DJIA 9026.95 +111.99 (+1.26%) S&P 500 1142.86 +17.65 (+1.57%) Nasdaq 1919.62 +38.13 (+2.03%) Value Line ndx 910.36 +10.39 (+1.15%) 30-Year Bond 105 22/32 +22/32 5.72% Yield
BetzDearborn <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BTL)") else Response.Write("(NYSE: BTL)") end if %>, which makes water treatment and other chemicals, jumped $31 13/16 to $67 11/16 after specialty chemicals maker Hercules <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HPC)") else Response.Write("(NYSE: HPC)") end if %> offered to buy the company for $72 per share in cash -- an Olympic-sized 100% premium to BetzDearborn's closing price of $35 7/8 per share yesterday. However, the purchase price is only $1 per share greater than BetzDearborn's 52-week high last September. Since then, BetzDearborn's shares have steadily declined as the company first absorbed its 1996 acquisition of W.R. Grace's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GRA)") else Response.Write("(NYSE: GRA)") end if %> Dearborn business and then dealt with the negative repercussions of the Asian financial crisis. The companies believe today's combination will yield at least $100 million in various synergies. Other specialty chemical makers were lifted by the continued industry consolidation. BetzDearborn rival Nalco Chemical Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NLC)") else Response.Write("(NYSE: NLC)") end if %> gained $2 7/8 to $34 15/16, and Great Lakes Chemical Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLK)") else Response.Write("(NYSE: GLK)") end if %> added $1 3/4 to $39 1/2.
Cable network operator USA Networks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USAI)") else Response.Write("(Nasdaq: USAI)") end if %> climbed $3 3/32 to $30 1/2 after reporting a pro forma fiscal Q2 loss of $0.01 per share versus a $0.08 per share loss a year ago. The results were ahead of the First Call mean estimate of a $0.05 per share loss. The operator of the USA Network, the Sci-Fi Channel, and the Home Shopping Network said overall pro forma earnings before interest, taxes, depreciation, and amortization (EBITDA) moved up 17.1% in the period to $130.6 million, thanks to strong ratings for its programs and higher ad revenues. The company also announced that it would buy back up to 10 million shares over the next 12 months. The company's USA Network is consistently one of the top cable channels in terms of prime-time ratings, with a 2.4% average share during the first half of the year. That status will probably continue to attract potential acquirers in the future following the reported failure of recent merger talks with General Electric's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> NBC network.
AccuStaff Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ASI)") else Response.Write("(NYSE: ASI)") end if %>, a global provider of business services such as strategic staffing, outsourcing, training, and consulting, rebounded $2 1/8 to $24 after plunging 21% yesterday on word that company Chair/CEO Derek E. Dewan was allegedly caught looking for some temporary sexual services. A TV station in AccuStaff's hometown of Jacksonville, Florida, reported that Dewan had been arrested Wednesday morning for soliciting an undercover policewoman posing as a prostitute. In a company press release last night, Dewan adamantly denied the allegations, and the board of directors expressed "continued support" for Dewan. Today's bounce-back appears to be a case of bargain hunters shrugging off the news and was helped along by Legg Mason, which reiterated its "buy" rating on the stock and its target price of $42 per share.
QUICK TAKES: Computing products and box makers rose today on bullish comments from analysts that the sector will enjoy a strong second half. Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> rose $2 15/16 to $34, Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> climbed $5 3/8 to $112 3/4, and Apple Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> gained $1 3/8 to $36 1/2... Chip maker Advanced Micro Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMD)") else Response.Write("(NYSE: AMD)") end if %> rose $1 9/16 to $17 1/4 after CEO Jerry Sanders told a Robertson Stephens semiconductor conference that AMD no longer has a "manufacturing issue" and should return to profitability in Q4, "short of any disasters"... Online services company America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> advanced $9 7/8 to $117 5/8 after William Blair & Co. reiterated its "buy" rating and 12-month price target of $132 per share.
