HEROES
SECURITY FIRST NETWORK BANK <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SFNB)") else Response.Write("(Nasdaq: SFNB)") end if %> surged $2 1/4 to $11 1/4
after the software arm of the
Internet banker
licensed its Virtual Financial
Manager to banking industry heavyweights CITICORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %>
and BARNETT BANKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBI)") else Response.Write("(NYSE: BBI)") end if %> and specialty finance banking company
SYNOVUS FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SNV)") else Response.Write("(NYSE: SNV)") end if %>. Those companies, along with others,
paid $14.2 million for the licenses, 500,000 shares in the company, and for
future software developments. The Virtual Financial Manager is a turnkey
solution for banks wanting to hang out the shingle on the Internet. With
this software featuring an HTML front-end, online check imaging, middleware
solutions, and the integration of services like credit cards and bill payments,
the whole thesis of INTUIT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTU)") else Response.Write("(Nasdaq: INTU)") end if %> being a great acquisition
for any big bank might now be completely bankrupt.
Following yesterday's $150 million investment from MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> and the installation of a virtually new board of directors, APPLE
COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> gained another $2 7/8 to $29 3/16. Bear Stearns
raised its rating on the company, dropping the "un" from its former
"unattractive" rating, while J.P. Morgan rated it a "buy," citing a "benevolent
[industry] conspiracy... to come to Apple's rescue." The rise again today
can be chalked up to two main reasons: 1. Almost every newscast in the country
over the last 24 hours has run this story, and 2. Some market players might
finally understand that this is less about Microsoft wrapping up Apple than
it is about Apple software. If this was about Microsoft sealing its monopoly,
one would think the "efficient market" would have bid up Microsoft and bid
down Apple.
Tom Gardner's
MoneyHeavy
Portfolio dark horse PIONEER HI-BRED INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PHB)") else Response.Write("(NYSE: PHB)") end if %>
shot up $13 11/16 to $90 1/4 after forming an alliance with DUPONT
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %>. DuPont will invest $1.7 billion in Pioneer and form a joint
venture intended to develop new genetically engineered grains. Not only does
plant genetics company Pioneer hook up with one of the world's premier chemical
and agricultural product companies, but the agreement calls for Pioneer to
use the proceeds of the equity investment to buy back 16 million common shares
in a Dutch auction. Total common shares outstanding will remain around 82
million. Pioneer said it expects sales from the joint venture to reach $3.5
million within ten years.
QUICK TAKES: Australia and New Zealand Internet service provider
OZEMAIL LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OZEMY)") else Response.Write("(Nasdaq: OZEMY)") end if %> jumped $5 1/2 to $12 1/2 after reporting
a 236% increase in Q2 revenues and EPS of $0.61 due to the receipt of a licensing
fee for its Internet phone and fax software... SUNGLASS HUT INTERNATIONAL
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAYS)") else Response.Write("(Nasdaq: RAYS)") end if %> brightened up $1 3/4 to $10 3/16 after the specialty retailer
reported a 7.8% increase in July same-store sales. OAKLEY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OO)") else Response.Write("(NYSE: OO)") end if %>, a main vendor to the Hut, gained $1 5/16 to $13 1/4 on the news...
Supercomputer maker TERA COMPUTER CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TERA)") else Response.Write("(Nasdaq: TERA)") end if %> rose $3 to $8
1/2 on a "buy" rating from Salomon Brothers... CORTECS INTERNATIONAL
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLVRY)") else Response.Write("(Nasdaq: DLVRY)") end if %> gained $2 5/8 to $15 1/2 after the pharmaceutical maker
announced that it plans to submit its oral Macritonin drug for the treatment
of bone degeneration for approval to European health authorities.
