HEROES

ICN PHARMACEUTICALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ICN)") else Response.Write("(NYSE: ICN)") end if %> manufactures and markets a broad range of prescription and over-the-counter pharmaceuticals in over 60 countries. Its partner, pharmaceutical company SCHERING-PLOUGH CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGP)") else Response.Write("(NYSE: SGP)") end if %>, today announced results from Phase III clinical studies showing that Intron A plus oral ribavirin combination therapy helped eradicate the hepatitis C virus. Since Schering-Plough has exclusive rights to market oral ribavirin for hepatitis C in all major world markets through a licensing agreement with ICN, shares of ICN were up strongly $6 1/16 to $49 7/8. The next stage in the process requires Schering-Plough to file a new drug application (NDA) with the Food & Drug Administration, which Schering feels can be accomplished by year end. ICN is now a step closer to potential revenue streams from the estimated 10 million people in major world markets that are infected with hepatitis C.

CNET INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNWK)") else Response.Write("(Nasdaq: CNWK)") end if %> today unveiled its free online service called Snap! Online, helping its stock rise $3 3/16 to $44 5/16. Positioned to compete with America Online, Snap! Online's consists of a free website and an introduction to the web, via CD-ROM, given to all customers that sign up with one of the Internet Service Providers (ISPs) that have engaged in distribution agreements with CNET. So, the "net" result is that someone who signs up with an ISP outside of CNET's distribution network can still go to the website and view all the content anyway (they just won't get the CD-ROM). Despite all the marketing fluff, the content is king. If it's good, the customers will come... and so too will the advertisers.

Information technology company COMPUTER DATA SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CDSI)") else Response.Write("(Nasdaq: CDSI)") end if %> rose $10 5/16 to $46 9/16 on news that it will be acquired by AFFILIATED COMPUTER SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AFA)") else Response.Write("(NYSE: AFA)") end if %> in stock swap. The acquisition will be accounted for as a pooling of interests and Affiliated claims that it will be non-dilutive to Affiliated shareholders as well as tax-free to Computer Data holders. Under the terms of the deal, Computer Data shareholders will receive 1.759 Affiliated Computer shares for each of their Computer Data shares, which values the deal around $340 million (with the assumption of debt).

QUICK TAKES: MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %> rose $3 1/8 to $40 1/2 in anticipation of the computer maker's fiscal fourth quarter earnings, scheduled for release after the market close today... Network equipment supplier NEWBRIDGE NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NN)") else Response.Write("(NYSE: NN)") end if %> sped $5 1/8 higher to $65 3/8 after MCI COMMUNICATIONS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %> said it selected the Siemens/Newbridge MainStreetXpress 36170 Multiservices Switch as the backbone switch for its nationwide asynchronous transfer node (ATM) network... BROOKE GROUP LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGL)") else Response.Write("(NYSE: BGL)") end if %> climbed $1/2 to $6 3/4 after it announced today that it and its Liggett Group tobacco subsidiary had reached a settlement agreement with the state of Nevada resolving Nevada's tobacco-related Medicaid reimbursement claims.

Gold mining, commercial real estate, and oil refining holding company TRIZEC HAHN CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TZH)") else Response.Write("(NYSE: TZH)") end if %>, formerly known as Horsham Corp., said it plans to spin off its entire interest in Clark USA Inc. to its shareholders by the end of 1997, moving shares up $1 5/16 to $25 1/16... The #1 U.S. producer of marine protein, ZAPATA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: ZAP)") else Response.Write("(AMEX: ZAP)") end if %>, moved $5/16 higher to $6 1/4 after announcing that it is continuing with its previously announced stock repurchase program. To date, Zapata has repurchased approximately 6.7 million shares... Chemical maker PIONEER COMPANIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PIONA)") else Response.Write("(Nasdaq: PIONA)") end if %> rose $1 1/4 to $7 1/4 after it announced the signing of a definitive agreement with ICI Canada, Inc. and ICI Americas, Inc. for the purchase of ICI's North American chlor-alkali business by a new subsidiary, PCI Chemicals Canada... ELECTRO RENT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ELRC)") else Response.Write("(Nasdaq: ELRC)") end if %> sparked $5 1/4 higher to $33 1/4 after it signed a definitive agreement to acquire the computer and test and measurement equipment rental businesses of GE Capital Technology Management Services for $320 million in cash.