British drugmaker Glaxo Wellcome PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLX)") else Response.Write("(NYSE: GLX)") end if %> rose $5 3/4 to $62 3/8 after reporting that its first-half net income came in at $1.35 billion, down 21% from last year but ahead of most British analysts' expectations... Insurer Conseco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CNC)") else Response.Write("(NYSE: CNC)") end if %> gained $1 15/16 to $43 7/16 after raising its cash dividend 12% to $0.14 per share from $0.125 per share... Biopharmaceutical firm Gilead Sciences <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GILD)") else Response.Write("(Nasdaq: GILD)") end if %> gained $1 1/4 to $23 1/4 after PaineWebber started coverage of the stock with an "attractive" rating... Specialty chemicals and metals maker Olin Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OLN)") else Response.Write("(NYSE: OLN)") end if %> picked up $2 3/8 to $39 1/16 after reporting fiscal Q2 EPS of $0.80, which was $0.02 ahead of the Street's estimate. The firm also said it will spin off its specialty chemical business to shareholders in Q1 of fiscal 1999.
Online travel services provider Preview Travel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTVL)") else Response.Write("(Nasdaq: PTVL)") end if %> advanced $3 to $24 7/8 after reporting a fiscal Q2 loss of $0.39 per share, which was a penny better than the loss expected by the Street. Revenues from online operations came in at $3.1 million, up 35% sequentially and 168% year-over-year... Pet food and batteries maker Ralston Purina Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RAL)") else Response.Write("(NYSE: RAL)") end if %> picked up $1 3/8 to $32 11/16 after forming a strategic alliance with specialty pet food maker Heska Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HSKA)") else Response.Write("(Nasdaq: HSKA)") end if %>... Infectious disease vaccine developer North American Vaccine <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: NVX)") else Response.Write("(AMEX: NVX)") end if %> tacked on $7/16 to $14 5/16 after the FDA approved the company's Certiva "all-in-one" vaccine for immunizing children against diphtheria, tetanus, and whooping cough.
Chip to chip interface technology company Rambus <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMBS)") else Response.Write("(Nasdaq: RMBS)") end if %> moved up $9 3/8 to $61 7/8 after executives told a Robertson Stephens semiconductor conference that they see Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> using Rambus technology in all of its products by 2001, when market share of its Direct Rambus DRAM product should reach 50%... Healthcare information management systems Health Management Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HMSY)") else Response.Write("(Nasdaq: HMSY)") end if %> was lifted $1 1/4 to $8 7/8 courtesy of a Gruntal & Co. upgrade to "strong buy" from "hold"... Tax preparation and financial planning firm Gilman + Ciocia <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GTAX)") else Response.Write("(Nasdaq: GTAX)") end if %> gained $2 3/8 to $14 15/16 after saying it is "very comfortable" with the Street's earnings expectations for Q4 and fiscal 1998.
Several oil production companies and services firms rose today as the Senate prepared to vote on a Treasury appropriations bill, which includes a rider for purchasing $420 million of oil for U.S. reserves. Triton Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OIL)") else Response.Write("(NYSE: OIL)") end if %> rose $1 1/2 to $18 5/8, Rutherford Moran Oil Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMOC)") else Response.Write("(Nasdaq: RMOC)") end if %> advanced $2 5/8 to $14, R&B Falcon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLC)") else Response.Write("(NYSE: FLC)") end if %> gained $1 3/8 to $17 1/4, BJ Services Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BJS)") else Response.Write("(NYSE: BJS)") end if %> added $1 11/16 to $22 1/4, and Cliffs Drilling <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CDG)") else Response.Write("(NYSE: CDG)") end if %> picked up $1 1/2 to $21 1/2... Enterprise modeling and simulation technologies company Engineering Animation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EAII)") else Response.Write("(Nasdaq: EAII)") end if %> added $8 1/4 to $68 7/8 after agreeing to buy two private companies, Variation Systems Analysis and Transom Technologies, for a total of $39 million in stock.
