DJIA 8936.57 -27.16 (-0.30%) S&P 500 1092.25 -1.77 (-0.16%) Nasdaq 1781.14 +3.05 (+0.17%) Value Line Index 943.03 -9.10 (-0.96%) 30-Year Bond 103 30/32 -3/32 5.84 Yield
Implantable medical device maker Medtronic <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MDT)") else Response.Write("(NYSE: MDT)") end if %> rose $2 15/16 to $53 15/16 after reporting fourth quarter earnings of $0.34 a share, up 13% from $0.30 in the year-earlier period and in line with analysts' estimates. Market share gains in its bradycardia pacemakers, which correct slow or irregular heartbeats, and growth exceeding 30% in sales of neurological devices resulted in 10% overall revenue growth (in constant-currency terms) for the quarter. In addition, the company's drug delivery revenues gained more than 40%, and its neurostimulator lines to treat chronic pain and tremors saw sales growth surpass 30%. However, Medtronic's vascular business, which is undergoing previously announced restructuring, posted a double-digit drop in sales. Company Chairman and CEO William George stated that new products will be the key to turning its vascular business around. Overall, he sees fiscal 1999 as a "strengthening" year for the company, which will put the company on stronger footing next year. Medtronic's earnings report led several brokerages, including Merrill Lynch, Lehman Brothers, Prudential Securities, and Paine Webber, to upgrade their ratings on the company's shares.
New Orleans-based electric company Entergy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ETR)") else Response.Write("(NYSE: ETR)") end if %> gained $1 13/16 to $25 5/8 following an unexpected announcement yesterday evening that Chairman and CEO Ed Lupberger, 61, will resign and act as a consultant to the company's new management. Credited with leading the company from the brink of bankruptcy in the 1980s and described as making a "transition to retirement," Lupberger said "now is the time for new leadership at the company." Although the resignation was a surprise, it comes after a series of senior management changes as Lupberger tried to recharge the underperforming power company -- the company's shares have dropped 20% this year, trailing the 28% return of the S&P's Utilities Index. The word is that dissatisfied institutional investors had been lobbying for a change. Bob Luft, a retired DuPont executive and a company director since 1992, will serve as chairman and acting CEO until a successor is found. Separately, Entergy increased production at its Grand Gulf reactor to 88% of full power from 58%. The reactor, which underwent a seven-week refueling and maintenance outage, was restarted last week.
QUICK TAKES: Internet and enterprise software company Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> gained $1 7/8 to $25 3/4 after yesterday posting better-than-expected breakeven Q2 results and today announcing an agreement with CNET <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNWK)") else Response.Write("(Nasdaq: CNWK)") end if %>, a media company that focuses on computers and technology, to create computing content and services for Netscape's new Computing & Internet channel on Netscape Netcenter. Other Internet companies that fell yesterday in advance of Netscape's earnings report recovered today. Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> rounded up $6 7/8 to $115 1/8; Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> jumped $5 to $57 7/8; Infoseek <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> rebounded $3 3/8 to $25 3/4; and Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> regained $7 to $57 3/8.
Telecommunications equipment company Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> rose $2 5/8 to $72 3/8 after introducing new data network products for Internet service providers that it says will cut maintenance costs by up to 40%...Materials management company Inland Steel Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IAD)") else Response.Write("(NYSE: IAD)") end if %> tacked on $1 1/4 to $27 5/8 after announcing it has signed a definitive agreement for the previously announced sale of its steel manufacturing subsidiary Inland Steel Co. to Ispat International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IST)") else Response.Write("(NYSE: IST)") end if %> for about $1.43 billion. Inland Steel Industries will then combine with its 87%-owned Ryerson Tull <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RT)") else Response.Write("(NYSE: RT)") end if %>, which operates metals and industrial plastics service centers...Analog and mixed-signal semiconductor manufacturer Semtech Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMTC)") else Response.Write("(Nasdaq: SMTC)") end if %> advanced $1 3/8 to $18 7/8 after reporting Q1 EPS of $0.30 (before charges), up from $0.22 for the prior-year period.
