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HEROES

Oil & gas exploration and production firm Anadarko Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: APC)") else Response.Write("(NYSE: APC)") end if %> jumped $3 7/16 to $56 5/16 after the company advised investors that it expects to report record financial results for 1997. The company said it exceeded its goal of producing 44 million barrels of energy equivalent (all substances that can be taken from an oil well, including crude, natural gas liquids, and condensates) in 1997, and that its exploration and development activities in the coming year should yield new reserves equal to three times its production. Anadarko expects to exceed Q4 EPS estimates of $0.60. PaineWebber natural gas analyst Ron Barone estimates that Anadarko can double its current cash flow by the year 2000, which currently puts the company at 5 times that estimated year 2000 cash flow of $11.30 per share and gives the stock a target price of $113 by that time. Anadarko's enormous gas reserves have insulated it somewhat from fluctuations in crude prices and also helped earn the company a reiterated "strong buy" from BT Alex. Brown today.

Gallium arsenide (GaAs) integrated circuit maker Vitesse Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VTSS)") else Response.Write("(Nasdaq: VTSS)") end if %> gained $5 5/16 to $42 1/2 after reporting Q1 EPS of $0.27, beating estimates by $0.01. In addition, the company posted record revenues; its top line grew by 59% compared with the year-ago period and was 12% better than last quarter, coming in at $34.7 million. Important for the industry, the company reported that all three of its business segments -- telecom, datacom, and test equipment "showed significant growth in both revenues and bookings" during the period. This announcement also boosted the fortunes of the two other players in the GaAs triumvirate, Anadigics Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ANAD)") else Response.Write("(Nasdaq: ANAD)") end if %> rose $2 3/16 to $27 3/16 and Triquint Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TQNT)") else Response.Write("(Nasdaq: TQNT)") end if %> added $1 1/4 to $24 1/4. These companies make semiconductor chips utilizing wafers made from gallium arsenide, as opposed to cheap and ubiquitous silicon. Though more difficult and expensive to work with, GaAs yields substantial performance improvements at higher frequencies, operating faster and generating less heat than conventional silicon.

Prognosticators projecting that 1998 will be a watershed year for consumer online commerce have gained some adherents in the past two weeks as Internet-related businesses have seen their stock prices soar. Net commerce in 1997 nearly tripled from the $706 million level in 1996, and forecasts by International Data Corp. state that the Internet is on track to reach 200 million users by the year 2000. Today, search engine concerns were bolstered by the announcement that Yahoo <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %>, up $3 9/32 to $65 25/32, had teamed up with MCI Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %> to form a new "online service" expanding Yahoo's existing offerings to include chat, e-mail, and other features. Lycos Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> gained $2 1/8 to $36 3/8, Infoseek Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> rose $9/16 to $10 11/16, and Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> picked up $3 5/16 to $33 3/16. Another self-proclaimed rival to America Online, CNET Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNWK)") else Response.Write("(Nasdaq: CNWK)") end if %> was up $1 1/2 to $26 after announcing an online service alliance with Snap! Online. Online auctioneer Onsale Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ONSL)") else Response.Write("(Nasdaq: ONSL)") end if %> gained $2 7/8 to $17 5/8 after announcing its 3-millionth online bid, and online music retailer N2K Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NTKI)") else Response.Write("(Nasdaq: NTKI)") end if %> continued its climb, rising $2 1/4 to $23 5/8 after earlier reporting that Q4 revenues will rise to $4.7 million.

QUICK TAKES: Pharmaceutical company Neurex Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NXCO)") else Response.Write("(Nasdaq: NXCO)") end if %> gained $3 11/16 to $17 3/4 after reporting on favorable Phase III clinical trial results for its painkiller Ziconotide in neuropathic applications... VCR programming systems company Gemstar International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GMSTF)") else Response.Write("(Nasdaq: GMSTF)") end if %> rose $4 5/8 to $28 5/8 after signing a cross-licensing agreement with Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> under which the two parties will integrate features of each other's software into their respective systems... Geron Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GERN)") else Response.Write("(Nasdaq: GERN)") end if %> jumped $4 3/8 to $14 3/8 after the biotech company announced that it will publish a study detailing its work on introducing telomerase into human cells in the January 16th issue of Science... Industrial and medial laser maker Excel Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XLTC)") else Response.Write("(Nasdaq: XLTC)") end if %> added $1 1/4 to $10 7/8 after the company announced that its board of directors has authorized a share buyback of up to two million shares.

