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HEROES

Discount warehouse club Costco Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COST)") else Response.Write("(Nasdaq: COST)") end if %> charged up $4 7/8 to $49 15/16 after announcing a 6% increase in August same-store sales and directly refuting rumors concerning a regulatory inquiry into its revenue recognition policy on membership fees. The company currently counts as revenues the entire amount of a customer's annual club fee when it is received, rather than deferring it and spreading it out over the length of the membership. Costco said it has accounted for fees this way since it opened in 1976 and that the practice conforms with Generally Accepted Accounting Principles (GAAP) and industry practice. Costco added that the SEC has not contacted the company on any accounting matter in the last several years. Even if it were to switch to the deferral method, the company said that it would simply take a one-time charge and that the change "would not have a material effect on its financial condition, cash flows or ongoing operating results." Since less than 2% of 1997 revenues were comprised of "membership fees and other" revenues and member cancellations were less than 1/10 of one percent at last count, at issue here are very small numbers, whatever the accounting method.

Customer management software developer USCS International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USCS)") else Response.Write("(Nasdaq: USCS)") end if %> surged $4 3/8 to $30 3/8 after late yesterday announcing it will be acquired by DST Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DST)") else Response.Write("(NYSE: DST)") end if %> for around $874 million, or $37.51 a share, based on yesterday's closing prices -- a 44% premium to USCS's last close of $26. In this all-stock transaction, USCS shareholders will receive 0.62 DST shares for each USCS share. The merger is expected to generate savings and add to DST's 1999 EPS. It will also bolster DST's position in the output processing and customer management software and services industries. If the deal goes through as expected in the fourth quarter, the combined company will have $1.1 billion in annual revenues and 8,000 employees worldwide. DST Systems plummeted $8 5/8 to $51 7/8, while former parent Kansas City Southern Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KSU)") else Response.Write("(NYSE: KSU)") end if %>, which still owns about 41% of DST, lost $1 15/16 to $31 7/8.

Tech Data <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TECD)") else Response.Write("(Nasdaq: TECD)") end if %> connected for a $2 15/16 gain to $42 3/8 on the strength of strong second quarter results announced late yesterday. The international distributor of microcomputer hardware and software products said sales rocketed 43% to $2.2 billion in the July period while earnings rose 29% to $27.7 million, or $0.55 per share (before one-time items). That topped last year's $0.47 per share as well as the consensus earnings estimate of $0.52 per share. Tech Data benefited from strong results across all segments, with sales at its networking unit up 54%, revenues at its peripherals division up 51%, and software and systems sales up 38% and 24% respectively. While domestic revenues vaulted 19% higher, the stellar growth has come from the international business, which accounted for 26% of total sales versus 11% a year ago. These numbers, however, include full quarter results from Macrotron, which was sold to meet antitrust issues in Germany raised by Tech Data's acquisition of Computer 2000 AG -- the results of which won't be included in Tech Data's numbers until the third quarter. For more details, click here.

QUICK TAKES: Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> gained $1 7/8 to $76 3/4 after Morgan Stanley Dean Witter raised its earnings estimates on the Pentium chip maker to $3.15 a share from $3.05 for 1998 and to $3.90 a share from $3.85 for 1999. Morgan Stanley said Intel will benefit from a seasonal uptick in demand and an end to a multi-quarter inventory correction... Casual wear retailer Gap Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %> regained $4 7/8 to $52 7/8 after falling for the past few days on no apparent news as the company reported that comparable-store sales rose 9% compared with a 10% increase in August 1997... Consumer electronics retailer Best Buy Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBY)") else Response.Write("(NYSE: BBY)") end if %> moved up $3 1/4 to $47 9/16 after reporting a 17.9% increase same-store sales. The company expects Q2 EPS of roughly $0.40, beating last year's EPS of $0.07 and the analysts' expectation of $0.18.

Telecommunications company WorldCom Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %> rang up a $1 5/8 gain to $47 3/8 after Lehman Brothers reiterated its "buy" rating on the company with a 12-month price target of $75. Merger partner MCI Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %> finished up $1 7/8 to $58 1/4... Drug developer Synaptic Pharmaceutical Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SNAP)") else Response.Write("(Nasdaq: SNAP)") end if %> soared $2 1/8 to $13 while Eli Lilly & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> advanced $2 15/16 to $72 3/16 after the companies announced that the migraine compound they are collaborating on will advance into Phase III clinical trials... Biotech firm Emisphere Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EMIS)") else Response.Write("(Nasdaq: EMIS)") end if %> added $5/8 to $7 3/4 after Eli Lilly formally selected a proprietary Emisphere carrier for clinical testing of the oral delivery of an important Lilly protein for the treatment of osteoporosis.

