competitive advantage.
Goats of a feather flock together. Plasma etch equipment manufacturer TEGAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TGAL)") else Response.Write("(Nasdaq: TGAL)") end if %> lost $2 1/4 to $7 1/4 after reporting a Q1 loss of $0.12 per share, below estimates for a loss of $0.09. Although the company said it has pushed into etch equipment for disk drive heads, it still expects losses to persist for the rest of the year. Also issuing an discouraging forecast was plastic packaging manufacturer AEP INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AEPI)") else Response.Write("(Nasdaq: AEPI)") end if %>, which fell $7 1/8 to $26 after forecasting Q3 EPS of $0.27, below estimates of $0.51. The company said its U.S. business is experiencing intense competition that it doesn't expect to let up any time soon.
QUICK CUTS: Heart laser company PLC SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: PLC)") else Response.Write("(AMEX: PLC)") end if %> was dashed against the rocks of FDA non-approval for its Heart Laser TMR System, losing $12 1/8 to $13 3/8... AWARD SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AWRD)") else Response.Write("(Nasdaq: AWRD)") end if %> fell $1 5/8 to $10 1/2 after the x86-based and server BIOS software developer reported Q2 EPS of $0.13, up 8% year-over-year but below estimates of $0.16... Storage systems company and Year 2000 software company ZITEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ZITL)") else Response.Write("(Nasdaq: ZITL)") end if %> lost $1 7/16 to $22 on reporting a 41% decline in Q3 revenues and a loss of $0.13 per share (before charges)... GATEWAY 2000 <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTW)") else Response.Write("(NYSE: GTW)") end if %> lost $1 11/16 to $38 1/8 after the PC manufacturer's president and COO, Richard Snyder, left the company to join a Michigan venture capital fund.
FOOL ON THE
HILL
An Investment Opinion by Randy
Befumo
Grade Point Average Logic
[Editor's note: Today we present an encore presentation of one of our
favorite Fool On the Hill columns. This column originally appeared on Sept.
23, 1996.]
In the year 2012, a government decree closed all of the world's stock markets.
Shares of companies owned by the public could no longer trade. The newly
formed world government, backed by the Pork-Eating, Dog-Hating Revolutionary
Front, bought every share of stock for the going price, turning world industry
into a captive, state-owned fixture in one fell swoop. Investors, needless
to say, were quite miffed by this turn of events and began to riot. In an
effort to calm the population but retain the spoils of its insidious move,
the crafty world government proposed a new form of investment more in tune
with its social agenda -- educational investing.
The process was rather simple. Investors would be allowed to purchase students
that were currently going through the rigors of academia. They would be allowed
to survey past performance records, as measured by standardized testing,
as well as examine every report, quiz or test the tikes had taken in their
education careers. After making an assessment of how well the students could
perform in the future, investors would plunk down their money on various
students and then wait for the quarterly grades to be issued. These report
cards would drive the value of their holdings up or down. Although not quite
as fun as speculating on the cream of America industry, investors of all
stripes read the handwriting on the wall and put their noses to the textbook
grindstone. A number of philosophies cropped up on what sort of students
represented the best buys. Many of these were remnants from various investing
approaches, making their success or failure all the more interesting to avid
students of history.
One rather vocal group believed in the value approach. They tended to focus
on students whose grades were... well, not that great. These students, for
one reason or another, had suffered massive academic setbacks and were valued
at mere pennies on the GPA point. At the center of attention was a motley
collection of D and F issues with some sporadic "Incompletes" sprinkled about.
The value crowd tended to congregate around here, looking for turnarounds.
"I think Johnny can start getting Cs next quarter, and that this middling
performance would actually bump up his valuation quite a bit." Nicknamed
"turtle investors," this crowd made a few big killings and did alright in
some other cases, but by and large ended up stuck owning a bunch of stupid
kids. Many educators had quite a field day with this crowd, as it was well
known that below-average students tended to remain below-average students
except in rare circumstances.
Another bunch of investors was the growth-at-a-reasonable price (GARP)
aficionados. This crowd was looking to buy an A student for the price of
a B or B+ average. By focusing on buying students who had the potential to
churn out As for less than the going price of the proven A students, these
investors thought that with a relatively simple valuation metric they could
make quite a bit of money. Unfortunately, this crowd was subject to the analyst
estimates of future performance as their guiding light. "Karen is forecast
to earn a 98% on the next geometry test and currently is being valued as
if she were going to get an 80%," the reports would begin. "On a relative
basis, she is a buy." These estimates were often subject to revision once
the analysts got hold of the homework, however. "Karen left three of the
proofs unfinished on a recent take-home assignment and we are downgrading
her to a sell." The GARP guys climbed over each other to get out of their
Karen holdings, pushing her down to the C- or D- range. (They would only
later repurchase her shares once the value guys drove her up to B and had
sold out.)