Adtran Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADTN)") else Response.Write("(Nasdaq: ADTN)") end if %> gained $3 7/16 to $27 7/16 after the datacom equipment company reported a 6.4% increase in Q4 revenues and EPS of $0.32, which surpassed the mean estimate of $0.30 and rose 10% from last year's results... Salomon Smith Barney raised its rating on remote access and broadband switching products company Ascend Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> to "buy" from "neutral," sending that company's shares up $1 11/16 to $28 5/8... Oil and gas driller and oil services company Parker Drilling <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PKD)") else Response.Write("(NYSE: PKD)") end if %> gained $1 3/8 to $10 7/8 after reporting Q1 1998 EPS of $0.14, beating with a stick the mean First Call estimate of $0.09. Quarterly revenues of $109.9 million more than doubled from last year.

U.S. Office Products Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OFIS)") else Response.Write("(Nasdaq: OFIS)") end if %> rose $2 13/16 to $20 9/16 after the office supply company announced that it will implement a "strategic restructuring plan," which includes a tender offer for 37 million shares (approximately 28% of shares outstanding) at $27 per share and a spin-off of its Corporate Travel Services, Education, Print Management and Technology Solutions Divisions into four separate, publicly traded companies... Aging industry bellwether Motorola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> gained $3 to $57 1/2 after reporting late on Monday Q4 EPS of $0.65 versus estimates for $0.68... Appliance maker Whirlpool Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHR)") else Response.Write("(NYSE: WHR)") end if %> jumped $3 3/8 to $53 7/8 after announcing that it sees Q4 earnings in line with estimates.

Agouron Pharmaceuticals (Nasdaq; AGPH) shot $2 3/4 higher to $33 after reporting Q2 EPS of $0.15, compared with a loss of $0.46 per share in its prior year period... Roofing products maker Bird Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BIRD)") else Response.Write("(Nasdaq: BIRD)") end if %> rose $31/32 to $5 11/32 after Certain Tweed Corp. agreed to purchase the company for $43.5 million in cash and debt... Software company Baan Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BAANF)") else Response.Write("(Nasdaq: BAANF)") end if %> gained $1 3/4 to $33 1/2 after announcing an agreement to offer a bundled hardware and software product with Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> in order to minimize the risk and complexity of implementing enterprise-wide solutions. Compaq was also up $3 1/8 to $59 1/8... Tax automation software company Computer Language Research <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLRI)") else Response.Write("(Nasdaq: CLRI)") end if %> gained $8 7/16 to $22 3/16 after agreeing to be bought by Thomson Corp. for $325 million, or $22.50 a share.

Wire bonder maker Kulicke & Soffa <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KLIC)") else Response.Write("(Nasdaq: KLIC)") end if %> gained $1 1/8 to $18 1/4 after receiving an order from Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LU)") else Response.Write("(Nasdaq: LU)") end if %>... Lattice Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LSCC)") else Response.Write("(Nasdaq: LSCC)") end if %> rose $4 1/4 to $46 1/2 on posting Q3 EPS of $0.57... The holding company for Sallie Mae, SLM Holding Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLM)") else Response.Write("(NYSE: SLM)") end if %>, gained $2 5/8 to $40 9/16 after reporting Q4 EPS of $0.75, beating estimates of $0.71.

GOATS

Corporate Express <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CEXP)") else Response.Write("(Nasdaq: CEXP)") end if %> was slammed for $3 1/16 to $8 5/16 after the world's largest office products and services distributor advised analysts that it anticipates EPS growth of 25% per year over the next decade. Two brokerages submitting five-year growth estimates to First Call project that the company will grow per-share earnings at 40% per year. Over the coming two years the company plans on making investments in technology and enhancing its brand name, which some investors fear will hamper the company's ability to even achieve 25% earnings growth. Over the last five years, First Call indicates compounded annual earnings growth of 42%, so 25% yearly growth is somewhat of a letdown and is a major change in tack from a strategy in which the company has grown through acquisitions to one based more on organic factors. After the bell yesterday, Corporate Express reported Q3 EPS of $0.19, just below the mean estimate of $0.20.