Following rival Dr. Solomon's Group's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SOLLY)") else Response.Write("(Nasdaq: SOLLY)") end if %> lead yesterday, enterprise network security and management company Network Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETA)") else Response.Write("(Nasdaq: NETA)") end if %> announced that it is offering all IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> antivirus customers a dollar-for-dollar credit towards an upgrade to its suite of network security products. Like Dr. Solomon's, Network Associates, which gained $2 13/16 to $62 7/8, is trying to take business away from IBM and Symantec <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYMC)") else Response.Write("(Nasdaq: SYMC)") end if %>, which recently announced a partnership on antivirus products... Supply chain management software firm i2 Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ITWO)") else Response.Write("(Nasdaq: ITWO)") end if %> jumped $5 1/2 to $60 9/16 after announcing that its shareholders have approved a previously announced 2-for-1 stock split payable on June 2.
Minimally invasive urological devices maker Urologix Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ULGX)") else Response.Write("(Nasdaq: ULGX)") end if %> added $1 1/8 to $9 3/4 after announcing that it has settled a lawsuit brought by BSD Medical Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BSDM)") else Response.Write("(Nasdaq: BSDM)") end if %> and TherMatrx Inc. and has paid the companies a total of $5 million... Advanced Fibre Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AFCI)") else Response.Write("(Nasdaq: AFCI)") end if %> leapt $3 7/16 to $37 7/16 after Piper Jaffray raised its rating on the telecommunications systems manufacturer to "strong buy" from "buy" based on the recent decline in the company's stock price. The brokerage kept its price target at $46... Marketing and communications company Think New Ideas <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THNK)") else Response.Write("(Nasdaq: THNK)") end if %> gained $3 5/16 to $21 5/16 after announcing that company co-founder Ron Bloom will become its chairman and CEO.
Computer and telecommunications systems and software developer Comverse Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMVT)") else Response.Write("(Nasdaq: CMVT)") end if %> moved up $2 5/8 to $46 1/4 after reporting Q1 EPS of $0.51, up from $0.34 for the year-earlier period. The mean estimate of analysts polled by IBES was $0.44... CNF Transport <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CNF)") else Response.Write("(NYSE: CNF)") end if %> climbed $1 3/4 to $40 7/16 after Merrill Lynch raised its near-term rating on the trucking, air freight, and global logistics management company to "buy" from "accumulate" while maintaining its long-term "buy" rating... Logistics and transportation company Ryder System <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: R)") else Response.Write("(NYSE: R)") end if %> chugged ahead $1 1/2 to $34 after yesterday announcing it is in talks with a number of interested parties to sell most of its business in the U.K.
Pharmaceutical company Centocor Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNTO)") else Response.Write("(Nasdaq: CNTO)") end if %> added $2 1/4 to $41 3/8 after Lehman Brothers reiterated its "buy" rating on the company, saying that the shares' weakness last week represents a buying opportunity and that there's a high chance that a FDA panel will recommend approval of the company's Avakine drug... Telecommunications billing systems company Saville Systems' <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SAVLY)") else Response.Write("(Nasdaq: SAVLY)") end if %> American depositary receipts gained $3 1/8 to $39 1/2 after Lazard Freres reiterated its "buy" rating on the company with a 12- to 18-month price target of $78... Italy-based Industrie Natuzzi <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NTZ)") else Response.Write("(NYSE: NTZ)") end if %> climbed $1 1/2 to $27 1/2 after reporting Q1 EPS of $0.30 compared with $0.23 for the year-ago period.. Regional bank holding company First United Bancshares <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UNTD)") else Response.Write("(Nasdaq: UNTD)") end if %> gained $4 to $51 3/4 after announcing a 2-for-1 stock split payable June 30.
Turmoil in Asian economies and in Russia prompted investors to bail out of financial services firms exposed to those regions and other emerging markets. Last night, Jakarta's stock market fell 3.9% as investors there fear more Indonesian companies will go bankrupt in the days to come. Meanwhile, the Russian Central Bank raised its central discount rate and Lombard lending rates to 150% from 50% today in an attempt to attract money back into a system that has seen the government debt market slowly collapse. Merrill Lynch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MER)") else Response.Write("(NYSE: MER)") end if %>, which just received clearance to sell securities in Japan, fell $3 9/16 to $88 1/2. Chase Manhattan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMB)") else Response.Write("(NYSE: CMB)") end if %> sank $3 5/16 to $136; Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> slipped $5 3/4 to $125 9/16; Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> slipped $4 to $148 7/8; and Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %> slid $1 11/16 to $61 1/16. BankBoston <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BKB)") else Response.Write("(NYSE: BKB)") end if %>, which has extensive operations in emerging South American economies, dropped $3 15/16 to $106 13/16.
