CHECK POINT SOFTWARE TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHKPF)") else Response.Write("(Nasdaq: CHKPF)") end if %> jumped $10 1/8 to $43 5/8 after reporting a 179% increase in Q3 revenues and a 220% rise in EPS of $0.32. Analysts were looking for EPS of $0.19. The company said sales of its encryption products to create Virtual Private Networks for secure transactions, which allow companies a cheaper alternative to Electronic Data Interchange networks to deal with vendors and customers, were especially brisk. Prudential Securities raised its rating on the dominant provider of network firewall software to "buy" with a 12-month price target of $42. Oops, it already reached that price point today.
Network analysis software company CONCORD COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CCRD)") else Response.Write("(Nasdaq: CCRD)") end if %> jumped $6 5/8 from its IPO price of $14 to close at $20 5/8 and at a market cap of $270.5 million. The company sold 2.3 million shares and insiders cashed out on 600,000 shares, netting the company somewhere in the neighborhood of $30 million. For the trailing 12 months, Concord has $13.2 million in revenues and $6.9 million in losses, or a loss of $0.60 per primary share. The company's software is used for local area and wide area network operations with customers such as America Online, Ameritech, MCI, AT&T, and Morgan Stanley highlighting a prestigious list of companies using its products.
Former Arizona Stock Analysis company ADFLEX SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AFLX)") else Response.Write("(Nasdaq: AFLX)") end if %> gained $2 7/32 to $24 25/32 after the manufacturer of flexible circuitry solutions reported a 49% jump in third quarter revenues and EPS of $0.29 versus the mean estimate of $0.25. Gross margin increased by 2.2 percentage points due to the company's moving of a production facility from the U.K. to Thailand and expects gross margin to improve in coming quarters because of that move. With $45 million of product already slated for shipment in the coming quarter, Needham & Co. raised its rating on AdFlex to "strong buy" from "buy."
QUICK TAKES: EXIDE ELECTRONICS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XUPS)") else Response.Write("(Nasdaq: XUPS)") end if %> gained $6 5/16 to $28 9/16 after the maker of uninterruptible power supplies agreed to be acquired by British company BTR plc for $29 per share in cash. That beats by 45% an offer received from conglomerate DANAHER CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DHR)") else Response.Write("(NYSE: DHR)") end if %> earlier this year... Healthcare information systems company CERNER CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CERN)") else Response.Write("(Nasdaq: CERN)") end if %> picked up $3 15/16 to $28 5/16 on reporting a 40% increase in third quarter revenues and EPS of $0.13, beating estimates of $0.11... BOSTON BIOMEDICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BBII)") else Response.Write("(Nasdaq: BBII)") end if %> gained $1 3/8 to $8 after the maker of quality control kits of blood tests announced a contract worth approximately $3 million per year to supply ABX Hematology, Inc. with technical and field services.
Broadband wireless telecom services provider ADVANCED RADIO TELECOM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ARTT)") else Response.Write("(Nasdaq: ARTT)") end if %> advanced $1 1/2 to $10 3/8 after the company's board elected as CEO and Chairman Harry Hirsch, formerly CEO at the Williams Communications unit of THE WILLIAMS COMPANIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMB)") else Response.Write("(NYSE: WMB)") end if %>, a major provider of long-haul and satellite telecommunications services... UNIVERSAL ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UEIC)") else Response.Write("(Nasdaq: UEIC)") end if %> rose $1 7/16 to $10 1/16 after the maker of universal remote controls reported Q3 EPS $0.19, in line with estimates... Computer network integrator DAOU SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DAOU)") else Response.Write("(Nasdaq: DAOU)") end if %> added $2 3/4 to $28 1/8 on reporting Q3 revenues of $11.3 million and EPS before charges of $0.05, beating estimates of $0.04... Tools and consumer products company BLACK & DECKER CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BDK)") else Response.Write("(NYSE: BDK)") end if %> advanced $1 1/2 to $39 7/16 on reporting Q3 EPS of $0.60, in line with estimates.
