DJIA 8923.87 +95.41 (+1.08%) S&P 500 1132.89 +13.40 (+1.20%) Nasdaq 1877.76 +33.19 (+1.80%) Value Line ndx 938.21 +6.90 (+0.74%) 30-Year Bond 106 22/32 -6/32 5.65% Yield
A year after Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> announced a $1 billion investment in cable TV operator and programmer Comcast Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMCSA and CMCSK)") else Response.Write("(Nasdaq: CMCSA and CMCSK)") end if %>, AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> today announced an agreement to acquire Tele-Communications Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %> for $48 billion in AT&T stock. AT&T will create a new division, Consumer Services, which will "combine [AT&T's] current consumer long distance, wireless, and Internet services units with TCI's cable, telecommunications, and high-speed Internet businesses." This will trade on the NYSE as a "letter stock" or "tracking stock," and AT&T will also issue tracking stock for TCI's programming and distribution arm, Liberty Media <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LBTYA)") else Response.Write("(Nasdaq: LBTYA)") end if %>. AT&T will be able to capitalize on the combination of its telecom assets with TCI's line into homes. Not only that, but Liberty Media owns chunks of some powerful programming assets such as BET, USA Networks, QVC, Time Warner <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TWX)") else Response.Write("(NYSE: TWX)") end if %>, Discovery Channel, and Fox. The value of the deal to AT&T's shareholders will be told in time, but the market initially seems to think that TCI got the better end of the deal, with TCI's shares advancing $1 1/16 to $39 3/4 and AT&T's shares dropping $5 3/8 to $60.
Some telecommunications and cable stocks rose after the AT&T-TCI merger announcement. Of the cable companies, Time Warner <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TWX)") else Response.Write("(NYSE: TWX)") end if %>, the largest U.S. cable company, moved up $5 1/8 to $88 3/8; Cablevision Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: CVC)") else Response.Write("(AMEX: CVC)") end if %> surged $14 to $76; Cox Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COX)") else Response.Write("(Nasdaq: COX)") end if %> gained $2 3/8 to $48 5/8; Century Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CTYA)") else Response.Write("(Nasdaq: CTYA)") end if %> added $2 1/8 to $18 1/8; Jones Intercable <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JOINA)") else Response.Write("(Nasdaq: JOINA)") end if %> jumped $1 5/16 to $26 1/8; Rogers Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RG)") else Response.Write("(NYSE: RG)") end if %> rose $1 9/16 to $8 3/4; and set-top box manufacturer General Instrument Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GIC)") else Response.Write("(NYSE: GIC)") end if %> advanced $2 15/16 to $26 1/8. Among telecoms, Alltel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AT)") else Response.Write("(NYSE: AT)") end if %> tacked on $1 5/8 to $44 15/16, and Nextel Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NXTL)") else Response.Write("(Nasdaq: NXTL)") end if %> rose $2 3/16 to $27 11/16. Telecommunications equipment company Northern Telecom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NT)") else Response.Write("(NYSE: NT)") end if %> climbed $2 5/16 to $56 1/16; rival Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> added $1 5/8 to $80 1/8, and ADC Telecommunications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADCT)") else Response.Write("(Nasdaq: ADCT)") end if %> gained $3 to $35 5/8.
Topically administered prescription products developer Penederm Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DERM)") else Response.Write("(Nasdaq: DERM)") end if %> rocketed up $4 3/4 to $20 1/2 after announcing it has agreed to be acquired by generic drug maker Mylan Laboratories <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MYL)") else Response.Write("(NYSE: MYL)") end if %>. Penederm shareholders will receive 0.68 Mylan shares for each Penederm share, which values the deal at around $205 million, or $21.89 a share based on Mylan's closing price yesterday. Penederm, which has a partnership with Mylan for marketing its antifungal compound Mentax, currently markets three products to dermatologists: Mentax, Avita for acne, and Acticin for scabies. Mylan expects the acquisition to be neutral to earnings per share (EPS) for this fiscal year ending March 31, 1999 (before the effects of the one-time charge for purchased R&D) and accretive to EPS in the next fiscal year.