Airline stocks fell back to earth today after gaining yesterday following a busy Memorial Day weekend for air traffic. Today, the turmoil in Asia and fears of possible labor tensions in the industry cast somewhat of a cloud of doubt over the future prospects for the sector. Northwest Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NWAC)") else Response.Write("(Nasdaq: NWAC)") end if %> dropped $2 1/4 to $46 after Goldman Sachs cut the Eagan, Minnesota-based carrier's fiscal 1998 earnings estimate to $5 per share from $6.35 per share. The fiscal 1999 estimate was also trimmed to $4.80 per share from $5.55 per share. United Airlines parent UAL Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UAL)") else Response.Write("(NYSE: UAL)") end if %> lost $2 1/16 to $79 7/8, Delta Air Lines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DAL)") else Response.Write("(NYSE: DAL)") end if %> slid $5/8 to $114 5/16, Southwest Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LUV)") else Response.Write("(NYSE: LUV)") end if %> sank $1/2 to $26 9/16, and Trans World Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TWA)") else Response.Write("(AMEX: TWA)") end if %> was cut $1/8 to $9 7/8.
QUICK CUTS: Commercial and military jet manufacturer Boeing Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> fell $3/4 to $46 1/2 after saying production of its 747 jumbo jet may be hampered by the Asian financial crisis. The company also said production problems for its next-generation 737 jet will delay delivery of that aircraft in the near term... Iomega Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %> slid $3/16 to $6 9/16 after the maker of Zip and Jaz drives said CFO Leonard Purkis resigned to take a similar position with online brokerage firm E*Trade Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGRP)") else Response.Write("(Nasdaq: EGRP)") end if %>... Network software developer Novell Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NOVL)") else Response.Write("(Nasdaq: NOVL)") end if %> slid $5/16 to $10 1/8 after suing privately held Computer Recyclers and four individuals in a patent and copyright infringement lawsuit.
Human resources and employee benefits services provider Vincam Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VCAM)") else Response.Write("(Nasdaq: VCAM)") end if %> tumbled $2 7/8 to $19 after being downgraded to "outperform" from "buy" at Lehman Brothers... Apex Mortgage Capital <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AXM)") else Response.Write("(NYSE: AXM)") end if %> moved $3/4 lower to $11 1/16 after PaineWebber downgraded the real estate investment trust (REIT) to "neutral" from "attractive"... Spanish language TV programmer Univision Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UVN)") else Response.Write("(NYSE: UVN)") end if %> was spun for a $2 3/4 loss to $31 after Mexico's Grupo Televisa <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TV)") else Response.Write("(NYSE: TV)") end if %> said it may cut its stake in the company to roughly 6% from its current 19.7%... SQL Financials International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SQLF)") else Response.Write("(Nasdaq: SQLF)") end if %> fell $1 1/2 to $8 1/2 after the accounting software company sold 2.5 million shares in an initial public offering at a price of $10 per share.
Pickle producer Vlasic Foods International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VL)") else Response.Write("(NYSE: VL)") end if %> was crunched for $1 3/16 to $19 3/4 after reporting fiscal Q3 EPS of $0.10 (excluding charges), which was shy of the IBES mean estimate of $0.14... Long-distance carrier Sprint Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FON)") else Response.Write("(NYSE: FON)") end if %> lost $1/2 to $71 5/8 after announcing it will take full ownership of its Sprint PCS wireless joint venture with Comcast Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMCSA)") else Response.Write("(Nasdaq: CMCSA)") end if %>, Tele-Communications Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %>, and Cox Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COX)") else Response.Write("(NYSE: COX)") end if %>. Comcast dropped $1 1/4 to $34 5/8 on the news and TCI slid $1 3/16 to $34 3/4... Vanguard Cellular Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VCELA)") else Response.Write("(Nasdaq: VCELA)") end if %> slumped $1 1/4 to $17 3/4 after J.P. Morgan downgraded the provider of wireless telecommunications services to "market performer" from "buy." Yesterday, the company agreed to sell its Pensacola and Ft. Walton Beach, Florida, cellular markets to privately held Wireless One Network for $172.5 million in cash.