RAYCHEM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RYC)") else Response.Write("(NYSE: RYC)") end if %> blasted $9 1/4 higher to $92 7/8 after the manufacturer of telecommunications and electronics products and specialty chemicals reported a 21% increase in EPS of $1.40 from ongoing operations... Auto and truck components manufacturer FEDERAL MOGUL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FMO)") else Response.Write("(Nasdaq: FMO)") end if %> added $3 3/4 to $45 after British company T&N plc agreed to be acquired by Federal Mogul for $42 1/8 per share in cash... Physician practice management firm MEDPARTNERS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MDM)") else Response.Write("(NYSE: MDM)") end if %> climbed $2 1/8 to $27 1/16 courtesy of Merrill Lynch, which named it a "Focus One" stock of the week... Specialty finance company DVI INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DVI)") else Response.Write("(NYSE: DVI)") end if %> was boosted $1 1/16 to $19 1/16 after Prudential Securities started coverage of the company with a "buy" rating... Data storage management software company LEGATO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LGTO)") else Response.Write("(Nasdaq: LGTO)") end if %> gained $4 1/8 to $37 1/8 on reporting Q3 revenues of $21.4 million, up from $14.5 million last year, and EPS of $0.23, up 44% over last year... Cancer treatment products producer THERAGENICS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THRX)") else Response.Write("(Nasdaq: THRX)") end if %> moved $3 1/16 higher to $47 1/16 on reporting record revenues and EPS of $0.20 for the third quarter and forecasting strong demand for its TheraSeed product in the fourth quarter.
Retailer SEARS ROEBUCK & CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: S)") else Response.Write("(NYSE: S)") end if %> fell $5 13/16 to $48 1/16 on reporting third quarter EPS of $0.76 before a gain (for the adoption of a new accounting standard), beating estimates by $0.01 a share. Despite this, "unseasonable" weather hurt retail sales and the company warned that it may not reach earnings growth above 10% in the coming quarter (expectations were for the mid-teens), due to increasing charge-offs in its credit card business. The company has perhaps more exposure to the consumer credit card segment than any other retailer, which has posed mounting risk over the last couple quarters, with Sears forced to increase its loan loss reserves (credit card provisions) by 85% over the last quarter. Another factor contributing to the decline was poor comparable-store sales of 2.2%, which were roughly half of expectations.
NEXTLEVEL SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NLV)") else Response.Write("(NYSE: NLV)") end if %> dropped $5 7/16 to $13 7/16 after the General Instruments spin-off said that its CEO had resigned and that it expects results for the rest of 1997 and for 1998 to be below investor expectations. After General Instruments Corp. was rent asunder and partitioned into GENERAL SEMICONDUCTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEM)") else Response.Write("(NYSE: SEM)") end if %>, COMMSCOPE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CTV)") else Response.Write("(NYSE: CTV)") end if %> and NextLevel, it was hoped that this would unlock the value of each enterprise. As the largest of the three and with product offerings in growth markets -- analog and digital cable television set-top boxes, cable modems, satellite television encoders and decoders, and telephone equipment -- NextLevel carried the weight of expectations. However, the cable industry foiled these plans due to "lower-than-anticipated technological upgrading." The company is mulling over the possibility of a spin-out or an outright sale of its money-losing (over $50 million in 1997) advanced telephone products unit, NextLevel Communications. For 1998, EPS is now expected to be in the range of $0.45-$0.50 a share, putting the company at 30 times forward estimates.
The Semiconductor Equipment and Materials International (SEMI) group said that the chip equipment industry posted a book-to-bill ratio (bookings to orders shipped) of 1.07 for the month of September, down from a revised August figure of 1.09. This means that $107 in orders were received for each $100 worth of products shipped. This measure, despite its faults, is used as an indicator of demand and apparently investors were running scared today. Semiconductor equipment maker APPLIED MATERIALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMAT)") else Response.Write("(Nasdaq: AMAT)") end if %> dropped $4 13/16 to $44 1/4, and KLA-TENCOR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KLAC)") else Response.Write("(Nasdaq: KLAC)") end if %> lost $4 3/16 to $62 1/4. Specialty semiconductor company LSI LOGIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LSI)") else Response.Write("(NYSE: LSI)") end if %> also fell, losing $3 to $24 on reporting a 3% sequential increase in Q3 EPS of $0.32.