ALLIANCE GAMING CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ALLY)") else Response.Write("(Nasdaq: ALLY)") end if %> added $7/8 to $5 3/4 after its subsidiary, Bally Gaming, announced that it will unveil several new products and new product platforms at the upcoming World Gaming Congress & Expo in Las Vegas, Nevada... Truckload carrier LANDAIR SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LAND)") else Response.Write("(Nasdaq: LAND)") end if %> elevated $2 to $21 after announcing that it has reached an agreement to acquire the air cargo operating assets of Adams Air Cargo... WORLDTALK COMMUNICATIONS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WTLK)") else Response.Write("(Nasdaq: WTLK)") end if %> jumped $5/8 to $7 3/4 on announcing that it has entered into an agreement with SECURITY DYNAMICS TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SDTI)") else Response.Write("(Nasdaq: SDTI)") end if %>, a provider of enterprise network and data security solutions, to distribute Worldtalk's line of Windows NT-based e-mail security solutions... SEGUE SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEGU)") else Response.Write("(Nasdaq: SEGU)") end if %> rose $5/8 to $9 7/8 after the software company announced a new product, the "Segue Millennium Edition," designed to ensure rapid Year 2000 compliance and verification testing.

GOATS

Computer marketer MICRO WAREHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MWHS)") else Response.Write("(Nasdaq: MWHS)") end if %> crashed $6 5/8 to $21 after announcing that its European operations will post a pre-tax net operating loss of about $4 million for the third quarter due to weak sales. Once again, this points out a possible danger in the valuations of the channel resellers of PCs and software. The margins just aren't there for these companies, as retail and wholesale middlemen in the PC business run operating margins less than half to one-eighth of the margins PC manufacturers run. Before this morning's slip, Micro Warehouse was selling at 23 times 1998 earnings estimates, while a company like COMPAQ <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %>, with much higher margins, sells for 25 times 1998 earnings estimates. The PC manufacturers will not let the middlemen make higher margins than them, ever, and there lies the problem with placing the same valuation on companies with similar estimated growth profiles but very different margins.

Life insurance and fixed annuities company AMERUS LIFE HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMRS)") else Response.Write("(Nasdaq: AMRS)") end if %> announced this morning that it will acquire AMVESTORS FINANCIAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMV)") else Response.Write("(NYSE: AMV)") end if %>, an annuity specialist, in deal valued at approximately $361 million. AmVestors dropped $3 7/8 to $21 1/16 on the news. Apparently, the Mod Squad from Lehman Brothers couldn't do much for AmVestors, which hired Lehman in July look at strategic alternatives. Today's valuation on the company puts the share price right back where it started on that day. Right off the bat, Amvestors holders have to worry about dilution, as they will receive up to 0.6724 shares of AmerUs for each of their shares. For AmerUs, this looks heavily accretive to earnings given its guidance on cost savings. For AmVestors holders, it looks dilutive by $0.10 per share on 1998 earnings estimates (before conversion of debt).

Long distance reseller EXECUTIVE TELECARD LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EXTL)") else Response.Write("(Nasdaq: EXTL)") end if %> fell $3 1/16 to $4 1/16 after announcing the termination of a merger agreement with Coast International. Executive Telecard also announced the resignation of board chairman Ronald Jensen. Jensen owns the majority of Coast International and is the same guy who purchased $7.5 million in Executive Telecard stock in July. With a 91% decline in operating earnings last quarter, a current ratio of 1.28, and a cash burn rate well into the hundreds of thousands of dollars per quarter, investors might be worried today that the company is going to have to go back to the debt well to keep itself afloat.