Direct marketing services and information technology outsourcing firm May & Speh <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPEH)") else Response.Write("(Nasdaq: SPEH)") end if %> was flayed $1 3/8 to $15 5/8 after agreeing to merge with data services and warehousing company Acxiom Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ACXM)") else Response.Write("(Nasdaq: ACXM)") end if %>. The purchase price values May & Speh at $17.45 per share -- a tiny 2.6% premium to its closing price of $17 per share yesterday. Acxiom dropped $1 11/16 to $20 1/8... Interactive entertainment software developer GT Interactive Software Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GTIS)") else Response.Write("(Nasdaq: GTIS)") end if %> was cut $5/8 to $8 5/16 after reporting fiscal Q4 EPS of $0.01. Analysts surveyed by IBES had been expecting the company to report breakeven results for the quarter. The company said its mass merchant business dropped 20% in the period... Transaction processing services provider National Processing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NAP)") else Response.Write("(NYSE: NAP)") end if %> lost $1 1/8 to $9 15/16 after Salomon Smith Barney lowered its rating on the company to "neutral" from "buy."
FOOL
ON THE HILL
An Investment Opinion
by
Louis Corrigan
Shareowners Rule
Shareowner rights activists enjoyed two important victories last week. On Wednesday, the Securities and Exchange Commission (SEC) approved new rules regarding shareowner proposals, essentially reversing a controversial and wrongheaded decision from 1992 in which the SEC constrained shareowner rights. The same day, an unusual coalition between a labor union and public pension funds, including the giant California Public Employees' Retirement System (CalPERS), defeated an attempt by Marriott International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAR)") else Response.Write("(NYSE: MAR)") end if %> to create two classes of stock with wildly different voting rights.
Regarding the Marriott vote, CalPERS spokesperson Brad Pacheco said, "This is a clear sign to other corporations to not only listen to their shareholders but pay attention to their interests." In turn, the SEC ruling will now make it easier for owners to get a corporation's attention.
The SEC's decision harkened back to events in 1992, when the New York City Employees' Retirement System (which also voted with CalPERS against Marriott's management) submitted a proposal to be voted on by other shareowners of restaurant chain Cracker Barrel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBRL)") else Response.Write("(Nasdaq: CBRL)") end if %>. The resolution called on the company to prohibit employment discrimination based on sexual orientation; the company had taken the position that it would have no gay employees. However, the SEC must approve all shareowner proposals before they make it onto a company's proxy. And the commission decided that Cracker Barrel could exclude the pension fund's resolution from its proxy because hiring practices fell under the 1954 "ordinary business" clause. That clause said, in effect, that the daily practice of running a business, including hiring and firing, fell under the exclusive purview of management.
As Jim Surowiecki's excellent historical overview of these issues makes clear, the SEC has for decades exhibited a bias in favor of management. Yet that history also reveals a struggle toward recognizing the legitimate interests of a company's owners. In 1952, the commission voted down a resolution asking Greyhound to abolish segregation on its buses by ruling that companies could exclude proposals designed "primarily" to promote social or economic causes. That decision, however, was modified in 1972 when the SEC decided that proposals related to economic or social causes could only be excluded if they addressed "causes not significantly related" to a company's business.
Since then, the "ordinary business" clause has been used frequently to bar proposals addressing social issues, such as investment in South Africa during the '80s. Yet for years leading up to the Cracker Barrel case, proposals dealing with employment issues had usually been allowed if they addressed broader social issues such as race or sex discrimination.
For many socially conscious investors, the Cracker Barrel decision amounted to an outrageous constraint on the rights of shareholders, who necessarily bring some ethical dimension to investing. It went beyond saying that disenchanted shareowners would have no say in whether a company upheld basic civil rights. It meant that owners could not use a company's established governance procedures to even attempt to have a say. On issues of job discrimination, a management team could basically tell a corporation's owners to stuff it.