QUICK CUTS: The largest independent distributor of residential central air conditioners, WATSCO INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WSO)") else Response.Write("(NYSE: WSO)") end if %>, fell $4 5/16 to $25 7/16 after Goldman Sachs removed the company from the firm's "recommended" list and now rates the stock a "market outperform"... COOPER TIRE & RUBBER CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CTB)") else Response.Write("(NYSE: CTB)") end if %> fell $2 3/4 to $23 1/4 after reporting 3Q EPS of $0.40... Microelectronics firm SGS-THOMSON N.V. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STM)") else Response.Write("(NYSE: STM)") end if %> fell $7 15/16 to $78 11/16 after being removed form Goldman Sach's "recommended" list... Integrated telecommunications company GTE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTE)") else Response.Write("(NYSE: GTE)") end if %> fell $3 1/4 to $44 3/4 on the heels of its cash offer for MCI; investors were concerned about the company's debt levels... APPLE COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> fell $2 5/16 to $21 1/2 after reporting Q4 revenues of $1.6 billion and a loss of $0.19 per share before a restructuring charge and the write-off of its purchase of the Mac OS license of Power Computing.
Biometric identification card systems maker VIISAGE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VISG)") else Response.Write("(Nasdaq: VISG)") end if %> face-planted for a $2 1/2 loss to $8 1/4 on reporting an 80% decline in Q3 EPS... BTG INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BTGI)") else Response.Write("(Nasdaq: BTGI)") end if %> fell $1 7/8 to $10 3/8 after the computer systems value-added reseller and consulting company reported another bad quarter of earnings, which fell to a loss of $0.27 per share, surprising analysts who were looking for earnings on the other side of zero at $0.33 per share... Flash memory maker SANDISK CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SNDK)") else Response.Write("(Nasdaq: SNDK)") end if %> was zapped for a $8 loss to $30 on announcing that it plans to issue an unspecified amount of debt or equity for capital expenditures and general corporate purposes... ANAREN MICROWAVE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ANEN)") else Response.Write("(Nasdaq: ANEN)") end if %> dropped $3 7/8 to $26 1/2 after the wireless communications products company reported a 52% increase in Q1 revenues and EPS of $0.17, up 240% over last year... Automotive parts maker DONNELLY CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: DON)") else Response.Write("(AMEX: DON)") end if %> screeched to a halt, falling $2 13/16 to $19 1/16 after reporting 1Q EPS of $0.10... Software services firm KEANE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: KEA)") else Response.Write("(AMEX: KEA)") end if %> fell $2 3/4 to $34 7/8 after posting 3Q EPS of $0.18.
FOOL ON THE HILL
An Investment Opinion by Randy Befumo
Compaq Crashes, Despite Record Gains
Although many computer-related companies were tossed about in late-day selling, no single discernible cause could be identified for the rout. It would be difficult to blame COMPAQ COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> for the turmoil. The global computer manufacturer reported robust profits early this morning and announced that it would begin paying a cash dividend for the first time ever. Unfortunately for shareholders, the stock closed down $4 5/16 at $72 15/16 today in spite of these record earnings. Although Intel's cautious guidance yesterday combined with Compaq's inability to shatter the highest earnings estimates may have weighed on the shares, investors should not fret unduly. The data fails to support any sign of a slowdown in the public's insatiable demand for personal computers.
Compaq Computer earned a record $0.71 EPS in the company's fiscal third quarter, net of a $0.06 per share charge for the acquisition of Tandem. This was three cents above consensus expectations but slightly below the most optimistic estimate of $0.73 EPS. The substantial earnings per share growth came from sales that grew at almost twice the rate of the industry and from Compaq's rigorous cost cutting. Revenues rose 36% during the quarter while EPS jumped 48%. Compaq's gross margins swelled by 1.2% to 27.5% when compared to last year, helping to magnify the gain on sales in spite of the fact that the company's acquisition of Tandem put a halt to its previously announced share repurchase.
Compaq claimed its newfound religion of direct manufacturing was the reason for the jump in gross margins, eagerly detailing how it had embraced the asset management model pioneered by competitor DELL COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>. According to the company's press release, during the quarter Compaq only had 37 days worth of inventory on average. This compares quite favorably with the 42 days of inventory on average the company had in the same period a year ago. Days sales outstanding (DSO), a measure of how quickly the company is collecting on its debts, plummeted to 40 days from 60 days in the same period last year. Here, the company is closing in on industry leader Dell, which had around 37 DSO when it reported its last quarter. All in all, Compaq has been able to mightily improve its asset management, increasing the gross margins and generating more cash.