Wisconsin Central Transportation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCLX)") else Response.Write("(Nasdaq: WCLX)") end if %> cruised up $1 1/8 to $14 1/2 after Morgan Stanley raised its rating to "strong buy" from "outperform"... Fiber-optic network developer Global Crossing Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GBLX)") else Response.Write("(Nasdaq: GBLX)") end if %> was up $2 1/16 to $20 11/16 after saying it expects positive net income and cash flow in the second half of 1998... Real estate investment trust Crescent Real Estate Equities Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CEI)") else Response.Write("(NYSE: CEI)") end if %> added $1 1/4 to $24 1/8 after announcing its board has declared a Q2 cash dividend of $0.55 per common share, which is about 45% higher than last year's $0.38 dividend, payable Nov. 3... BREED Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BDT)") else Response.Write("(NYSE: BDT)") end if %>, which develops and makes automotive occupant safety systems, picked up $1 to $6 15/16 after announcing the grand opening of FAB 2, the world's largest facility dedicated to silicon micromachined sensor manufacturing, in Helsinki, Finland.

Professional tool and equipment manufacturer Snap-on Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SNA)") else Response.Write("(NYSE: SNA)") end if %> snapped up $2 11/16 to $28 7/8 after saying it expects Q4 EPS to approximate last year's $0.68 (compared with analysts' mean estimate of $0.71) and a return to growth and profitability in 1999... Teltrend Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLTN)") else Response.Write("(Nasdaq: TLTN)") end if %> tacked on $3/4 to $13 3/4 after announcing Q4 EPS of $0.33 a share, $0.03 higher than both the EPS for the same year-earlier period and the analysts' mean estimate... Aviation and marine fuel services company World Fuel Services Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: INT)") else Response.Write("(NYSE: INT)") end if %> moved up $1 11/16 to $13 1/16 after declaring a regular quarterly cash dividend of $0.05 per share payable Oct. 7... Insurer Centris Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CGE)") else Response.Write("(NYSE: CGE)") end if %> climbed $1 to $10 3/8 after announcing board authorization to buy back up to $5 million in shares.

Auto dealership Cross-Continent Auto Retailers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XC)") else Response.Write("(NYSE: XC)") end if %> of Amarillo, Texas, sped ahead $3 1/16 to $9 1/2 after announcing it will be acquired by National Car Rental and Alamo Rent-A-Car parent Republic Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RII)") else Response.Write("(NYSE: RII)") end if %> for $10.70 a share in cash, or a total of $145 million... People's Bank of California parent PBOC Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PBOC)") else Response.Write("(Nasdaq: PBOC)") end if %> rose $3/4 to $10 3/8 after announcing plans to buy back as many as 1 million shares, or 5% of its shares outstanding.

GOATS

America West Holdings Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AWA)") else Response.Write("(NYSE: AWA)") end if %> was clipped for a $5 5/8 loss to $14 1/8 after its America West Airline unit reported an August passenger load factor of 72.8%, down from 74.7% a year ago. The airline also said its revenue passenger miles, a key gauge for the air industry, was flat during the period at 1.5 billion. Contract talks with a union representing about 450 of its line mechanics has hampered the firm's financial results, the company said. The drawn-out discussions, which left the carrier's operational performance in July and August stalled on the tarmac, will lead to fiscal Q3 earnings below the Street's mean estimate of $0.61 per share. Chairman William Franke added that he is "cautiously optimistic" that the quarterly figures will match the $0.40 per share earned last year.

