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HEROES

Big Blue computing powerhouse IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> rose $5 5/16 to $117 15/16 on reports that the company has quietly put its Global Network operations on the auction block and could sell it for as much as $3 billion to $4 billion. IBM has hired Merrill Lynch to do the honors. This follows on the heels of the company's decision earlier this summer to sell its printer division (care of Goldman Sachs) for around $2.5 billion. IBM's Global Network, which started as a phone system linking the company's scattered offices, has grown to become a worldwide network serving 30,000 customer facilities in 900 cities in 50 countries. According to The Wall Street Journal, at least a dozen companies have expressed preliminary interest in buying the unit. Initial bids are expected to come in later this month.

Diversified agribusiness and biotechnology firm Mycogen Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MYCO)") else Response.Write("(Nasdaq: MYCO)") end if %> surged $7 1/2 to $27 1/2 on more than 70 times its 30-day avergae trading volume after Dow Chemical Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DOW)") else Response.Write("(NYSE: DOW)") end if %> announced that it will acquire the roughly 32% of Mycogen that it doesn't already own for $28 a share. That's a whopping 40% premium to Mycogen's $20 closing price yesterday and substantially higher than Dow's initial offer of $20.50 a share made in April. Dow subsidiary Dow AgroSciences will make a tender offer for the San Diego-based seed developer, and shareholders will have until Oct. 2 to take the bid. Fellow seed company AgriBioTech <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ABTX)") else Response.Write("(Nasdaq: ABTX)") end if %> also gained $2 1/2 to $11 1/8.

QUICK TAKES: Computer makers and related companies rallied back today. Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> jumped $8 3/8 to $108 3/8, Apple Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> soared $2 15/16 to $34 1/8, Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> recovered $1 15/16 to $29 7/8, Hewlett-Packard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> gained $1 9/16 to $50 1/8, Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> advanced $5 5/16 to $101 1/4, Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> regained $4 13/16 to $76, Applied Materials <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMAT)") else Response.Write("(Nasdaq: AMAT)") end if %> added $1 9/16 to $26 1/8, Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> charged up $8 1/8 to $90, Seagate Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %> was up $1 1/16 to $18 3/16, Computer Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %> picked up $3 1/8 to $30 1/8, Compuware <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CPWR)") else Response.Write("(Nasdaq: CPWR)") end if %> leapt $4 3/16 to $49 5/8, Peoplesoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSFT)") else Response.Write("(Nasdaq: PSFT)") end if %> surged $4 9/16 to $32 11/16, and 3Com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %> finished up $1 13/16 to $25 1/2.

Computer retailer and reseller CompUSA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPU)") else Response.Write("(NYSE: CPU)") end if %> rose $1 3/16 to $12 15/16 after announcing it has completed its acquisition of Tandy's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TAN)") else Response.Write("(NYSE: TAN)") end if %> Computer City subsidiary for $136 million, down from the originally announced price of $275 million due to a decline in Computer City's book value... Drug companies bounced back today after dropping yesterday on little apparent news. Pfizer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %> added $3 3/4 to $96 3/4, Warner-Lambert (NSYE: WLA) jumped $6 3/8 to $71 5/8, Eli Lilly <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> rose $3 11/16 to $69 7/16, Merck <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %> advanced $6 9/16 to $122 1/2, Bristol-Myers Squibb <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMY)") else Response.Write("(NYSE: BMY)") end if %> was lifted $7 1/4 to $105 1/8, Glaxo Wellcome <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLX)") else Response.Write("(NYSE: GLX)") end if %> gained $5 to $60 3/8, Johnson & Johnson <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %> was up $3 3/8 to $72 3/8, Schering-Plough <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGP)") else Response.Write("(NYSE: SGP)") end if %> moved up $5 5/8 to $91 5/8, and Baxter International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAX)") else Response.Write("(NYSE: BAX)") end if %> tacked on $2 3/4 to $55 7/8.

