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 30-Year Bond   107 1/32    +19/32  5.63% Yield 
 

HEROES

Semiconductor chip makers of various stripes moved ahead again today. A number of analysts have issued upgrades across the sector as inventories of PCs and peripherals held by distributors and manufacturers look to be under control. Lehman Brothers upgraded shares of x86 CPU company Advanced Micro Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMD)") else Response.Write("(NYSE: AMD)") end if %> to "outperform" from "neutral," sending its shares up $1 1/4 to $18. Digital video compression chip maker C-Cube Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CUBE)") else Response.Write("(Nasdaq: CUBE)") end if %> also picked up $1 1/8 to $17 13/16 thanks to Lehman's upgrade to "buy" from "outperform." CS First Boston started coverage on a slew of chip firms, as well. Field programmable embedded chip maker Microchip Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCHP)") else Response.Write("(Nasdaq: MCHP)") end if %> gained $1 3/8 to $30 13/16 after receiving a "strong buy" designation. Cypress Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CY)") else Response.Write("(NYSE: CY)") end if %> rose $7/16 to $8 3/8, Lattice Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LSCC)") else Response.Write("(Nasdaq: LSCC)") end if %> climbed $1 11/16 to $32 1/4, and STMicroelectronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STM)") else Response.Write("(NYSE: STM)") end if %> added $2 5/8 to $66 5/8 with new "buy" ratings.

Companies doing business in the oil sector gained ground today as commodity traders tried to discern whether renewed tensions between the United Nations and Iraq could help ease the worldwide oversupply of the oil. The standoff between the two sides started earlier this week when Iraq decided it would no longer cooperate with U.N. inspectors snooping around the country for weapons deemed off-limits. The U.N.'s Security Council called the decision "totally unacceptable" and said it is trying to find a new way to deal with the pesky Iraqis and avoid similar standoffs down the road. Meanwhile, oil services and drilling companies rallied. R&B Falcon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLC)") else Response.Write("(NYSE: FLC)") end if %> gained $7/8 to $16 9/16, Global Marine <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLM)") else Response.Write("(NYSE: GLM)") end if %> rose $1 to $14 1/8, Ensco International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ESV)") else Response.Write("(NYSE: ESV)") end if %> added $1 to $13 3/8, Baker Hughes <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BHI)") else Response.Write("(NYSE: BHI)") end if %> tacked on $1 to $23 13/16, Marine Drilling Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MDCO)") else Response.Write("(Nasdaq: MDCO)") end if %> climbed $1 7/8 to $12 3/8, and Key Energy Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KEG)") else Response.Write("(NYSE: KEG)") end if %> advanced $5/8 to $10 1/2.

Companies involved in actually finding and extracting "Texas Tea" also gained today amid the Iraq-U.N. tensions. A Goldman Sachs upgrade of Royal Dutch Petroleum Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RD)") else Response.Write("(NYSE: RD)") end if %> to "market outperform" from "market perform" helped send that company's shares up $3 1/16 to $48 3/4. Shell Transport & Trading Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SC)") else Response.Write("(NYSE: SC)") end if %>, which owns the 40% interest in the Royal Dutch/Shell Group not owned by Royal Dutch, also rose $1 1/2 to $37 3/16, despite news that jointly owned affiliate Shell Oil Co. is shutting down its refinery in Deer Park, Texas, for at least a week due to a fire. Atlantic Richfield Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARC)") else Response.Write("(NYSE: ARC)") end if %> moved up $2 9/16 to $67 5/16, Exxon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XON)") else Response.Write("(NYSE: XON)") end if %> added $2 to $66 15/16, Triton Energy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OIL)") else Response.Write("(NYSE: OIL)") end if %> tacked on $1 3/16 to $18 3/8, and Seven Seas Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: SEV)") else Response.Write("(AMEX: SEV)") end if %> advanced $2 1/16 to $14 13/16.

QUICK TAKES: Anchorage, Alaska-based grocery and drug store chain Carr-Gottstein Foods Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CGF)") else Response.Write("(NYSE: CGF)") end if %> picked up $3 3/8 to $11 1/4 after supermarket operator Safeway <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SWY)") else Response.Write("(NYSE: SWY)") end if %> offered to buy the company for $12.50 per share in cash. Safeway rose $13/16 to $44 1/8... Internet portal company Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> moved up $4 1/4 to $91 5/8 as CEO Timothy Koogle reportedly denied rumors that the company is looking for a merger partner. Other Internet-related stocks also gained ground. America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> rose $6 1/2 to $111 7/8, Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> gained $4 1/16 to $45 15/16, Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> climbed $1 1/16 to $25 1/16, Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> added $6 5/8 to $64 1/2, and Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %> picked up $6 1/2 to $116.

