Energy concern OCCIDENTAL PETROLEUM (NTSE: OXY) gushed $3 1/16 higher
to $29 7/8 on the strength of several announcements. Occidental agreed to
purchase the Elk Hills oil and natural gas field from the Department of Energy
for $3.65 billion in cash. Occidental claims the acquisition will immediately
increase its net domestic production by 46,000 barrels of oil per day and
93 million cubic feet of gas per day, almost doubling the company's existing
oil production and increasing domestic gas production by about 20%. The company
also announced that it will repurchase up to 40 million shares of its common
stock. Finally, Occidental said it plans to divest itself of MidCon Corp.,
its natural gas pipeline subsidiary, in part to fund its other two announcements.
The company says it will raise "at least" three billion dollars through the
divestiture and apply two thirds of it toward the Elk Hill acquisition and
the balance to fund the share repurchase.
Computer components, software, and services company DIGITAL EQUIPMENT
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DEC)") else Response.Write("(NYSE: DEC)") end if %> rose $4 to $48 3/4. Rumors surfaced that the company was in
negotiations with INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> to sell its Alpha chip technology
to the dominant chipmaker for $1.5 billion, settling an ongoing patent dispute
begun in May. According to The Wall Street Journal, Intel would acquire
Digital's Alpha-making facilities for $650 million and would get patent rights
from Digital for another $200 million. Both DEC and Intel declined to comment.
Despite the hype engendered by computer magazine bench testing, the two
companies'
manufacturing
operations are tailored for different end markets. Digital's hope that the
combination of Alpha and Microsoft's Windows NT would transform the chip
into a volume platform never materialized. DEC's faltering relations with
Microsoft clearly paves the way for Intel to make a renewed try with the
architecture.
QUICK TAKES: Shares of CEL-SCI CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: HIV)") else Response.Write("(AMEX: HIV)") end if %> rose $1 7/8
to $10 as the immunotherapy company reported positive results in an ongoing
clinical study of its potential cancer treatment drug Multikine, developed
specifically for head and neck cancer patients... Donald R. Loback resigned
as a Director, Chairman and CEO of CONTINENTAL HOMES HOLDING CORP.
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CON)") else Response.Write("(NYSE: CON)") end if %>; shares of the home financing company were up $3 5/16 to $32
15/16 on the day... The parent company of Coast Federal Bank, COAST SAVINGS
FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSA)") else Response.Write("(NYSE: CSA)") end if %>, soared $4 13/16 to $58 13/16 after it was announced
that H.F. AHMANSON & CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AHM)") else Response.Write("(NYSE: AHM)") end if %> will acquire the company
in a $900 million stock deal that will create the second-largest savings
and loan in the country... Freight and package transporter CALIBER SYSTEMS
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CBB)") else Response.Write("(NYSE: CBB)") end if %> surged $3 15/16 to $59 1/4 after announcing that a specially
created holding company called FDX Corp. will acquire the company. The new
holding company will be the product of a deal between FEDERAL EXPRESS
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDX)") else Response.Write("(NYSE: FDX)") end if %> and Caliber in which Caliber shareholders will receive 0.8
shares of FDX Corp. stock in exchange for each Caliber System share.
US AIRWAYS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: U)") else Response.Write("(NYSE: U)") end if %> ascended $3 1/16 to $47 1/16 after J.P.
Morgan raised its rating on the airline to "buy" from "market perform" based
on the earnings momentum generated after a tentative agreement with its pilots...
Practice management software company INFOCURE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: INC)") else Response.Write("(AMEX: INC)") end if %> gained
$3/8 to $6 1/2 after it announced that it has reached an agreement to acquire
Pace Financial Corp. for a combination of cash and stock... Oil rig company
TRANSOCEAN OFFSHORE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RIG)") else Response.Write("(NYSE: RIG)") end if %> gushed $2 7/8 to $52 3/16 on the strength
of a Rauscher Pierce upgrade of the company to its "focus group buy" from
"market outperform"... Speaker maker CAMBRIDGE SOUNDWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HIFI)") else Response.Write("(Nasdaq: HIFI)") end if %> turned it up $2 7/8 to $10 after announcing that it is engaged in
discussions with CREATIVE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CREAF)") else Response.Write("(Nasdaq: CREAF)") end if %> regarding the
possible acquisition of the company by Creative.
BancAmerica Robertson Stephens research analyst Wade King today initiated
coverage of medical device company BIONX IMPLANTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BINX)") else Response.Write("(Nasdaq: BINX)") end if %>
with a "buy" rating. Bionx gained $4 1/4 to $26... Network test and performance
monitoring company APPLIED DIGITAL ACCESS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADAX)") else Response.Write("(Nasdaq: ADAX)") end if %> added $1
3/8 to $9 3/8 after announcing that it has entered into a joint development
agreement with Northern Telecom to develop SONET network products for the
telecommunications industry... Designer of specialized implants for the repair
of vascular systems, ENDOVASCULAR TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EVTI)") else Response.Write("(Nasdaq: EVTI)") end if %>, rose
$2 5/8 to $19 after medical device giant GUIDANT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GDT)") else Response.Write("(NYSE: GDT)") end if %>
reached a definitive agreement to acquire the company in a stock transaction
valued at about $170 million.