QUICK TAKES: Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> added another $4 3/16 to $104 15/16 after yesterday's news that a U.S. appeals court has overturned an earlier ruling, thus allowing the operating and software company to sell Windows 95 with its Internet Explorer browser. (Click here for Foolish opinions on Microsoft's battle with the Department of Justice)... Financial services company Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %> traveled up $1 3/4 to $62 11/16 and Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> rose $5 7/16 to $154 9/16 after the European Commission cleared the $70 billion merger of the two companies... Several regional banks recovered in advance of the Q2 earnings reporting season. NationsBank <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NB)") else Response.Write("(NYSE: NB)") end if %> gained $2 3/4 to $77 1/2. Fleet Financial Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLT)") else Response.Write("(NYSE: FLT)") end if %> rose $2 1/8 to $81 13/16. BankBoston Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BKB)") else Response.Write("(NYSE: BKB)") end if %> climbed $2 3/16 to $54 3/4. Mellon Bank <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MEL)") else Response.Write("(NYSE: MEL)") end if %> picked up $1 7/8 to $70 3/4. Bank of New York <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BK)") else Response.Write("(NYSE: BK)") end if %> jumped $2 13/16 to $62 5/8. KeyCorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KEY)") else Response.Write("(NYSE: KEY)") end if %> gained $1 3/16 to $36 7/16, and Banc One Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ONE)") else Response.Write("(NYSE: ONE)") end if %> tacked on $2 3/8 to $58.
Pharmaceutical giant Merck <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %> gained $3 15/16 to $131 1/4 as European regulators cleared the sale to DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> of its half of their drug joint venture for $2.6 billion. DuPont ended up $1 13/16 to $75 7/8... Wireless communications, semiconductors, and advanced electronic systems, components, and services company Motorola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> rang up $2 5/16 to $54 5/16 in light of the AT&T-TCI deal and after it announced that it sold 50,000 units of fixed wireless terminals to Tata Lucent Technologies Ltd. of India, a joint venture between Tata Teleservices and Lucent Technologies... Rambus Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMBS)") else Response.Write("(Nasdaq: RMBS)") end if %>, which makes an interface that accelerates the exchange of signals between a computer's memory and logic chips, gained another $2 5/16 to $59 13/16 following strong endorsements from Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>, Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %>, and Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>.
Consumer appliances company Sunbeam Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SOC)") else Response.Write("(NYSE: SOC)") end if %> chugged up $3/4 to $12 on news that the troubled company is in talks with lenders in an effort to avoid defaulting $1.7 billion in loans... Healthcare management company MedPartners <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MDM)") else Response.Write("(NYSE: MDM)") end if %> gained $1 3/16 to $8 7/1 after it announced plans to sell its Team Health operations, which organizes and manages physicians and other healthcare professionals to hospitals throughout the U.S.... Carpeting and rugs manufacturer Shaw Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SHX)") else Response.Write("(NYSE: SHX)") end if %> rose $1 11/16 to $18 3/16 after agreeing to sell its residential retail operations -- consisting of about 275 stores in 26 states -- to floorcovering retailer The Maxim Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MXG)") else Response.Write("(NYSE: MXG)") end if %> for about $115 million in cash, stock, and assumption of debt. The Maxim Group fell $2 1/2 to $19 1/8.
Amgen <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMGN)") else Response.Write("(Nasdaq: AMGN)") end if %> advanced $4 1/16 to $66 3/4 after Gruntal & Co. upgraded the company to "strong buy" from "buy" due to the government raising its reimbursements for the drug company's blood cell production regulation drug Epogen. Gruntal raised its target price on Amgen to $82 from $69 and said the shares were "seriously undervalued"... Several companies advanced on news that they will be added to the Standard & Poor's 500 Index after the close of trading on June 30. Brokerage firm Bear Stearns <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSC)") else Response.Write("(NYSE: BSC)") end if %> was lifted $4 1/8 to $58 3/8; financial services company Capital One Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COF)") else Response.Write("(NYSE: COF)") end if %> moved up $4 5/16 to $114 7/8, and post-secondary education financial services company SLM Holding <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLM)") else Response.Write("(NYSE: SLM)") end if %> climbed $2 7/16 to $46 1/2... Electronic component devices maker Methode Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: METHA)") else Response.Write("(Nasdaq: METHA)") end if %> rose $2 7/8 to $13 5/8 after reporting Q4 EPS of $0.27, including a $0.03 gain on the sale of a building. Analysts had expected EPS of $0.25.
Bank holding company BB&T Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBK)") else Response.Write("(NYSE: BBK)") end if %> picked up $1 7/8 to $66 9/16 after announcing a 2-for-1 stock split payable August 3 and an increase in its dividend to $0.35 (a $0.04 hike) on a pre-split basis... Contract drug and biotechnology research company Kendle International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KNDL)") else Response.Write("(Nasdaq: KNDL)") end if %> jumped $3 5/8 to $27 1/8 after announcing plans to sell 2.1 million shares for $23.50 per share... Consumer finance company Household International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HI)") else Response.Write("(NYSE: HI)") end if %> added $1 1/16 to $50 1/8 and rival Beneficial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BNL)") else Response.Write("(NYSE: BNL)") end if %> moved up $4 3/16 to $152 11/16 after Household told analysts that it reduced costs and boosted revenue from its pending purchase of Beneficial and projected higher earnings... Internet service provider At Home Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATHM)") else Response.Write("(Nasdaq: ATHM)") end if %> shot up $11 15/16 to $51 3/16 on optimism that the AT&T-TCI merger will speed the company's expansion.