Oil and gas exploration and production giant Royal Dutch Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RD)") else Response.Write("(NYSE: RD)") end if %> picked up another $3 1/4 to $43 1/4 and Royal Dutch/Shell Group sibling Shell Transport & Trading <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SC)") else Response.Write("(NYSE: SC)") end if %> climbed another $2 3/16 to $33 3/8 on market rumors that the companies may merge with Texaco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TX)") else Response.Write("(NYSE: TX)") end if %>, which rose $2 3/16 to $57 3/4... Haagen-Dazs parent Diageo PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DEO)") else Response.Write("(NYSE: DEO)") end if %> jumped $4 7/16 to $42 1/4 after The Wall Street Journal reported that rival Ben & Jerry's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BJICA)") else Response.Write("(Nasdaq: BJICA)") end if %> has ended its 12-year distribution agreement with Dreyer's Grand Ice Cream <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DRYR)") else Response.Write("(Nasdaq: DRYR)") end if %> and has teamed up with Diageo to deliver its products... Integrated circuit manufacturer Integrated Circuit Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICST)") else Response.Write("(Nasdaq: ICST)") end if %> soared $2 5/16, or 35.6%, to $8 13/16 after announcing it expects fiscal Q1 earnings will be "well within the range of current analysts' consensus mean estimates" despite the economic downturn in Asia.

Electronic signal processing components supplier Sawtek Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SAWS)") else Response.Write("(Nasdaq: SAWS)") end if %> leapt $2 to $12 1/4 after announcing it intends to repurchase up to 1 million shares because it believes its stock is currently undervalued by the market... Consumer finance company FIRSTPLUS Financial Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FP)") else Response.Write("(NYSE: FP)") end if %> shot up $4 7/16 to $27 3/16 after announcing it is beginning discussions with potential acquirers of the company... Health insurer Aetna Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AET)") else Response.Write("(NYSE: AET)") end if %> added $4 3/8 to $64 9/16 after announcing it plans to withdraw from the Medicare health maintenance organization business in six states to cut costs... Data processing company Automatic Data Processing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AUD)") else Response.Write("(NYSE: AUD)") end if %> gained $3 3/16 to $66 15/16 after Lehman Brothers raised its rating on the company to "buy" from "outperform" with a 12-month price target of $80.

Bank holding company InterWest Bancorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IWBK)") else Response.Write("(Nasdaq: IWBK)") end if %> gained $1 3/4 to $25 after announcing it will buy back up to 230,000, or 1.5%, of its shares outstanding... Information technology services firm Complete Business Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBSI)") else Response.Write("(Nasdaq: CBSI)") end if %> surged $7 3/8 to $22 1/2 after announcing the successful launch of an intranet/extranet Java application for Ford's Global Dimensional Control Division (GDCD) to manage operations related to the structural pre-production of vehicles... Consumer electronics retailer Circuit City Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CC)") else Response.Write("(NYSE: CC)") end if %> rang up $2 1/8 to $33 after yesterday saying it expects earnings for its consumer electronics business to increase about 44% to $0.46 a share. Subsidiary CarMax Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KMX)") else Response.Write("(NYSE: KMX)") end if %> sped ahead $1 13/16, or 31.8%, to $7 1/2.

Temporary manual labor company Labor Ready <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LBOR)") else Response.Write("(Nasdaq: LBOR)") end if %> rocketed up $6 3/8 to $17 3/4 after announcing an 87% jump in August sales to $60.3 million from $32.3 million a year ago... Radio frequency power amplifier maker Powerwave Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PWAV)") else Response.Write("(Nasdaq: PWAV)") end if %> surged $2 5/16 to $8 7/8 after announcing it will acquire Hewlett-Packard's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> radio frequency power amplifier business and its manufacturing facility in Folsom, Calif., for about $59 million... Broadband network systems company International FiberCom <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IFCI)") else Response.Write("(Nasdaq: IFCI)") end if %> was up $1 9/32 to $6 5/16 after announcing that more than 99% of its common stock purchase warrants that traded publicly under the symbol "IFCIW" have been exercised, raising roughly $7,150,000 in cash.