Compaq's balance sheet looks particularly solid. The company has $4.84 billion in cash and equivalents, up 81% from a year ago. This jump combined with the fact that accounting rules will not allow it to repurchase stock for some time due to the Tandem acquisition are what probably caused the company to initiate a dividend. Compaq will continue to look for other attractive acquisitions as it consolidates its position as the world's largest PC manufacturer. The company stated that it was comfortable with fourth quarter estimates of 81 cents per share and that it will split its stock two-for-one -- only three months after the company announced a five-for-two split. The combination of the dividend and the stock split indicate that management is confident that the next few quarters will be good. "If the Christmas season is anything like the back-to-school season, we are going to have an outstanding Christmas," quipped Compaq Chief Financial Officer Earl Mason.
Compaq's rosy outlook is a sharp contrast to the gloomy bout of selling that took chipmaker INTEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> down 8% yesterday. Off another $1 5/16 to $85 3/8 today, the chipmaker is suffering from Wall Street's disappointment with third quarter results and the company's lowered fourth quarter forecast. Although Intel had record unit volume for central processors, a much better indicator for end-user demand than fickle profits, some took this as a sign of weakness in the "technology" stocks, whatever that means. With companies like Dell, Compaq, and HEWLETT-PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> continuing to grow their sales at two to three times the rate of the overall PC market while using "just-in-time" inventory models, some disruption of normal order flow to Compaq is to be expected. Some Intel customers are imploding as the big three suck up their market share, while others like Compaq cut orders because it is keeping less inventory. Investors with a time horizon of longer than three months should probably take the recent volatility in stride, using it as a buying opportunity if they believe one company is particularly undervalued.
VISX INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VISX)") else Response.Write("(Nasdaq: VISX)") end if %>
(402) 220-4836 -- replay
SYBASE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYBS)") else Response.Write("(Nasdaq: SYBS)") end if %>
(402) 220-0111 -- replay
SUMMIT PROPERTIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SMT)") else Response.Write("(NYSE: SMT)") end if %>
(800) 633-8284 (code: 3148971) -- replay through 10/17 @ 5:00 pm EDT
FREDDIE MAC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FRE)") else Response.Write("(NYSE: FRE)") end if %>
(800) 475-6701 (code: 358103) -- replay through 10/17
INTEL CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>
(402) 220-0103 -- replay through 10/17
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
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
CCA PRISON REALTY TRUST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PZN)") else Response.Write("(NYSE: PZN)") end if %>
(402) 220-8775 -- replay through 10/17
USANA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USNA)") else Response.Write("(Nasdaq: USNA)") end if %>
(303) 804-1855 (code: 243759) -- replay through 10/18 @ 4:30 pm EDT
SUN MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %>
(800) 633-8284 (reservation # 3086520) -- replay through 10/19
(303) 248-1201 (reservation # 3086520) -- replay for international callers
IOMEGA CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %>
(800) 446-4927 -- replay through 10/20
CREE RESEARCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CREE)") else Response.Write("(Nasdaq: CREE)") end if %>
(800) 633-8284 (code: 3256078) -- replay through 10/21
PLATINUM TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PLAT)") else Response.Write("(Nasdaq: PLAT)") end if %>
(800) 642-1687 (code: 635624) -- replay through 10/21
DOCUMENTUM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DCTM)") else Response.Write("(Nasdaq: DCTM)") end if %>
(402) 344-1087 -- replay through 10/21
360 COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XO)") else Response.Write("(NYSE: XO)") end if %>
(402) 220-3014 -- replay until 10/22
AVALON PROPERTIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AVN)") else Response.Write("(NYSE: AVN)") end if %>
(800) 475-6701 (code: 359042) -- replay through 10/22
(320) 365-3844 (code: 359042) -- replay number for international callers
INTERMET INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INMT)") else Response.Write("(Nasdaq: INMT)") end if %>
(800) 475-6701 (code: 360026) -- replay through 10/23
(320) 365-3844 (code: 360026) -- replay for international callers
10/17/97 (Friday)
TRIBUNE COMPANY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRB)") else Response.Write("(NYSE: TRB)") end if %>
1-800-633-8284 (code: 3218583) -- replay from 10/17 @ 11:00 am EDT through 10/24
10/20/97 (Monday)
MICROSOFT CORPORATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>
(800) 456-5304 (code: 1017) -- replay through 10/22
THIS WEEK'S CONFERENCE CALL SYNOPSES
GREEN TREE FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GNT)") else Response.Write("(NYSE: GNT)") end if %> Call
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Randy Befumo (TMF Templr), a Fool
Fool on the Hill
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Heroes & Goats
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