Industrial process equipment manufacturer MAXWELL TECHOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MXWL)") else Response.Write("(Nasdaq: MXWL)") end if %> added $3 1/2 to $29 3/4 after announcing a win on a government contract
worth up to $25 million over five years... QWEST COMMUNICATIONS
INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QWST)") else Response.Write("(Nasdaq: QWST)") end if %> rose $1 7/8 to $36 3/4 after the telecom
fiber optic backbone provider yesterday reported Q2 revenues of $229 million
and pro-forma EPS of $0.31, crushing estimates of $0.05... COMPAQ COMPUTER
CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> rose $3 1/2 to $62 1/8 after Donaldson, Lufkin &
Jenrette added the shares to its recommended list... Leading British bank
BARCLAYS PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BCS)") else Response.Write("(NYSE: BCS)") end if %> added $5 3/4 to $91 after saying that it
doesn't expect to make any further concessions to its union employees...
Heavy equipment manufacturer TEREX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TEX)") else Response.Write("(NYSE: TEX)") end if %> rolled $1 5/16
higher to $22 13/16 on initiation of coverage by J.P. Morgan with a "buy"
rating.
GOATS
HEILIG MEYERS CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HMY)") else Response.Write("(NYSE: HMY)") end if %> slid $2 5/16 to $15 1/16 after the furniture
retailer and stealth specialty finance company reported a 1.5% increase in
July same-store sales. Added to last month's 1.2% decline in same-store sales,
the company announced yesterday that it may be difficult to reach earnings
estimates for the quarter. Going in the other direction, furniture manufacturer
and retailer ETHAN ALLEN INTERIORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ETH)") else Response.Write("(NYSE: ETH)") end if %> moved up $6 15/16 to
$61 11/16 after reporting Q4 EPS of $1.02, which rose 100% from the comparable
quarter last year and smashed estimates of $0.84.
HMO giant UNITED HEALTHCARE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UNH)") else Response.Write("(NYSE: UNH)") end if %> fell victim to this
week's misery in the sector, dropping $7 5/16 to $50 3/4 and dragging down
cohorts AETNA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AET)") else Response.Write("(NYSE: AET)") end if %> $5 1/4 to $96 3/4 and OXFORD HEALTH PLANS
<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %> $5 1/4 to $74. United Health reported Q2 EPS of $0.55
(excluding a gain), missing estimates. Like Aetna, the company showed strong
enrollment growth in the quarter, but the medical loss ratio (the percentage
of earned premiums spent on enrollees' medical expenses) showed a minuscule
improvement. If it weren't for underperforming markets in Maryland, Rhode
Island, and the Gulf Coast states, though, the company's medical loss ratio
would have improved 1.5 percentage points to 83.7%.
QUICK CUTS: COSTILLA ENERGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COSE)") else Response.Write("(Nasdaq: COSE)") end if %> slumped $4 1/2 to $9 after the oil and gas exploration and production company reported a loss of $0.23 per share, falling short of EPS estimates of $0.04... Teleservices company SITEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SWW)") else Response.Write("(NYSE: SWW)") end if %> was clouted for a $4 1/4 loss to $11 after reporting Q2 EPS of $0.10, in line with estimates and up 67% year-over-year. Both Alex. Brown and Dillon Read lowered their ratings on the company, with Dillon Read reducing its 1998 EPS estimate to $0.58 from $0.63... WET SEAL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WTSLA)") else Response.Write("(Nasdaq: WTSLA)") end if %> was harpooned for a $7 11/16 loss to close at $19 after the young women's clothing retailer pre-announced Q2 EPS of $0.25, below estimates of $0.29, due to sluggish sales in July... FINE AIR SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BIGF)") else Response.Write("(Nasdaq: BIGF)") end if %> fell $1 5/16 to $14 9/16 a day after going public after one of its DC-8 cargo planes crashed on takeoff from the Miami Airport... Connecticut-based BANK OF SOUTHINGTON <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: BSO)") else Response.Write("(AMEX: BSO)") end if %> lost $2 1/2 to $20 3/4 after issuing a terse statement saying it is reviewing takeover proposals it has received... Anglo-Dutch publisher ELSEVIER NV <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ENL)") else Response.Write("(NYSE: ENL)") end if %> fell $2 1/8 to $33 5/8 after reporting a weak 1% increase in operating profits in the first half of the year and issuing an equally weak outlook for the remainder of the fiscal year... Ion beam systems manufacturer MICRION CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MICN)") else Response.Write("(Nasdaq: MICN)") end if %> was burned $2 5/8 to $18 7/8 after reporting Q4 EPS of $0.13, in line with estimates... Youth apparel retailer HOT TOPIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HOTT)") else