Data services giant Electronic Data Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EDS)") else Response.Write("(NYSE: EDS)") end if %> tacked on $5 1/8 to $41 13/16 as Les Aberthal announced that he would step down as the company's chairman and CEO after 12 years at the helm, making way for a replacement "from outside the company"... Aircraft maker Boeing Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> rose $2 3/8 to $39 7/16 after denying rumors that chairman and CEO Phil Condit is preparing to leave the company... Oil pipeline and drilling platform builder Global Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GLBL)") else Response.Write("(Nasdaq: GLBL)") end if %> spouted $9/16 higher to $13 1/16 after setting a $30 million stock buyback plan... Clothing retailer Stage Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGE)") else Response.Write("(NYSE: SGE)") end if %> staged a comeback today, rising $4 1/4 to $14 5/8 after falling 55% yesterday. The slide followed a warning by the company that its fiscal Q2 EPS will come in between $0.02 and $0.05, missing the $0.28 expected by analysts surveyed by First Call.

Digital prepress services provider Applied Graphics Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AGTX)") else Response.Write("(Nasdaq: AGTX)") end if %> stamped out a $4 1/8 gain to $37 despite saying it will report Q2 EPS of $0.30 (excluding a restructuring charge), which falls $0.04 short of the First Call mean estimate... Electronic commerce software developer Sterling Commerce <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SE)") else Response.Write("(NYSE: SE)") end if %> charged ahead $3 11/16 to $41 after reporting fiscal Q3 EPS of $0.33, beating the Street's mean estimate by a penny... Lafayette, Calif.-based lawn and garden and pet supplies distributor Central Garden & Pet Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CENT)") else Response.Write("(Nasdaq: CENT)") end if %> plowed ahead $3 3/4 to $25 1/8 after reporting fiscal Q3 EPS of $0.56, which was a penny ahead of the Street's estimate. An El Nino-induced late spring selling season helped boost net sales in the period by 57% to $502.2 million, the firm said.

Fort James Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FJ)") else Response.Write("(NYSE: FJ)") end if %> stormed up $1 7/8 to $31 1/2 after Salomon Smith Barney upgraded the maker of paper towels and tissues to "buy" from "outperform"... Truck transport company Knight Transportation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KNGT)") else Response.Write("(Nasdaq: KNGT)") end if %> rolled $1 1/2 higher to $16 5/8 after setting a plan to buy back up to 500,000 of its outstanding shares... Real estate investment trust Mack-Cali Realty Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CLI)") else Response.Write("(NYSE: CLI)") end if %> gained $1 1/2 to $30 5/8 after setting a $100 million share repurchase plan... Enterprise client/server software developer Aspect Development <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASDV)") else Response.Write("(Nasdaq: ASDV)") end if %> moved up $5 3/4 to $64 1/2 after Credit Suisse First Boston started coverage with a "buy" rating... Computerized special effects developer Discreet Logic <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DSLGF)") else Response.Write("(Nasdaq: DSLGF)") end if %> added $1 1/8 to $12 1/8 after reporting fiscal Q4 EPS of $0.22 (excluding charges), beating the First Call mean estimate by $0.02.

Network security products maker Network Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETA)") else Response.Write("(Nasdaq: NETA)") end if %> added $2 5/8 to $46 7/16 after SoundView Financial placed the stock on its "focus list"... Residential furniture maker Stanley Furniture Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STLY)") else Response.Write("(Nasdaq: STLY)") end if %> constructed a $1 3/16 gain to $23 15/16 after saying it will phase out its upholstered product line to focus on its wood furniture business, which has seen sales expand by 20% so far this year.