News of AT&T's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> deal to buy Tele-Communications Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %> knocked down the Baby Bells today on fears that the former Ma Bell will soon be entering their markets to provide local telecom service. BellSouth Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BLS)") else Response.Write("(NYSE: BLS)") end if %> slipped $2 1/4 to $67, SBC Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SBC)") else Response.Write("(NYSE: SBC)") end if %> slumped $1 5/8 to $39 5/8, US West <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: USW)") else Response.Write("(NYSE: USW)") end if %> stumbled $1 5/8 to $48 11/16, Ameritech Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AIT)") else Response.Write("(NYSE: AIT)") end if %> slid $2 3/8 to $42 1/2, and Bell Atlantic <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEL)") else Response.Write("(NYSE: BEL)") end if %> sank $5 7/8 to $92 1/2. The deal gives AT&T the opportunity to pitch its telecommunications services to TCI's reported 13 million cable customers across the U.S. With that vast reach, AT&T has greatly improved its chances of selling local phone service in some of the country's largest and most lucrative metropolitan markets, such as Chicago, Dallas, Denver, St. Louis, and Pittsburgh.
Hotel real estate investment trust (REIT) Patriot American Hospitality <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PAH)") else Response.Write("(NYSE: PAH)") end if %> was knocked down $1 1/16 to $21 7/16 after BT Alex. Brown lowered its rating on Patriot to "buy" from "strong buy." The downgrade follows an 11th hour agreement by Congressional leaders on a reform bill for Washington's perennial whipping boy, the Internal Revenue Service. Included in the legislation is a provision to nix a tax advantage for Patriot and the country's three other paired-share REITs. If the bill becomes law, the paired-share status could no longer be used to shield the REITs from the sizable tax liabilities created through mergers. For acquisition-hungry Patriot, which recently completed its $2.1 billion purchase of Interstate Hotels, losing the tax exemption could spell the end of its merger-based growth strategy.
QUICK CUTS: America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> fell $2 5/16 to $103 7/8 despite signing an agreement to market videotapes from Video Now, a unit of Digital Courier Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DCTI)") else Response.Write("(Nasdaq: DCTI)") end if %>. Digital Courier also fell $1 11/32 to $8 5/8... Luggage maker Samsonite Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SAMC)") else Response.Write("(Nasdaq: SAMC)") end if %> tumbled $13 5/8 to $12 after completing a self-tender offer for about half of its outstanding shares at a price of $40 per share... High-performance bicycles maker Cannondale Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BIKE)") else Response.Write("(Nasdaq: BIKE)") end if %> dropped $1/2 to $12 5/8 after saying its fiscal Q4 EPS will be about 20% below the Street's estimate of $0.34 due to higher expenses related to the development of a motorcycle... Electrical power distribution and control equipment maker Eaton Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ETN)") else Response.Write("(Nasdaq: ETN)") end if %> lost $3 7/16 to $78 13/16 after saying its fiscal 1998 earnings might fall short of $5.24 per share earned a year ago due to the slowdown in the semiconductor equipment business.
High-speed digital subscriber line (DSL) products maker Pairgain Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PAIR)") else Response.Write("(Nasdaq: PAIR)") end if %> was pared for a $1 3/4 loss to $17 3/8 after CEO Charles Strauch squelched some of the merger rumors that have swirled around the company lately. "I don't think at the moment acquisitions are a particularly good focus for our company," Strauch said in an interview with CNBC... Healthcare data management firm Transition Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TSIX)") else Response.Write("(Nasdaq: TSIX)") end if %> fell $4 15/16 to $10 11/16 after saying "timing issues with several significant deals" will result in fiscal Q3 earnings between $0.08 and $0.12 per share, which is below the $0.21 per share expected by the Street... CMP Media <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMPX)") else Response.Write("(Nasdaq: CMPX)") end if %>, the publisher of technology magazines and newspapers such as EE Times and Information Week, lost $2 3/4 to $13 1/2 after saying it will report fiscal Q2 EPS between $0.10 and $0.14 compared to $0.29 a year ago.