Earnings Movers
ACT Manufacturing <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ACTM)") else Response.Write("(Nasdaq: ACTM)") end if %> up $1 19/32 to $10 3/8; Q2 EPS: $0.01 vs. $0.39 last year; Estimate: $0.02 loss
bebe Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BEBE)") else Response.Write("(Nasdaq: BEBE)") end if %> up $1 5/8 to $19; Q4 EPS: $0.20 vs. $0.08 last year; Estimate: $0.11
Clorox Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CLX)") else Response.Write("(NYSE: CLX)") end if %> up $8 3/8 to $103 1/8; Q4 EPS: $0.93 vs. $0.71 last year; Estimate: $0.81
Concentra Managed Care <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CCMC)") else Response.Write("(Nasdaq: CCMC)") end if %> up $2 5/32 to $22 13/32; Q2 EPS: $0.30 vs. $0.21 last year; Estimate: $0.30
Data Dimensions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DDIM)") else Response.Write("(Nasdaq: DDIM)") end if %> up $1 7/16 to $15 5/16; Q2 EPS: $0.16 vs. $0.08 last year; Estimate: $0.12
MicroStrategy <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSTR)") else Response.Write("(Nasdaq: MSTR)") end if %> up $3 3/4 to $38 3/4; Q2 EPS: $0.03 vs. breakeven last year; Estimate: $0.02
Patriot American Hospitality <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PAH)") else Response.Write("(NYSE: PAH)") end if %> up $1 5/16 to $19 1/2; Q2 FFO: $0.62 vs. $0.46 last year; Estimate: $0.62
Pediatrix Medical Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PDX)") else Response.Write("(NYSE: PDX)") end if %> up $6 to $39 7/8; Q2 EPS: $0.45 vs. $0.30 last year; Estimate: $0.42
PSC Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSCX)") else Response.Write("(Nasdaq: PSCX)") end if %> up $1 5/8 to $8 1/8; Q2 EPS: $0.19 vs. $0.02 last year; Estimate: $0.17
Respironics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RESP)") else Response.Write("(Nasdaq: RESP)") end if %> up $1 3/4 to $15 5/8; Q4 EPS (excluding charges): $0.17 vs. $0.26 last year; Estimate: $0.16
Tommy Hilfiger Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TOM)") else Response.Write("(NYSE: TOM)") end if %> up $4 11/16 to $56 11/16; Q1 EPS: $0.60 (before charges) vs. $0.37 last year; Estimate: $0.52
World Access <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WAXS)") else Response.Write("(Nasdaq: WAXS)") end if %> up $3 3/16 to $29 3/4; Q2 EPS: $0.30 vs. $0.18 last year; Estimate: $0.28
Consumer products giant Procter & Gamble <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PG)") else Response.Write("(NYSE: PG)") end if %> fell $4 1/2 to $83 5/8 on concern over slower earnings growth in the first half of the next fiscal year. The company reportedly said in a conference call that first half earnings growth could be stalled but it would make up for it in the second half. The maker of Cover Girl cosmetics, Pringles potato chips, Crest toothpaste, Tide laundry detergent, and Pampers diapers today reported fiscal fourth quarter earnings of $0.47, up from $0.41 a year ago and in line with analysts' estimates. Revenues grew 4% year-on-year, though in constant-currency terms that number would've been an increase of 7%.
Ice cream vendor Friendly Ice Cream <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FRND)") else Response.Write("(Nasdaq: FRND)") end if %> virtually melted today, losing $3 7/8, or 32.3%, to $8 1/8 after reporting Q2 EPS of $0.39, a penny higher than a year ago and short of analysts' downwardly revised mean estimate of $0.43. Last month, the ice cream maker forewarned that Q2 earnings would be "significantly lower than expectations" due to price increases in the key ingredient for ice cream, fresh cream. Q2 revenues came in $100,000 less than the same period a year ago, while same-store sales gained 3.6%, held back by cold, wet weather in most of the areas it operates. The company said in its press release that it has "no reason to believe the cream problem will be resolved over the balance of the year" and that retail sales volumes may be hurt by the company's recent price increases and revised promotional strategy.
Telecommunications equipment company Ciena Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> lost $1 1/16 to $79 3/8 in four times its normal trading volume today on news that AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> has stopped testing one of its products for use and instead will consider other products from Ciena and its competitors. Tellabs <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %>, which plans to acquire Ciena, dropped $29/32 to $80 1/32, also in heavy trading. Ciena had expected to start shipping its wave-division multiplexing (WDM) equipment to AT&T in June, which would have helped offset delayed purchases by WorldCom <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %> as it prepares for its acquisition of MCI Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %>. AT&T told Ciena it will need higher-capacity systems than the ones it had been testing, which boost capacity by a factor of 16. AT&T plans to begin testing an 80-channel system from Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> in the fourth quarter. Lucent was up $6 1/4 to $95 1/4.