QUICK CUTS: LUNAR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LUNR)") else Response.Write("(Nasdaq: LUNR)") end if %> fell $4 9/16 to $19 7/16 after the maker of osteoporosis diagnostic equipment said revenues will be flat and earnings will fall from last year as doctors are confused by prospective Medicare reimbursements for bone densitometry procedures... Software tools company RATIONAL SOFTWARE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RATL)") else Response.Write("(Nasdaq: RATL)") end if %> lost $5 to $17 1/2 as investors fear that ORACLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> will be cutting into its market share with new products... INFORMIX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IFMXE)") else Response.Write("(Nasdaq: IFMXE)") end if %> was shot down $2 3/32 to $7 11/32 after the database software company said it restate both 1996 and 1995 financial results... Deep ultraviolet excimer laser company CYMER INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYMI)") else Response.Write("(Nasdaq: CYMI)") end if %> slid $5 to $30 5/16 after Montgomery Securities, a force in semiconductor and semiconductor capital equipment research, lowered its rating on the company to "hold" from "buy."

STEWART & STEVENSON SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SSSS)") else Response.Write("(Nasdaq: SSSS)") end if %> fell $3 3/4 to $24 1/8 on announcing the sale of its gas turbine division to a unit of GENERAL ELECTRIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %>. S&S will use the majority of the cash for debt repayment and share repurchases... Non-utility power generating company CALPINE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPN)") else Response.Write("(NYSE: CPN)") end if %> fizzled $1 15/16 to $21 on a Morgan Stanley Dean Witter downgrade to "neutral" from "outperform"... IOMEGA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %> fell $1 11/16 to $26 15/16 on questions about possible competition in its Zip disk category from French storage company Nomai... Agricultural equipment producer AGCO CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AG)") else Response.Write("(NYSE: AG)") end if %> dropped $1 13/16 to $32 1/2 on advising that the strong dollar will keep earnings growth to 20% this year and that 1997 per-share earnings will come in $0.10 to $0.12 below earnings estimates.

FOOL ON THE HILL
An Investment Opinion by Randy Befumo

The Forgotten Bell

Once dismissed as a relic of deregulation politics, CINCINNATI BELL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSN)") else Response.Write("(NYSE: CSN)") end if %> has reinvented itself as one of the premier providers of data processing and information services in North America. As Ma Bell was being broken apart in 1983, the holding company that is now known as Cincinnati Bell was born with a business strategy to provide telecommunications services. A leader in billing and customer care solutions for the cellular communications industry and outsourced telephone marketing services, the company has certainly fulfilled its mandate for diversification when compared with the larger Regional Bell Operating Companies (RBOCs).

Although the returns in owning Cincinnati Bell have been relatively flat over the past twelve months, investors shouldn't discount the company out of hand. Cincinnati Bell has generated 39.6% annualized gains since 1994 by involving itself in inbound teleservices and billing management. Although teleservices company valuations have diminished considerably since last year, billing providers like CSG Systems, USCS International, and Billing Information Concepts still command premium valuations. In fact, the riddle of Cincinnati Bell is not what made the company move up roughly 10% today to $26 5/8, but rather the question of how one values a diversified holding company with three distinct businesses.

Cincinnati Bell Telephone Co. (CBT) has roots all the way back to 1873 as the City and Suburban Telegraph Association. Successfully transitioning into telephone services when it was invented three years later, the company became the first telephonic exchange in Ohio in 1878. Right now it is the fourteenth largest local exchange carrier (LEC) in the United States with 927,000 network access lines. CBT provides a substantial portion of Cincinnati Bell's revenues and operating profits. Rather than giving this money to shareholders in the form of fat dividends like every other RBOC, stupidity apparently mandated by divine fiat, Cincinnati Bell has actually taken this cash flow and reinvested over the past fifteen years to create Cincinnati Bell Information Services (CBIS) and MATRIXX Marketing.