LA QUINTA INNS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LQI)") else Response.Write("(NYSE: LQI)") end if %> fell $4 7/8 to $18 1/8 after pre-announcing
Q3 EPS (before extraordinary items) of $0.29 to $0.30, below estimates of
$0.36. For the quarter, revenues grew 13.1% and room occupancy expanded by
1.5% to 75%, a pretty good level. Although earnings before interest, taxes,
depreciation, and amortization (EBITDA) grew 15%, those results were below
expectations, prompting downgrades from CS First Boston, Morgan Stanley,
and Lehman Brothers. One reason why analysts downgraded the stock today was
the company's guidance that a number of its Inns & Suites hotels will
not be open until later this year, dampening fourth quarter forecasts for
earnings and revenue gains.
SILICON GRAPHICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGI)") else Response.Write("(NYSE: SGI)") end if %> slumped $8 13/16 to $18 1/16 after the
maker of high-powered servers and workstations,
MIPS chips for game machines, and
other consumer electronics, software, and supercomputers today announced
that it will record flat year-over-year revenues for the first quarter of
$760 million and a loss of $0.20 per share, missing estimates of a profit
of $0.21 per share. The company said server sales were lower than expected
in part due to a very strong June quarter and in part due to longer selling
cycles associated with closing large enterprise contracts. Some believe that
Silicon Graphics isn't doing well with its Cray acquisition, that its costly
software development efforts have been so far fruitless, and that its lack
of server products for Microsoft NT (which to some extent can be blamed on
SGI's distaste for Microsoft) have hurt the company and will continue to
hurt it until the company's direction becomes clear in these departments.
QUICK CUTS: E*TRADE GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGRP)") else Response.Write("(Nasdaq: EGRP)") end if %> fell $7 9/16 to $39 5/16
as rival AMERITRADE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMTD)") else Response.Write("(Nasdaq: AMTD)") end if %> cut its commissions for online
trading to $8 per order... Information and communications systems integrator
ALLSTAR SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ALLS)") else Response.Write("(Nasdaq: ALLS)") end if %> was dragged down $1 5/8 to $5 5/8 after
pre-announcing that Q3 EPS would come in at $0.08 to $0.10, well below the
mean First Call estimate of $0.18... GT INTERACTIVE SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GTIS)") else Response.Write("(Nasdaq: GTIS)") end if %> lost $1 3/8 to $10 15/16 after announcing that it will acquire
MICROPROSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MPRS)") else Response.Write("(Nasdaq: MPRS)") end if %>, formerly Spectrum Holobyte, in a stock
swap valuing each MicroProse share at 0.7 shares of GT Interactive... Telephone
triage and health information services firm ACCESS HEALTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ACCS)") else Response.Write("(Nasdaq: ACCS)") end if %> declined $3 1/2 to $36 1/8 following Friday's nearly $4 rise on announcing
a five-year strategic partnership with OXFORD HEALTH PLANS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %>.
OREGON STEEL MILLS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OS)") else Response.Write("(NYSE: OS)") end if %> fell $1 1/2 to $26 1/2 after steel workers
at a subsidiary rejected a contract offer on Friday and went on strike...
MERCURY AIR GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: MAX)") else Response.Write("(AMEX: MAX)") end if %> was hamstrung for a $1 loss to $6 3/8
after one of the aviation services company's customers, Western Pacific Airlines,
filed for Chapter 11 bankruptcy owing Mercury $2 million in accounts payable...
Specialty chemicals company BALCHEM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: BCP)") else Response.Write("(AMEX: BCP)") end if %> slid $1 1/4
to $16 1/2 after its CEO resigned... LAM RESEARCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LRCX)") else Response.Write("(Nasdaq: LRCX)") end if %> lost
$2 3/8 to $43, KLA-TENCOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KLAC)") else Response.Write("(Nasdaq: KLAC)") end if %> fell $1 1/8 to $66 5/8, and
APPLIED MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMAT)") else Response.Write("(Nasdaq: AMAT)") end if %> was dragged down $1 3/8 to $96 1/2
after KULICKE & SOFFA INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KLIC)") else Response.Write("(Nasdaq: KLIC)") end if %> issued earnings
guidance that made investors in semiconductor capital equipment companies
worry about order push-outs. For more on this story, see today's Fool on
the Hill.