Response.Write("(Nasdaq: HOTT)") end if %> slid $2 to $16 1/8 after announcing a meager 0.7% increase in second quarter same-store sales... Healthcare equipment servicing outsourcer COHR INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHRI)") else Response.Write("(Nasdaq: CHRI)") end if %> lost $2 1/8 to $18 after reporting Q1 EPS of $0.24, in line with estimates. Gross margin dropped slightly year-over-year but operating margin expanded considerably... CIENA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> fell $4 13/16 to $49 3/8 after the maker of photon electronics for telecom carriers pre-announced Q3 EPS of $0.31 to $0.33, above the mean estimate of $0.27....Telecom company MASTEC INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MTZ)") else Response.Write("(NYSE: MTZ)") end if %> was scuttled for a $4 3/4 loss to $48 3/4 by investors who weren't happy with Q3 EPS of $0.41, which missed estimates of $0.44... CALENERGY COMPANY INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CE)") else Response.Write("(NYSE: CE)") end if %> lost $2 1/8 to $37 3/8 as takeover target NEW YORK STATE ELECTRIC & GAS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NGE)") else Response.Write("(NYSE: NGE)") end if %> filed with New York regulatory authorities for a review of CalEnergy's takeover attempt... Connecticut bank BANK OF SOUTHINGTON <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: BSO)") else Response.Write("(AMEX: BSO)") end if %> lost $2 1/2 to $20 3/4 after issuing a terse statement saying it is reviewing takeover proposals received by the bank.
FOOL ON THE
HILL
An Investment Opinion by Randy
Befumo
Unraveling the Results Reported by America Online
AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> reported fairly confusing fourth quarter
results this afternoon that will probably have number crunchers busy for
months. The company reported operating results of $0.09 EPS, two cents ahead
of the consensus estimate from First Call. However, due to ongoing discussions
with the "staff" of the Securities and Exchange Commission (SEC), the company
was forced to move a $24.5 million charge taken in the second quarter to
the fourth quarter as well as reclassifying $7 million of revenues booked
last quarter as "deferred" revenues, causing the company to take charges
to adjust results for both periods in this quarter. Although it is the operating
results that are most remarkable, a lot of attention will probably be spent
over the next few days digging through the charges.
On the operational side, America Online increased gross margin to 38.1% from
35.8% last quarter, a 2.3 percentage point improvement that probably reflects
the fact that the bulk of the company's modem spending is over. Marketing
expenses as a percentage of revenues have stabilized around the 20% mark,
coming in at 20.4% this quarter. This is well below the 35% to 40% range
the company had been recording before it converted to flat-fee access,
demonstrating clearly that the flat-fee move results in significant market
acquisition savings. "Product Development" and "General & Administrative"
expenses were unremarkable.
Operating momentum for the first full quarter for the Pittman team will probably
be overlooked tomorrow because of a focus on the charges, though. Always
controversial, America Online results have become increasingly complicated
since the company changed its accounting standards last October. As the company
that has produced more individual one-time charges than any other company
in the S&P MidCap 400, it is probably not going to shed its reputation
for questionable accounting anytime soon, in spite of adopting the
"gold-standard" accounting for subscriber acquisition costs nine months ago.
For those who have been in a coma for the last two years, America Online
previously amortized the recognition of
subscriber
acquisition costs over the estimated life of the subscriber. Although
this was in line with Federal Accounting Standards Board (FASB) SOP 93-7
regarding the capitalization of advertising costs related to direct-response
marketing, it has always been a sore spot for investors, and the company
was wise to dump it given the disproportionate attention it garnered from
the media.
However, replacing SOP 93-7 with a bevy of one-time charges was probably
not the wisest move America Online accountants could have made. Rather than
economizing the violence inherent in changing accounting, it has accidentally
prolonged the perception that there is something rotten in the state of America
Online's books. While one charge taken is apparently just the movement of
a $25.7 million charge originally taken in the second quarter for the termination
of non-performing "partners" whose sites were not generating enough activity
to justify their existence, the restatement of revenues is a little more
disconcerting. In a move that will probably incite short-sellers into fits
of glee, the company is restating $7 million in revenue recognized from the
Tel-Save deal last quarter and amortizing it over the life of the deal.