GOATS

Fallout from the recently settled General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> strike may replace the Asian financial crisis and El Nino as this fall's scapegoat of choice for companies missing their quarterly financial targets. Today, shares of specialty metal alloy auto parts maker Autocam Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ACAM)") else Response.Write("(Nasdaq: ACAM)") end if %> stalled $1 1/8 to $15 7/8 after the company warned that its fiscal Q1 earnings "will not compare favorably" with last year's results because of the strike. However, the company said it is expecting earnings growth in fiscal 1999 on the whole. Elsewhere, enterprise resource planning (ERP) software developer QAD Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QADI)") else Response.Write("(Nasdaq: QADI)") end if %> was squashed $3 1/2 to $4 3/4 after forecasting an unspecified Q2 net loss and laying blame on the doorsteps of both GM and Asia. Analysts surveyed by First Call had expected QAD to earn $0.08 per share in the period.

Up in the Great White North, Canadian Imperial Bank of Commerce <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BCM)") else Response.Write("(NYSE: BCM)") end if %> was cross-checked for a $4 9/16 loss to $24 7/16 after issuing a reportedly "unprecedented" profit warning for its fiscal third quarter. The company said its per share earnings will come in about 40% below analysts' estimates due to lower underwriting and brokerage fees at its expanding CIBC Oppenheimer investment banking unit, which was acquired last year. The bank said the earnings shortfall will not endanger its proposed merger with hometown rival Toronto-Dominion Bank <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TD)") else Response.Write("(NYSE: TD)") end if %>, which also fell $2 1/2 to $34 5/8. Much like their neighbors to the south, Canadian banks are in the midst of an era of large-scale mergers. However, government regulators have not yet given the green light to the CIBC-TD linkup or to Royal Bank of Canada's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RY)") else Response.Write("(NYSE: RY)") end if %> bid for Bank of Montreal <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMO)") else Response.Write("(NYSE: BMO)") end if %>.

QUICK CUTS: Healthcare services company Humana <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HUM)") else Response.Write("(NYSE: HUM)") end if %> lost another $13/16 to $18 5/16 after a surprise $900 million reorganization charge disclosed yesterday in merger partner United HealthCare's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UNH)") else Response.Write("(NYSE: UNH)") end if %> Q2 financial report raised doubts about whether the proposed combination would be consummated. United HealthCare fell $1 9/16 to $36 5/16... Router maker Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> was spun for a $2 1/2 loss to $96 7/8 after CEO John Chambers spooked analysts a little bit by reportedly telling them the firm faced "a big challenge" from competitors such as Lucent <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> and Northern Telecom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NT)") else Response.Write("(NYSE: NT)") end if %> in the growing Internet telephony market... Regional Bell Operating Company (RBOC) BellSouth Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BLS)") else Response.Write("(NYSE: BLS)") end if %> was cut $2 1/2 to $60 as the company agreed to pay $211 million for an additional 11% stake in Venezuelan wireless communications company TelCel Cellular, increasing its interest in the firm to 78%.

Multimedia computer products maker and Sound Blaster technology developer Creative Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CREAF)") else Response.Write("(Nasdaq: CREAF)") end if %> fell $9/16 to $10 7/16 after reporting fiscal Q4 EPS of $0.14, short of the Street's downwardly revised estimates of $0.17... Supply chain management software company Logility <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LGTY)") else Response.Write("(Nasdaq: LGTY)") end if %> sank $3 to $3 3/4 after pre-announcing a fiscal Q1 loss between $0.22 and $0.32 per share, short of the Street's expectations of a $0.05 per share profit... Business productivity software firm International Microcomputer Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IMSI)") else Response.Write("(Nasdaq: IMSI)") end if %> produced a $3 3/8 loss to $8 1/4 after reporting fiscal Q4 EPS of $0.10, missing the Street's mean estimate of $0.19... Casino operator Station Casinos <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STN)") else Response.Write("(NYSE: STN)") end if %> dropped $2 1/8 to $5 7/8 after real estate investment trust (REIT) Crescent Real Estate Equities Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CEI)") else Response.Write("(NYSE: CEI)") end if %> called off its $1.7 billion stock swap with the company. Crescent rose $1 11/16 to $30 1/16.