GOATS

Less-than-truckload freight hauler Roadway Express <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ROAD)") else Response.Write("(Nasdaq: ROAD)") end if %> broke down today, losing $3 1/8 to $12 after saying its fiscal Q3 earnings will be about 60% below last year's $0.50 per share and short of the First Call mean estimate of $0.40 per share. Revenues in the period will be about 5% lower than last year's $642.2 million, which were inflated a bit by last summer's United Parcel Service strike. The warning is the third in the past four quarters for Roadway, which this time around is blaming a high-cost freight mix and fallout from this summer's strike at General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> for its ills. To improve its freight mix yield (read: margins) down the road, the company said it is planning "new sales and marketing initiatives." It also will try to put the brakes on costs by cutting 6% of its headquarters staff and freezing hiring in its field operations.

Tefron Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TFR)") else Response.Write("(NYSE: TFR)") end if %>, which manufactures intimate apparel for retailers such as Intimate Brands' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBI)") else Response.Write("(NYSE: IBI)") end if %> Victoria's Secret unit and Gap <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>, was shredded for $8 13/16 to $6 7/16 after its shares finally opened for trading at around 12:30 p.m. The delay gave investors plenty of time to ruminate over the company's announcement earlier in the day that its second half profits will likely come in below expectations. Earnings in fiscal Q3 and Q4 will be "essentially in line" with the $0.27 per share recorded in Q2, dashing analysts' hopes of EPS of $0.33 in Q3 and $0.35 in Q4. Based on the strong demand for its man-made Hi-Tex fiber products, the Israeli firm said it is speeding up investment in a new plant for the garments. The added capital expenditures, combined with a continuing fall-off in orders from an unspecified client, will sacrifice short-term profits at the altar of "the long-term best interests of the company."

QUICK CUTS: Air carrier Trans World Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TWA)") else Response.Write("(AMEX: TWA)") end if %> slipped $9/16 to $6 1/16 as its pilots agreed yesterday to a four-year labor contract that will reportedly boost their pay to 90% of the airline industry's average at contract's end from its current 60% level... Life sciences company Monsanto <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MTC)") else Response.Write("(NYSE: MTC)") end if %> dropped $1 1/2 to $53 1/2 after cutting the prices of its Roundup brand of herbicide products by between $6 and $10 per gallon... Online book and music retailer Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %> dropped $3 13/16 to $79 15/16 after Merrill Lynch started coverage of the company with a near-term "reduce" rating and a long-term "neutral" rating.

Real estate finance and mortgage servicing firm WMF Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WMFG)") else Response.Write("(Nasdaq: WMFG)") end if %> dropped $2 5/8 to $8 1/8 after saying a subsidiary was hit with a $30 million pre-tax loss after deciding to sell $691 million in commercial mortgage loans to a unit of Merrill Lynch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MER)") else Response.Write("(NYSE: MER)") end if %> and closing hedges on the loans... Educational software developer The Learning Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLC)") else Response.Write("(NYSE: TLC)") end if %> was spanked for $1 5/8 to $16 1/16 today. The company completed its merger with Broderbund Software last night and said today that it will launch a "Broderbund is Back" campaign, which emphasizes cutting costs and improving distribution at its new unit.

Cast and forged industrial components maker Citation Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CAST)") else Response.Write("(Nasdaq: CAST)") end if %> slipped $1 5/8 to $9 after signing a letter of intent to consider a potential acquisition of French rival Groupe Valfond... Drug company Incyte Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INCY)") else Response.Write("(Nasdaq: INCY)") end if %> fell $7/8 to $18 1/2 after Affymetrix <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AFFX)") else Response.Write("(Nasdaq: AFFX)") end if %> said it received a patent for a technology to detect nucleic acids, which will be added to its current infringement lawsuit against Incyte. Affymetrix rose $1 1/2 to $18... Department store operator Nordstrom <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NOBE)") else Response.Write("(Nasdaq: NOBE)") end if %> slid $2 7/8 to $27 1/16 despite being upgraded to "strong buy" from "accumulate" by Black & Co.