CBIS provides billing and customer care services to cellular and PCS providers in North America. Whereas CSG Systems and UCSC International own the cable provider's business, CBIS controls the cellular phone companies, with 23 of the 25 largest among its customer base as of late 1996. AT&T, 360 Degrees Communications, Ameritech, and Comcast Cellular account for 70% of the company's revenues. Despite this concentration, there is not as much business risk as there might otherwise seem. The AT&T relationship has been contracted out to 1999, Comcast Cellular is locked up until 2003, and 360 Degrees (formerly Sprint Cellular) is booked all the way to 2006. Many customers have also purchased CBIS software to run in their own customer service centers, a business that competes with Saville Systems and LHS Group. For growth, the company has been looking at the emerging PCS industry and has contracts of varying duration with PCS Primeco, AT&T, and Tele-Communications Inc.

Cincinnati Bell's smallest business, and perhaps its fastest growing, is MATRIXX Marketing. Profiled in this month's Fast Company, MATRIXX develops long-term, strategic outsourcing relationships with large clients in the telecommunications, broadcasting, financial services, consumer products, and other direct response industries. Two of its more high-profile accounts include DirectTV and Sony's Playstation. Employees of MATRIXX actually view themselves as employees of the partner company, going as far as wearing uniforms or having the service centers located near the main customer. MATRIXX is also getting plugged into services being developed by CBT and CBIS, like CBT's FUSE online helpdesk service and providing the customer service people behind CBIS's data processing services.

Knowing all this about the businesses, how does one value the company? The easiest way is to look at the holding company as one aggregate beast and value those earnings. Zack's consensus estimates call for Cincinnati to earn $1.47 per share this year and $1.69 per share next year. With the company trading at 18.1 times this year's numbers and 15.8 times next year's, growing earnings at 15% per year with a 1.6% dividend yield, it is hard to call the company "cheap." However, there are other ways to view the company. Consider that CSG Systems sells at 6.1 times annualized sales with operating margins of only 5.1% on $41 million in sales last quarter. With CBIS generating 30.9% of Cincinnati Bell's sales and 29.1% of Cincinnati Bell's operating income, the company is effectively being valued at $1.1 billion (30% of Cincinnati Bell's market capitalization).

With $134 million in sales last quarter at a 19% operating margin, CBIS's valuation of 2.1 times sales compares favorably with CSGS -- although it is important to note that revenues are only growing half as fast. Needless to say, valuing each component rather than obsessing about the value of the whole company might actually allow one to come up with a higher valuation. As long as Cincinnati Bell hides the light of its various business units under the bushel of a holding company, it could well remain valued like SOUTHERN NEW ENGLAND TELECOMMUNCATIONS CORP.

CONFERENCE CALLS

HEILIG-MEYERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HMY)") else Response.Write("(NYSE: HMY)") end if %>
(804) 254-3939 -- replay

EASTMAN KODAK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %>
Earnings shortfall pre-announcement
(402) 398-4725 -- replay through 9/22

MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %>
(402) 220-1002 -- replay through 9/23

CABLETRON SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CS)") else Response.Write("(NYSE: CS)") end if %>
(402) 220-4881 -- replay through 9/29

09/23/97 (Tuesday)
MICRON ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MUEI)") else Response.Write("(Nasdaq: MUEI)") end if %>
(800) 846-0416 -- replay through 9/24

THIS WEEK'S CONFERENCE CALL SYNOPSES

ORACLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> Call
EASTMAN KODAK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> Call

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The Digital World @ Half Price!

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Randy Befumo (TMF Templr), a Fool
Fool Plate Special

Dale Wettlaufer (TMF Ralegh), another Fool
Heroes & Goats

Brian Bauer (TMF Hoops), and yet another Fool
Editing