Casino operator Trump Hotels & Casinos Resorts <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DJT)") else Response.Write("(NYSE: DJT)") end if %> slid $1/4 to $6 3/8 on speculation that The Donald will try to refinance his Atlantic City casino's mortgages rather than seek an acquirer, following comments by executives after the company's annual shareholders meeting yesterday... Compound wafer fabrication systems manufacturer EMCORE Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EMKR)") else Response.Write("(Nasdaq: EMKR)") end if %> was knocked down $7/8 to $10 after reporting a fiscal Q3 loss of $0.80 per share, well below the $0.19 per share loss expected by analysts surveyed by First Call... Consumer products company Colgate-Palmolive Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CL)") else Response.Write("(NYSE: CL)") end if %> decayed $2 1/8 to $88 3/16 after The Wall Street Journal cited a report indicating the ingredient triclosan in the company's Total toothpaste could generate a resistant strain of bacteria and lose its bacteria-fighting ability.

Mexican wireless communications firm Grupo Iusacell <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CEL)") else Response.Write("(NYSE: CEL)") end if %> fell $2 3/16 to $12 15/16 after announcing a recapitalization plan, which will simplify the company's share structure but will result in a 10.5% increase in the number of shares outstanding... Cardiovascular and respiratory drug developer KOS Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KOSP)") else Response.Write("(Nasdaq: KOSP)") end if %> lost $7/8 to $8 after lawyers representing shareholders filed a class action lawsuit alleging securities fraud and "material misstatements" by the company in its federal disclosure filings... Drug wholesaler Bergen Brunswig Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBC)") else Response.Write("(NYSE: BBC)") end if %> slipped $7/8 to $41 7/8 after Cardinal Health <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAH)") else Response.Write("(NYSE: CAH)") end if %> canceled its proposed merger with the company due to federal opposition to the deal. AmeriSource Health Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AAS)") else Response.Write("(NYSE: AAS)") end if %> and McKesson Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCK)") else Response.Write("(NYSE: MCK)") end if %> also called off their merger for the same reason... Battered consumer products giant Sunbeam Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SOC)") else Response.Write("(NYSE: SOC)") end if %> fell another $1/4 to $6 3/4 following a Prudential Securities downgrade to "sell" from "hold."

FOOL ON THE HILL
An Investment Opinion
by Alex Schay

A Look at EVA

Mention Economic Value Added (EVA) in certain circles and one is met with varying degrees of consternation. "Just what the heck is it?" is the common lament. As a tool, it can be used in a number of distinct ways. Perhaps most important is its ability to quantify trends that have yet to be reflected in earnings per share. Another useful application is its ability to assess the price of an equity, or alternately give an investor insight into the key value drivers inherent in the current price of an issue. However, to really distill EVA down to its essence, it simply states that a company creates value for owners only when the company's operating income exceeds the cost of capital employed. The easiest way to calculate EVA is to "charge" invested capital by multiplying invested capital by the weighted average cost of capital and then subtracting that total from net operating profit after taxes.

The capital provided by creditors and owners has a cost, and this has been recognized for many years. With this in mind, investors can be heartened somewhat by the fact that EVA does not differ mathematically from a net present value analysis (Net Present Value = The present value of cash inflows minus the present value of cash outflows). Let's take a look at a simple, standard Net Present Value analysis:

                                       YEAR 
                            0      1      2      3      4 
 Initial investment - $100.00  
 Revenue                       80.00  80.00  80.00  80.00 
 Cash Expenses                 13.33  13.33  13.33  13.33 
 Depreciation                  25.00  25.00  25.00  25.00 
  
 Income before tax             41.67  41.67  41.67  41.67 
 40% tax rate                  16.67  16.67  16.67  16.67 
  
 Income after tax              25.00  25.00  25.00  25.00 
 Depreciation                  25.00  25.00  25.00  25.00 
  
 Aftertax cash      -$100.00   50.00  50.00  50.00  50.00 
 NPV at 10%           $58.45

                                YEAR 
                     0      1      2      3      4 
  
 Capital employed      100.00  75.00  50.00  25.00 
 Kw                       .10    .10    .10    .10 
 Kw * capital           10.00   7.50   5.00   2.50 
  
 EBIT(1 - t)            25.00  25.00  25.00  25.00 
 Kw * capital           10.00   7.50   5.00   2.50 
  
 EVA                    15.00  17.50  20.00  22.50 
 EVA at 10%     $58.46 
 (modified tables swiped from Robert C. Higgins)

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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 Editing Brian Bauer (TMF Hoops), another Fool Bob Bobala (TMF Bobala), a Fool's Fool Jennifer Silber (TMF Amused), Fool at last