While the revenue restatement is hardly the end of the world given that it
is for cash that America Online already has in the bank, there was originally
a lot of noise after the Tel-Save deal about the accounting and this will
probably revive it. This restatement means that America Online actually lost
$0.05 per share last quarter rather than making a $0.02 per share profit
as originally reported. For many investors, the profit at America Online
was taken as a sign that the business model was a viable one. To restate
that profit to a loss and have the charge taken to do so dampens earnings
for the fourth quarter and will probably generate a lot of confusion as well
as a lot of less-than-informed yammerings about accounting from the business
media.
Investors should focus on the fact that regardless of when the revenues are
recognized, the cash is already in the bank -- which is the completely opposite
situation from the amortization of subscriber acquisition costs where the
money had already been spent, but had not been recognized.
Sadly, unlike most media companies where the investors are used to complicated
accounting, America Online has attracted a number of pundits who are relatively
unsophisticated when required to move beyond the standard manufacturing profit
and loss statement. Investors should pay careful attention to operating cash
flow when the company releases its 10-Q sometime in the next few weeks.
CONFERENCE CALLS
RAINFOREST CAFE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAIN)") else Response.Write("(Nasdaq: RAIN)") end if %>
(402) 222-9939 -- replay
TIDEWATER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDW)") else Response.Write("(NYSE: TDW)") end if %>
(800) 475-6701 (#348218) -- replay
PAPA JOHN'S PIZZA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PZZA)") else Response.Write("(Nasdaq: PZZA)") end if %>
(800) 642-1687 (ask for Papa John's Int'l conference call) -- replay
CREE RESEARCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CREE)") else Response.Write("(Nasdaq: CREE)") end if %>
(800) 642-1687 (code: 523215) -- replay
(706) 645-9291 (code: 523215) -- replay for international callers
MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>
Re: introduction of NetShow server 2.0
(800) 677-0672 -- replay through 8/7
(402) 998-0101 -- replay for international callers
BA MERCHANT SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BPI)") else Response.Write("(NYSE: BPI)") end if %>
(800) 964-3941 -- replay through 8/7
(402) 344-6640 -- replay for international callers
AMRION INC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMRI)") else Response.Write("(Nasdaq: AMRI)") end if %> and
WHOLE FOODS MARKETS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WFMI)") else Response.Write("(Nasdaq: WFMI)") end if %>
(800) 633-8284 (code: 2979188) -- replay through 8/7
MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> and
APPLE COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %>
Regarding product and technology development agreement
(800) 456-5304 (code: 8797) -- replay through 8/8 @ 5:00 pm EDT
(402) 344-6835 -- replay number for international callers
AMERICAN RADIO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AFM)") else Response.Write("(NYSE: AFM)") end if %>
(800) 475-6701 (access code: 350455) -- replay through 8/8
I-STAT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STAT)") else Response.Write("(Nasdaq: STAT)") end if %>
(800) 475-6701 (ID# 345839) -- replay through 8/8
SARA LEE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLE)") else Response.Write("(NYSE: SLE)") end if %>
(402) 220-3124 -- replay through 8/14
CISCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>
(800) 633-8284 (code: 2875731) -- replay through 8/15
THIS WEEK'S CONFERENCE CALL SYNOPSES
APPLE and MICROSOFT
Call
CISCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>
Call
OXFORD HEALTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %>
Call
WE
DELIVER - Get The Evening News delivered
to your e-mailbox every evening!
ANOTHER FOOLISH
THING
Foolish Tech Support!
So, you say you bought a product from the Fool that doesn't seem to be working the way it's supposed to? You're not sure how to download the latest file, or install the newest gadget, or view the most recent newsletter? Do you just not know how to make what you bought do what you want it to do? Well, have we got the place for you! The Foolish Technical Support area is designed to assist you with all of your Foolish purchases that involve your computer. From spreadsheets to newsletters, we answer questions, give instructions and provide a place for you to talk with the people behind the products. Check out Foolish Tech Support.
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