QUICK CUTS: Integrated voice and data applications company General Magic <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GMGC)") else Response.Write("(Nasdaq: GMGC)") end if %> tumbled $1 3/16 to $10 7/8 after reporting a Q2 loss of $0.82 a share compared with a loss of $0.25 in the year-earlier period. Revenue dropped 69% to $91,000 from $297,000... Adobe Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADBE)") else Response.Write("(Nasdaq: ADBE)") end if %> was down $1 13/16 to $34 1/4 after J.P. Morgan lowered its rating on the desk publishing software maker to "long-term buy" from "buy," citing continued weakness in Japan and uncertainty over the company's new product strategy for the enterprise and consumer markets... Agricultural equipment manufacturer AGCO Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AG)") else Response.Write("(NYSE: AG)") end if %> tanked $2 1/16 to $13 11/16 after reporting Q2 EPS of $0.52 compared with $0.83 (before charges) in the year-ago period and analysts' expectations of $0.88. The company announced plans to cut production levels to reduce pipeline, dealer, and company inventories.
Owner of National, Alamo, and other car rental companies Republic Industries (NYSE RII) skidded for a $1 1/2 loss to $22 3/8 after warning that it won't meet 1998 earnings estimates due to weak tourist business... Managed care company WellPoint Health Networks <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WLP)") else Response.Write("(NYSE: WLP)") end if %> plunged $7 5/8 to $64 after reporting Q2 earnings and announcing it will sell its UNICARE Specialty Services subsidiary to Fremont General Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FMT)") else Response.Write("(NYSE: FMT)") end if %> for about $100 million. WellPoint reported Q2 EPS of $0.86 (before charges), up from $0.76 in the year-ago period and a penny ahead of analysts' mean estimates... Senior living and healthcare services company American Retirement Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ACR)") else Response.Write("(NYSE: ACR)") end if %> shed $1 7/16 to $16 1/8 after announcing it sold 4.5 million shares in a public offering at $16 per share.
News integrator and provider NewsEdge Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NEWZ)") else Response.Write("(Nasdaq: NEWZ)") end if %> plummeted $2 1/4, or 25.4%, to $6 5/8 after reporting a Q2 loss of $0.09 a share. Analysts had expected a loss of $0.05... Telecommunications software company LHS Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LHSG)") else Response.Write("(Nasdaq: LHSG)") end if %> was disconnected for a $5 17/32 loss to $58 3/8 on concern that its growth next year will slow to no more than 40%... Year 2000 specialist Accelr8 Technology Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ACLY)") else Response.Write("(Nasdaq: ACLY)") end if %> bombed $1 5/8 to $4 3/8 after warning that it expects to report a Q4 loss, which is "substantially below" the analysts' mean estimate of a profit of $0.16. Q2 revenues were "off sharply" due to lower-than-anticipated demand for its Y2K tools.
Property and casualty insurance company Orion Capital <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OC)") else Response.Write("(NYSE: OC)") end if %> took a loss of $1 11/16 to $48 after announcing plans to sell its Colorado Casualty following lower-than-expected Q2 EPS of $0.83 (before unusual items)... Lawn mower and snowblower maker Toro Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TTC)") else Response.Write("(NYSE: TTC)") end if %> pulled back $2 11/16 to $27 5/8 after announcing it expects full-year earnings will be "significantly" below last year... Paper and janitorial supplies distributor Unisource Worldwide <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UWW)") else Response.Write("(NYSE: UWW)") end if %> was cut $3/4 to $9 1/4 after announcing plans to eliminate more than 1,500 jobs, which will result in pre-tax charges of $130-$150 million in fiscal 1998. The company reported Q3 EPS of $0.11, down from $0.19 last year, and said it will reduce quarterly dividends to $0.05 a share from $0.20.