Financial services giant Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %> voyaged $1 lower to $43 3/8 after saying its Salomon Smith Barney investment banking unit had pre-tax losses of $150 million in July and August due to "extreme volatility" in its U.S. and global arbitrage businesses, including some positions linked to Russia. Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %>, which said it has lost $350 million so far in fiscal Q3 due mostly to Russian trading positions, fell $1 3/16 to $73 1/8... Freight railroad operator Kansas City Southern Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KSU)") else Response.Write("(NYSE: KSU)") end if %> sank $2 3/8 to $30 1/2, thanks in no small part to an unidentified 1.4 million share block trade in the firm's stock reported by Dow Jones.

Vaccine developer Aviron <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVIR)") else Response.Write("(Nasdaq: AVIR)") end if %> was shot down $9 3/16 to $12 1/2 after the FDA refused to accept the company's regulatory filing for its FluMist inhalable influenza vaccine, citing a lack of information about the manufacturing processes and facilities used to make the vaccine... Auto components maker Tower Automotive <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TWR)") else Response.Write("(NYSE: TWR)") end if %> stalled $1 3/8 to $17 after agreeing to sell its door hinge business to Dura Automotive Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DRRA)") else Response.Write("(Nasdaq: DRRA)") end if %> for unspecified terms.

FOOL ON THE HILL
An Investment Opinion
by Alex Schay

Boeing's Flight Plan

A number of announcements concerning management changes at the world's largest aircraft maker Boeing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %> helped the company's share price taxi down the runway for $2 1/8 to $33 1/16 today, and signalled to the market that the firm is serious about getting past its recent production problems (by fomalizing the assignment of blame and getting the "new" blood pumping). This shift comes on the heels of yesterday's announcement (which provided more information about Boeing's flight plan) that its board had authorized the repurchase of as much as 15% of its common stock. As far as market signalling goes, Boeing is making some pretty clear indications that it's ready for takeoff.

Boeing replaced Ron Woodward, the head of its commercial airline unit (which saw profit margins slump below 3% last year) with another company veteran, Senior Vice President Alan Mulally, who managed Boeing's launch of the 777 and ran the Information, Space & Defense Systems Group. In addition to this announcement, Boeing also reported that its President and Chief Operating Officer Harry Stonecipher will now serve as the company's acting Chief Financial Officer until a replacement is found for the departing Boyd Givan, who retired today.

Boeing's "chief" problem over the last year has been in the area of production, not in demand for commercial aircraft. To paraphrase a money manager who commented on the managerial reshuffling today, stormy financial performance is unacceptable when the sun shines day after day on a company's business. Against a backdrop of steadily rising demand in 1993, Boeing forecast that it would lower the costs associated with producing aircraft (thanks to some hefty operating leverage) by about 25% in the time frame between 1992 and 1998. Present estimates indicate that Boeing has delivered about 7% of that promise. So, the firm still faces the task of cutting costs and improving productivity while at the same time delivering on its existing commitments to customers.

In tandem with past cost-cutting efforts came a pricing scheme that had been lowered to reflect the anticipated production breakthroughs (as evidenced by margins). And kind of like HMOs that don't forecast their expenses properly, the differences can't be made up at the end of the year or when the aircraft is completed. Another problem that Boeing has faced is completing jobs out of sequence, which can cost 5 times as much when compared with situations where everything goes as planned. This was the case with the firm's 737-NG and 747 lines for a period, and as Dale Wettlaufer reported last year, lower skilled labor on the 747 couldn't get up to speed quickly enough to execute the higher-level tasks that were required. The company is hoping that the $178 million in losses last year (even as deliveries rose 39%) will fade into dim memory around the turn of the century. Management's present long-run targets for improvement include:

1. A significant reduction in work-in-process inventory within 3 years.
2. Implementing "lean manufacturing" within 5 years.
3. Implementing fully digital defined production within 10 years.

CONFERENCE CALLS

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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