Automated microwave test and measurement systems maker ORBIT/FR Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORFR)") else Response.Write("(Nasdaq: ORFR)") end if %> dropped $3/8 to $6 7/8 after saying it has called off its proposed acquisition of privately held RDL Inc. The firm also said it is the subject of U.S. Customs Service probe... Human resources services provider OutSource International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OSIX)") else Response.Write("(Nasdaq: OSIX)") end if %> fell $1 1/8 to $8 11/16 after saying fiscal Q2 EPS will likely come in between $0.10 and $0.12, missing the Street's estimate of $0.14... Tool maker Stanley Works <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SWK)") else Response.Write("(NYSE: SWK)") end if %> was hammered for a $1 9/16 loss to $41 15/16 after saying its fiscal Q2 earnings (excluding charges) will be below the Street's estimate of $0.63 due to lower than expected sales volume.
Swiss watch maker TAG Heuer International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: THW)") else Response.Write("(NYSE: THW)") end if %> was clocked for a $1 11/16 loss to $9 9/16 after saying its first half sales will be as much as 10% lower than a year ago due to weak demand from Asian customers... Athletic footwear retailer The Finish Line <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FINL)") else Response.Write("(Nasdaq: FINL)") end if %> was stomped for $3 1/8 to $25 3/4 after Raymond James downgraded the firm to "accumulate" from "buy"... Microelectronics capital equipment maker FSI International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FSII)") else Response.Write("(Nasdaq: FSII)") end if %> slumped $3/16 to $9 1/8 after reporting a fiscal Q3 loss of $0.09 per share. The company said weak dynamic random access memory (DRAM) chip prices and the Asian financial crisis will result in sequentially lower fiscal Q4 sales.
Microsemi Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSCC)") else Response.Write("(Nasdaq: MSCC)") end if %>, which makes semiconductors and custom diode assemblies for the electronics, aerospace, and medical markets, dropped $1/2 to $10 after warning that its fiscal Q3 results will be about 20% below last year's levels due to slow bookings from the commercial space and other markets... General Scanning <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GSCN)") else Response.Write("(Nasdaq: GSCN)") end if %>, which makes laser systems for the semiconductor and electronics industries, fell $9/16 to $9 3/16 after saying it sees fiscal Q2 EPS of between $0.14 to $0.17, which is short of the IBES mean estimate of $0.30... Film production and distribution company Metro-Goldwyn-Mayer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MGM)") else Response.Write("(NYSE: MGM)") end if %> bombed $1 1/16 to $23 1/2 after Merrill Lynch lowered its near-term rating to "neutral" from "accumulate."
FOOL
ON THE HILL
An Investment Opinion
by
Louis Corrigan
Quigley's Cold-Eeze Questioned
The saga of Quigley Corp.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QGLY)") else Response.Write("(Nasdaq: QGLY)") end if %> Cold-Eeze zinc gluconate glycine (ZGG) lozenges took another turn yesterday as a new study published in today's Journal of the American Medical Association (JAMA) found that a lower-dose version of the lozenge didn't provide any benefits to children. The news wasn't a total surprise, as CEO Guy Quigley had made comments in a May 1 conference call and at the May 8 shareholders' meeting indicating that there were some problems with the study. Nonetheless, the stock dropped $1 3/8 to $7 1/2 on the bad news yesterday. The stock was unchanged today as the company attempted some damage control, announcing an additional 500,000 share stock buyback.
The JAMA article, though, poses new problems for Quigley, which has seen Cold-Eeze continue to dominate the zinc lozenge market it created, despite rather massive ad spending by Hall's for its Zinc Defense zinc acetate lozenge. After all, the power of the Cold-Eeze brand has depended on the fact that a clinical trial conducted by the Cleveland Clinic's Dr. Michael Macknin and published in the respected Annals of Internal Medicine (July 15, 1996) showed that adults taking the standard Cold-Eeze formulation (with 13.3 mg of ionic zinc) had experienced a 42% reduction in the duration of cold symptoms.
Those results were in line with an earlier study conducted at Dartmouth College by ZGG patent-holder Dr. John Godfrey. That study used ZGG lozenges with a high level of zinc (23.7 mg). These trials allowed Quigley to make the unique claim that its patent-protected zinc formulation had been "clinically proven" to reduce the duration and severity of the common cold.