What made the Cracker Barrel decision even more obviously misguided was that it restricted shareowner rights in an area where the bottom-line impact of managerial decisions could hardly be greater. As former SEC commissioner Steven H. Wallman argued last year in a New York Times editorial critical of the commission on which he then sat, numerous companies in recent years have been hit with mega-settlements owing to job discrimination lawsuits. Shoney's, Denny's, Texaco, Mitsubishi, and Publix Supermarkets have been among the affected companies. More recently, Home Depot <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HD)") else Response.Write("(NYSE: HD)") end if %> took a $104 million hit to settle its own sex discrimination lawsuits. In addition to such obvious financial losses, poor employment practices foster negative publicity that inflicts untold damage to a company's brand. Just ask Nike <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %>, which has been forced to grapple with criticism of how it treats low-wage workers in Southeast Asia.
The rules adopted last week by the SEC insure that resolutions on hiring practices are now fair game and no longer fall under the "ordinary business" exclusion. That paves the way for shareowner resolutions next year on issues such as affirmative action and discrimination. The commission also backtracked from a proposal that would have allowed companies more control over what proposals made it to shareowners. The SEC will continue to adjudicate disputes.
As important, the commission also decided against raising the bar on the number of votes a proposal must win in order to be resubmitted the next year. There had been talk of requiring 6% of shareowners to vote for a resolution the first year, 15% in the second year, and 30% in the third year for the proposal to be allowed on the next year's proxy. However, the current rules requiring just 3%, 6%, and 10%, respectively, will be maintained. Although few shareowner resolutions ever win a majority vote, a positive tally as low as 15% can provoke management to address a thorny issue since that usually means some major institutions support the initiative.
If the new SEC decision gave back to owners rights they once had, the Marriott vote showed that owners are increasingly willing to exercise their rights. Led by Chair/CEO J.W. Marriott, Jr., the company had insisted that it needed two classes of stock (Class A with 10 votes each and common stock with one vote a piece) in order to make acquisitions without diluting the interest of current stockowners. The Hotel Employees & Restaurant Employees International Union, whose workers own a small number of Marriott shares, teamed up with the activist pension funds to hold the company to just 47% of the vote. The dissenting shareholders argued that the whole gambit was designed to protect the interests of the Marriott family, which owns 20% the company. The plan would have penalized future owners of the common, who would have been literally second-class owners.
Despite these shareowner victories, though, the week ended on a sour note with what appears to be another example of a company failing in its disclosure obligations. Shares of highflying Manugistics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MANU)") else Response.Write("(Nasdaq: MANU)") end if %>, a firm that makes supply chain software, plummeted 39% to close at $29 1/4 Friday. That collapse followed the firm's Thursday evening press release admitting that first quarter revenues would be lower than expected and led to an operating loss.
Unfortunately, some investors may have gotten early warning signals from the company. The volatile stock was sliced for nearly a $3 loss Wednesday before then shedding another $8 7/8 to close at $47 7/8 on Wednesday following negative comments by Christopher Mortenson, an analyst at BT Alex. Brown, which underwrote Manugistics' 1993 and 1997 stock offerings. While Mortenson reiterated his "strong buy" rating, he warned that the firm might have trouble closing enough orders to meet its quarter given that it was winning larger contracts.
Did someone in Chair/CEO William Gibson's management team give Mortenson the bad news before the company disclosed it to the general public? Or did Mortenson just exhibit remarkable insight based on independent research? Manugistics' investor relations office didn't respond to our inquiry by press time. But the fact that Mortenson's outlook closely tracked Gibson's statements in the ensuing press releases and conference call certainly raises suspicion that Mortenson got the scoop early enough for his firm's clients to bail out before the massacre began.
SEC chair Arthur Levitt recently reiterated that selective disclosure is illegal and that the agency's enforcement office would be looking into violations. Now that the chairman has crossed "shareholder resolutions" off his list of things to do, let's hope he's ready to devote more attention to disclosure issues. Shareholders rule, but they can always stand a little help from their friends.
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
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Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), Fool Two Louis Corrigan (TMF Seymor), Fool Three Alex Schay (TMF Nexus6), Fool, too Dale Wettlaufer (TMF Ralegh), Final Fool
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