Pharmaceuticals contract manufacturer ChiRex Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHRX)") else Response.Write("(Nasdaq: CHRX)") end if %> lost $2 1/8 to $11 5/8 after pre-announcing Q4 EPS of $0.01 to $0.03, well below the current mean estimate of $0.16 due to new product start-ups and a write-down of a inventory that is a component of the Fen-Phen diet drug combination. Revenues for the quarter will be flattish at $25 million. For the full year, a 3% increase in revenues of $93 million is expected.

Central Vermont Public Services Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CV)") else Response.Write("(NYSE: CV)") end if %> dropped $1 1/8 to $13 7/16 after the company reported in an 8-K filed yesterday that it will vigorously protest a New Hampshire Public Utility Commission order for the company's Connecticut Valley Electric unit to change its accounting standards, which will hurt the company's shareholders' equity position and throw the company into violation of debt covenants. Central Vermont says the order will force it to operate in a manner that is inconsistent with every other utility in the Granite State. In addition to filing a request for injunction against the order in a federal court, Central Vermont will seek to win reimbursement from the government for a $45 million write-down of its power generating assets, representing the stranded costs of operating its Connecticut Valley unit. The New Hampshire PUC also ordered the company's subsidiary serving residents of New Hampshire to temporarily freeze its rates pending hearings on price structures.

QUICK CUTS: Database software company Versant Object Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VSNT)") else Response.Write("(Nasdaq: VSNT)") end if %> was clouted for $4 1/4 to $5 1/8 after pre-announcing a Q4 loss of $0.12 to $0.15 per share. The three analysts surveyed by First Call were looking for EPS of $0.10 for the quarter and $0.07 for the year... Auspex Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASPX)") else Response.Write("(Nasdaq: ASPX)") end if %> lost $1 3/8 to $7 7/8 after the server and data management software company announced it will report a Q2 loss of $0.28 to $0.32 per share after a write-down of disk drive inventory. The company expects revenues for the quarter to fall as low as $42 million, down 14.5% from last year's second quarter... Following a fall in the shares of pharmaceutical contract manufacturer ChiRex Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHRX)") else Response.Write("(Nasdaq: CHRX)") end if %>, contract research organization Premiere Research Worldwide <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRWW)") else Response.Write("(Nasdaq: PRWW)") end if %> slid $1 1/2 to $7 1/2... Auto dealership company United Auto Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UAG)") else Response.Write("(NYSE: UAG)") end if %> declined $2 1/4 to $20 after the company announced a Q4 pre-tax loss of $39 million to $45 million for the divestiture of nine dealership franchises and other restructuring moves. United has been bouncing around on no news lately without comment from the company.

FOOL ON THE HILL
An Investment Opinion by Jim Surowiecki

Scrambling for Pigskin

It probably makes sense to think of the National Football League as milk. Milk, after all, tends to be what convenience stores call a "loss leader." The stores charge less for the milk than they should on a pure cost basis because they hope that if you come in to buy milk, you'll also pick up cigarettes, bread, and a Slurpee, and that you'll decide to fill up your car's gas tank as well. Everyone buys milk, so it's a good choice as a loss leader. (For similar reasons, supermarkets put the dairy case at the back of the store, so you'll have to walk past many other tempting products to get that half-gallon of skim.) The same principle seems to be behind the major TV networks' willingness to shell out billions of dollars for the rights to televise NFL games at a time when NFL ratings are the lowest in history and when the league is threatened by the prospect of labor turmoil before the end of the decade. We may not make back our investment on the NFL per se, the networks seem to be saying, but it'll bring people into the store.