While an accompanying editorial in JAMA notes that the new study "by no means closes the door on zinc gluconate lozenges," this study will inevitably reinforce doubts about whether Cold-Eeze really works. The irony here is that the new trial was also led by the Cleveland Clinic's Macknin and funded by a grant from Quigley Corp. Macknin had been attacked for his original study because he had acquired stock in Quigley after analyzing the trial results (he still holds 20,000 shares). A later Annals editorial indicated that Macknin had disclosed this financial interest when he submitted the manuscript but that the editors determined it was not necessary to disclose this information in the published text.
Nonetheless, the episode led to much public discussion about potential bias in scientific research and considerable skepticism about the Cleveland Clinic's results. For his part, Godfrey offered his own re-analysis of these trial data. He argued that if data from 16 of the 99 patients who violated the study protocol were excluded, the results would have shown an even stronger 48% shortening of the duration of the common cold (see Alternative Therapies, November 1996).
The children's study involved 249 students grades 1-12 taking a 10 mg ZGG lozenge or placebo either 5 or 6 times a day. Three lozenges a day were administered by study personnel at the school, with the students expected to take additional doses themselves in the evening and on weekends. Though nearly half of the students in each group reported taking more doses (median of 6) than could be verified by the actual lozenge packages, the researchers deemed overall compliance (88.8% median) to be good. Moreover, students in the ZGG group who adhered better to the protocol did not show a significant reduction in the duration of their colds. Children on zinc did miss fewer days of school (59 days vs. 32), but that difference was not statistically significant.
For the elementary grade students, colds lasted a median of 9 days for the placebo group and 8 days for those on ZGG. For the older students, the median time to the resolution of all cold symptoms was 8.5 days for the placebo group and 9.5 days for those taking ZGG. These results revealed no significant benefits of this lower dose ZGG formulation. Meanwhile, as in previous studies, those on zinc experienced higher rates of adverse effects, such as bad taste reaction; nausea; discomfort of the mouth, tongue or throat; and diarrhea. They were also more likely to guess correctly that they were taking the zinc lozenge.
Although the researchers speculate that the lower dose level or compliance issues may have led to the negative results, they ultimately dismiss these concerns. A more likely explanation is that Cold-Eeze may only be effective against rhinoviruses. Some 200 viruses can cause the common cold, but rhinoviruses are the most frequent cause. Yet they are more likely to strike in the beginning or end of the cold season -- precisely when the earlier two trials showing benefits of the ZGG formula were conducted. The children's trial, however, took place throughout the cold season (from October 7, 1996 through March 13, 1997). Macknin's team notes that "rhinovirus almost certainly would not have been the predominant virus isolated throughout this entire study." The matter of how zinc might work against colds has been studied most closely by Godfrey. He has argued that zinc ions fit into the surface of rhinoviruses, blocking them from entering cells. The children's study, then, may actually support Godfrey's hypothesis of how Cold-Eeze works.
For its part, Quigley has come out swinging. CEO Guy Quigley called the study "bogus" and said that JAMA had been "equally irresponsible" in publishing the findings despite being supplied by Quigley Corp. with information detailing "the bad science" practiced by the Cleveland Clinic. The company charged that the study included children who had never had a cold; subjects who had a cold for longer than a week before entering the study; subjects who had verified secondary infections, including strep throat, or who had the flu; and 29 subjects with asthma. Also, many of the children also took other cold medicines. Quigley argues that 83 of the 249 students should have been excluded from the data.
The published results don't appear to offer clear evidence regarding some of these claims. Still, it appears that only two children (one on placebo, one on ZGG) didn't have colds on entry. (They didn't want to miss out on the fun, apparently.) Meanwhile, at least 17 of the asthma subjects were in the placebo group, which, if anything, should have worked in favor of a positive finding for ZGG.
Quigley said it plans to repeat the study at a different institution and both Macknin's group and JAMA have called for additional clinical trials. In the meantime, Quigley shares held up fairly well, though they are still off considerably from the $13 level reached in mid-May following the company's move to the Nasdaq National Market and a deal with Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> to market Cold-Eeze over the Internet.
Given that a weaker-than-expected first quarter has left it with high inventories and new filings indicate insiders may still be selling, Quigley needs to show it can accomplish as much during Cold-Eeze's third year in the big leagues as it did during its first two seasons, otherwise its stock isn't going anywhere. Skeptics wonder, for instance, what ongoing annual sales will amount to now that inventory is on the shelves. The story remains interesting, though, because despite many reasons for caution, Quigley's is a highly profitable business, and the company had around $2 a share in cash and no debt at the end of March.
Related article:
Quigley Warms Up (2/18/98)
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Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), Fool Two Alex Schay (TMF Nexus6), Fool, too Dale Wettlaufer (TMF Ralegh), Final Fool
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