Earnings Movers
Air Express International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AEIC)") else Response.Write("(Nasdaq: AEIC)") end if %> down $3 11/16 to $22 1/8; Q2 EPS: $0.39 vs. $0.37 last year; Estimate: $0.42
Encore Wire Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WIRE)") else Response.Write("(Nasdaq: WIRE)") end if %> down $1 15/16 to $14 15/16; Q2 EPS: $0.27 vs. $0.32 last year; Estimate: $0.26
Hologic Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HOLX)") else Response.Write("(Nasdaq: HOLX)") end if %> down $1 3/4 to $16 3/4; Q3 EPS: $0.31 vs. $0.35 last year; Estimate: $0.34
Pillowtex Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PTX)") else Response.Write("(NYSE: PTX)") end if %> down $2 1/8 to $32 3/4; Q2 EPS: $0.42 vs. $0.17 last year; Estimate: $0.38
FOOL
ON THE HILL
An Investment Opinion
by
Alex Schay
Macromedia: The Turnaround Plays On
In the grand tradition of Intuit <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTU)") else Response.Write("(Nasdaq: INTU)") end if %> and even Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>, software development company Macromedia <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MACR)") else Response.Write("(Nasdaq: MACR)") end if %> continues to jam as its Web-centric turnaround plays on. After the bell yesterday the company reported Q1 1999 earnings of $3 million, or $0.07 per share, which beat estimates by $0.02 and last years' results by $0.10. The company does a superb job of laying it all out for clients and investors alike, offering a surprising degree of disclosure and transparency at its dual websites, macromedia.com and shockrave.com. This information, including RealPlayer conference call recordings, stems in part from the company's recognition that it can't afford to play around with investors' expectations. Ever since last year's shortfalls, the company has been extroverted in its attempt to provide prudent guidance. The company continues to create highly compelling products that actually make it to market when the company says they will.
Last quarter Macromedia reported EPS of $0.05 on sales of $30.0 million, which was driven by higher gross margins (92% versus most estimates in the high eighties), as well as higher "other income" of $1.5 million (thanks to currency gains). The 8% increase in revenues in the most recent quarter combined with gross margins of 90% helped to boost the company's bottom line -- although gross margins continue to be on the high end of the company's long-term model of 85-90%.
Of the company's three key revenue centers, revenue from its new web initiatives -- including Flash, Dreamweaver, Fireworks, and advertising from websites -- provided some eyebrow lifting numbers, growing to 32% of total revenues as Web traffic on its dual sites in June grew to 2 million page views per day. Shockrave received 60,000 visitors in June, and for those uninitiated few, it's a site that features games, music, and other activities that take advantage of the functionality built into the company's free software. Shockwave is a technology that is built into Macromedia products to optimize interactive multimedia files for delivery on the Web, and Flash is a design tool that allows Web developers to create interactive graphics and animations for the Web.
Shockwave and Flash, the browser plug-ins, were downloaded 9 million times in June, bringing the total since inception to 93 million. This comes on top of the fact that the company inked a June agreement with Netscape whereby the firm will include the Flash player with every copy of its browser. But wait there's more, Windows 98 comes standard with Shockwave and Flash -- avoiding all the hassle of downloading -- and Compaq will provide Shockrave promotion in conjunction with its Presario line. Meanwhile, Macromedia's core Authorware, Director, FreeHand business (accounting for 65% of revenues) continues to do well, as sell through in the quarter outnumbered what was pushed into the channel. However, inventory will increase as pipeline products make it to market. Here is a tentative schedule:
Flash Generator this quarter
DreamWeaver Learning in the second quarter
Director 7 in the second half
Authorware in the second quarter
Dreamweaver 2 in the second half
In anticipation of ramping profitability, Macromedia shares have risen 83% thus far this year, and all signs seem to indicate that it is on the cusp of some nice development. With Q1 results on track, but the company still not (by its own admission) firing on all cylinders -- most of its growth will occur in the third and fourth quarters as products really begin to move -- expect some upward adjustments to the previously stated 20% top-line growth for the year. While investors may look askance at the company's current valuation at 50 times forward earnings, Macromedia still operates in a world where the Web is slow, silent, static, and the graphics are crummy, which is not Macromedia's optimal environment.
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 Alex Schay (TMF Nexus6), Fool, too Dale Wettlaufer (TMF Ralegh), Final Fool
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