That's the easiest way to explain the $4.4 billion deal the Fox network signed with the NFL on Monday, renewing Fox's contract to televise NFC games and three Super Bowls over the contract's eight years. At $550 million a year, the deal represents a 39% annual increase over the network's current arrangement, even though Fox's NFL ratings dropped 5% last year. (One can only imagine what the league would have demanded if ratings had actually risen.) And the deal is even more questionable than the initial numbers suggest, since the NFL has the right to renegotiate the contract after five years if it believes it can get a more favorable deal, while Fox has no such right.

Still, there was essentially no chance that Fox, which is owned by Rupert Murdoch's News Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NWS)") else Response.Write("(NYSE: NWS)") end if %>, would not sign the deal. Its successful bid for NFC rights four years helped catapult it into the public eye and to legitimize its ambition to be a fourth network. Fox's Sunday-night lineup, which features both The Simpsons and The X-Files, is the center of its programming and marketing strength, and the NFL provides a nice lead-in to those shows. More importantly, perhaps, Fox felt the need not to return to second-class status. While the network remains a long way away from profitability and still regularly runs fourth in the ratings -- with the exception of its few hits -- Fox has successfully used its TV programming as a platform for both marketing efforts and for branching out into other media, and the NFL goes a long way to institutionalize its credibility.

Interestingly, something similar seems to be at work in the decision of CBS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CBS)") else Response.Write("(NYSE: CBS)") end if %> to spend $4 billion over the next eight years for the right to televise AFC games. CBS has, of course, been out of the NFL loop for the last four years, having been outbid by Fox for NFC rights back in 1994. And over the course of those four years, CBS has watched its brand image erode and its ad rates decline as it earned a reputation as the network for old people. (CBS actually finished first in the ratings race in 1997, but it generates far less advertising revenue than either NBC or ABC because its audience is skewed away from that 18-to-54 demographic that advertisers love so much.) The network, under the leadership of CEO Michael Jordan and former radio mogul Mel Karmazin, who heads up the CBS Station group, is in the process of reinventing itself as a pure media company by dumping all the non-media assets of what was once Westinghouse, which actually bought CBS in 1994. A crucial part of that reinvention was the re-entry into the NFL market.

CBS' path to the AFC rights was cleared when NBC -- which is owned by General Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> -- chose to bid for the rights to "Monday Night Football" against ABC, which is owned by Disney <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %>. It was a path that the network evidently felt it had to take, both because televising football guarantees it access to the young, male viewers that it's had a difficult time courting otherwise, and because NFL games are a potential bonanza for the twelve local CBS TV stations that the company owns. Local advertising revenue from football games tends to be massive, and Karmazin, who oversees the stations, saw this as an opportunity that could not be passed up. At the same time, it's unclear that investors should really expect the network to reap a profit on the arrangement. Shelling out $500 million a year is an enormous up-front cost to pay for a company that reaped just $310 million in profits from all of its media operations last year. And given the stock's 50% rise in 1997, leaping on the CBS bandwagon may not be the best strategy.

Nonetheless, as part of Jordan's and Karmazin's broader strategy to turn the CBS brand name back into a major asset, purchasing the NFL rights represents a rational decision to expand the network's long-term reach. Without ascribing too much rationality to the networks as a whole, the fact that all four of them have vigorously pursued the NFL suggests that CBS' bid was not out of line. If NBC, for instance, loses the bidding for "Monday Night Football" -- on top of Seinfeld's disappearance -- that network's future will suddenly become very cloudy.

In a sense, what we're seeing is the inevitable result of a world in which the networks' share of the pie is steadily shrinking, and each remaining piece of the pie therefore becomes ironically more valuable, even if smaller. The ability to reach a mass audience is the only genuine value the networks have over their smaller competitors in cable. And that means that any event with the ability to draw a guaranteed mass audience is impossible to overlook, which is why the National Football League finds itself in the enviable position of being less popular than ever and yet more expensive.

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Randy Befumo (TMF Templr), a Fool One
Dale Wettlaufer (TMF Ralegh), Fool Two
Alex Schay (TMF Nexus6), Fool Three
Jim Surowiecki (TMF Cinder), Fool Four
Contributing Writers

Brian Bauer (TMF Hoops), Fool Five
Editor