One group tended to outperform the others consistently, although its system
mystified many ex-stock investors as it went against all of their "buy low
and sell high" principles. These were the teachers, a bunch who had never
invested before in their lives. They knew enough about students, however,
to know that the A+ students tended to remain A+ students, so they just invested
in the best -- particularly loading up when a student's prowess in Science
had not yet been recognized or when a poor grade on a mid-term plunged him
or her down momentarily to B- valuation. By sticking with the best students,
the quarterly return of this group was pretty shaky, subject to large swings
due to the students' high valuations. Over the long-term, though, it was
the A+ crowd that tended to graduate summa cum laude, reaping incredible
dividends. Some investors who thought they were smart would sell the A and
A+ students when they seemed to get too high, only to curse and realize that
these students had an annoying tendency to continue higher. The teachers
loved this -- any of them could have told you that an A+ kid will eventually
grow into his valuation and much, much more if you just have the right time
frame.
Eventually, the Pig-Eating, Dog-Hating Revolutionary Front was overthrown
by irate hookah users and the companies were returned to the public. Most
investors went back to the same old "buy low, sell high" credo that had dominated
the market for years. A few had learned from the teachers and focused on
A+ companies trading at reasonable valuations, buying them and holding them
for a longer period than the market could efficiently discount. How did they
do? Some would say they did as well as those who only invested in A+ students
and much better than those who were constantly dumping their B+ kids for
D- players that had not made their big moves yet.
CONFERENCE CALLS
AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>
(800) 475-6701 (code 347752) -- replay
TIDEWATER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDW)") else Response.Write("(NYSE: TDW)") end if %>
(800) 475-6701 (#348218) -- replay
ONYX ACCEPTANCE CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ONYX)") else Response.Write("(Nasdaq: ONYX)") end if %>
(800) 633-8284 (code: 2990155) -- replay through 7/29 @ midnight
GENZYME <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GENZ)") else Response.Write("(Nasdaq: GENZ)") end if %>
(402) 220-2251 -- replay through 7/31
ACCEPTANCE INSURANCE COMPANIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AIF)") else Response.Write("(NYSE: AIF)") end if %>
(800) 633-8284 (code: 2931450) -- replay through 7/31
CYRIX CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYRX)") else Response.Write("(Nasdaq: CYRX)") end if %> and
NATIONAL SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSM)") else Response.Write("(NYSE: NSM)") end if %>
Regarding merger
(800) 642-1687 (code: 534426) -- replay through 8/1
07/30/97 (Wednesday)
OLSTEN CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OLS)") else Response.Write("(NYSE: OLS)") end if %>
(800) 475-6701 (code: 348684) -- replay through 7/31
(320) 365-3844 (code: 348684) -- replay for international callers
07/31/97 (Thursday)
PERFORMANCE TECHNOLOGIES, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTIX)") else Response.Write("(Nasdaq: PTIX)") end if %>
(800) 360-6077 -- 10:00 am EDT
THIS WEEK'S CONFERENCE CALL SYNOPSES
NATIONAL SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSM)") else Response.Write("(NYSE: NSM)") end if %>
Call
ATLAS AIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATLS)") else Response.Write("(Nasdaq: ATLS)") end if %>
Call
PRIME MEDICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMSI)") else Response.Write("(Nasdaq: PMSI)") end if %>
Call
WE
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THE FOOL IN NEWSPRINT!
You've been reading the Fool online for an hour or two, now, and your eyes are starting to hurt from the monitor. You wish you could lounge on the couch, but you just can't tear yourself away from the Fool. You know that last time you stopped reading the Fool you found yourself almost in withdrawal, and quickly losing perspective. What to do? Rejoice! There's relief around the corner. The Motley Fool is now appearing in newspapers across the country. Check this list to see if your local paper is in it. If not, consider letting the editors know that you'd like them to carry the Fool.
Randy Befumo (TMF Templr), a Fool
Fool Plate Special
Dale Wettlaufer (TMF Ralegh), another
Fool
Ups & Downs
Brian Bauer (TMF Hoops), and yet
another Fool
Editing