Hitting a new 52-week low, customer service software company SCOPUS
TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SCOP)") else Response.Write("(Nasdaq: SCOP)") end if %> fell $2 1/8 to $11 7/8 on announcing it will
miss Q2's earnings estimate of $0.14 with EPS of $0.04 to $0.06... IMNET
SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IMNT)") else Response.Write("(Nasdaq: IMNT)") end if %> dropped $2 5/8 to $18 13/16 after the information
management software company projected a Q1 loss of $0.29 to $0.32 per share,
missing estimates of $0.17 per share because "[s]everal significant new and
add-on contracts were not completed because of the negative publicity surrounding
the announcement last week of the delayed filing of [the company's] Form
10-K"... Casino equipment manufacturer PAUL-SON GAMING <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSON)") else Response.Write("(Nasdaq: PSON)") end if %>
lost $3 1/8 to $20 1/4 after the company said it is looking into strategic
alternatives. Some investors took this to mean that this quarter isn't looking
so hot.
FOOL
ON THE HILL
An Investment Opinion by Randy
Befumo
A Miss at K&S -- Kulicke & Soffa Puts Out a Warning
[Correction: On Friday in Fool on the Hill we said that Microsoft
had invested in Cablevision. For some reason, the whole C- thing threw us
late Friday. Microsoft invested in Comcast, as anyone could have figured
out if they had followed the link back to the original Comcast article. Sorry
for the confusion.]
Demonstrating for the first time in months that the share prices of major
semiconductor capital equipment manufacturers can go down, KULICKE &
SOFFA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KLIC)") else Response.Write("(Nasdaq: KLIC)") end if %> plunged $8 1/8 to $39 today on an earnings warning.
Although in many ways the company maintains it had a strong quarter, management
believes that earnings for next quarter will fall below the $0.59 per share
consensus estimate. Talk of customers delaying recent orders caught jittery
momentum investors by surprise and many decided a retreat was the better
part of valor. Perhaps the recollection of Kulicke & Soffa forecasting
a collapse in the entire group evokes too painful a memory for some.
By most measures, Kulicke & Soffa booked
a pretty solid fourth quarter. Bookings slightly exceed sales for the fourth
quarter running. This quarter also marked the second sequential quarter where
the wafer assembly equipment maker shipped more than 1,000
wire bonders. Unfortunately,
analysts got a little too optimistic with next quarter's estimates and the
forecasts of $0.59 EPS do not seem attainable. Kulicke's press release explained
this by saying that "some customers have scheduled many of the machines just
ordered for delivery later in the winter," raising the ugly spectre of
"push-outs." Although Kulicke made reassuring noises about customer demand,
the last time a number of customers "pushed out" delivery dates it presaged
a drop in demand.
Used to make electrical connections between the die and a substrate, wire
bonders are a critical component in the assembly portion of making a
semiconductor. The machines "bond" gold or aluminum wire to the die and substrate
using thermal compression or ultrasonic welding. Wire bonders come in a variety
of forms and configurations according to where they are bonding the wire
on the chip, and overall they are a critical component in manufacturing high-end
semiconductor chips. Large customers for Kulicke wire bonders include Intel,
Taiwan Semiconductor, and Advanced Semiconductor Engineering. Kulicke dominates
the market for these products, calling itself the largest maker of semiconductor
assembly equipment in the world.
As Kulicke's sales are an excellent barometer of assembly equipment demand,
today's announcement is being taken as a potential negative for the group.
Although prices on shares of semiconductor capital equipment makers have
been racing up for the last six months, this has been mostly because investors
are expecting a recovery over the next few years on the scale of past recoveries.
Just as the last downturn was not nearly as ugly as most anticipated, contrarian
thinking in the group holds that the recovery will not as spectacular as
past runs. Should demand fail to meet expectations, the valuations of many
of the major capital equipment manufacturers could contract.
As always, a company-specific explanation also exists. "Intel has decided
to convert to flip chip assembly processes and informed K&S they would
be scaling down purchases beyond their current backlog," said Carl Johnson
of Infrastructure. "Lead times for assembly
equipment are very short and volatile -- typically six to eight weeks." With
some of Kulicke's forecasted demand disappearing overnight, projected bookings
contracted and earnings took a hit as a result. Johnson's picture was of
Kulicke hitting a normal bump in the manufacturing road -- not anything ominous
for the group as a whole. Johnson stressed demand for test equipment from
companies like TERADYNE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TER)") else Response.Write("(NYSE: TER)") end if %> and ELECTROGLAS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGLS)") else Response.Write("(Nasdaq: EGLS)") end if %> remains strong. Third quarter results for the group as a whole will
be very instructive, as they will show whether the recent momentum will continue
or demand will level off to a 16% annual clip, the long-term compound annual
growth rate for semiconductor orders from 1976 to 1996.
10/09/97 (Thursday)
ECHLIN, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ECH)") else Response.Write("(NYSE: ECH)") end if %>
(800) 683-1535 (code: refocus) -- replay through 10/17
10/09/97 (Thursday)
ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %>
(800) 475-6701 (code: 358559) -- replay through 10/17
WE
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Randy Befumo (TMF Templr), a Fool
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Dale Wettlaufer (TMF Ralegh), another
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