After posting some modest gains yesterday, several banks and brokerage firms resumed their recent downward slide today. Like Curly returning Moe's eye-pokes in a financial version of The Three Stodges, the big Wall Street firms and money center banks today took turns lowering each others' fiscal 1999 earnings estimates on fears that Russia's new scare-istroika economic policy will drag down the entire sector's near-term profitability. Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> moved down $6 3/8 to $67 1/8, Chase Manhattan Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMB)") else Response.Write("(NYSE: CMB)") end if %> slid $5 5/8 to $49 1/4, Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %> fell $3 3/8 to $41 1/8, and merger partner Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> dropped $10 1/4 to $98 1/2. Also, Merrill Lynch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MER)") else Response.Write("(NYSE: MER)") end if %> sank $3 15/16 to $63 7/8, and Morgan Stanley Dean Witter <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MWD)") else Response.Write("(NYSE: MWD)") end if %> stumbled $5 3/8 to $53 5/8. Rounding out the bunch, J.P. Morgan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JPM)") else Response.Write("(NYSE: JPM)") end if %> slipped $6 1/2 to $88 3/4, Donaldson, Lufkin & Jenrette <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLJ)") else Response.Write("(NYSE: DLJ)") end if %> slumped $3 1/4 to $30 7/8, and Lehman Brothers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEH)") else Response.Write("(NYSE: LEH)") end if %> lost $3 3/4 to $38 3/8.

QUICK CUTS: The American depositary shares of Hitachi Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HIT)") else Response.Write("(NYSE: HIT)") end if %> fell $5 1/2 to $49 1/4 after the Japanese electronics manufacturer said slowing sales will result in an estimated $1.8 billion loss in the current fiscal year, which ends in April 1999... VLSI Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VLSI)") else Response.Write("(Nasdaq: VLSI)") end if %>, which makes chips for the wireless communications and networking markets, dropped $1 to $7 13/16 after saying the general slowdown in the semiconductor industry will result in a 5% to 10% sequential drop in fiscal Q3 revenues and EPS below the $0.13 expected by the Street... Delta Air Lines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DAL)") else Response.Write("(NYSE: DAL)") end if %> fell $2 9/16 to $95 1/4 after a SwissAir MD-11 jet crashed off the coast of Nova Scotia, killing all 229 passengers on board. Delta had a code sharing agreement with the SwissAir flight, which reportedly included 53 ticketed Delta passengers and a Delta flight attendant.

Carbonated beverage maker Coca-Cola Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> slumped $2 5/16 to $61 15/16 following a downgrade from Sanford C. Bernstein & Co. to "market perform" from "outperform"... Sunglasses retailer Sunglass Hut International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAYS)") else Response.Write("(Nasdaq: RAYS)") end if %> was scorched $1 1/16 to $5 7/8 due in part to a Gruntal & Co. downgrade to "buy" from "strong buy"... Online development services firm USWeb Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USWB)") else Response.Write("(Nasdaq: USWB)") end if %> dropped another $2 1/8 to $10 3/16 after agreeing to acquire new media marketing firm CKS Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CKSG)") else Response.Write("(Nasdaq: CKSG)") end if %> yesterday for about $344.4 million in stock. CKS Group lost $2 to $13 1/4 today... T.J. Maxx and Marshalls off-price apparel stores operator TJX Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TJX)") else Response.Write("(NYSE: TJX)") end if %> was marked down $1 13/16 to $20 5/8 after reporting a 1% year-over-year advance in August same-store sales.

Belgium's ICOS Vision Systems Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IVISF)") else Response.Write("(Nasdaq: IVISF)") end if %>, which makes machine vision and inspection systems used in the back end of the chip making process, slipped $7/8 to $13 3/4 after saying its net income will be "substantially lower" in the second half of the year than for the first half due to a slowdown in demand and the Asian financial crisis... Technology media and marketing firm CMP Media <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMPX)") else Response.Write("(Nasdaq: CMPX)") end if %> lost $4 7/8 to $10 5/8 after warning that its third quarter net income will come in between $0.01 and $0.02 per share, missing the Street's mean estimate of $0.20... 3D graphics hardware and software developer Evans & Sutherland Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESCC)") else Response.Write("(Nasdaq: ESCC)") end if %> slumped $1 1/8 to $14 1/2 after Wheat First Union lowered its rating to "hold" from "outperform" less than a week after it had downgraded the firm to "outperform" from "buy."

Air carrier Alaska Air Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALK)") else Response.Write("(NYSE: ALK)") end if %> dropped $4 to $33 5/16 after the load factor of its Alaska Airlines unit slipped to 73.7% in August from 74.7% a year ago... International training and education company TRO Learning <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TUTR)") else Response.Write("(Nasdaq: TUTR)") end if %> fell $2 1/4 to $7 after reporting fiscal Q3 EPS of $0.23, missing the Street's mean estimate by $0.12... Department store operator Bon-Ton Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BONT)") else Response.Write("(Nasdaq: BONT)") end if %> was knocked down $1 3/4 to $7 1/4 after announcing its same-store sales declined 0.7% in August compared to the same month a year ago... Semiconductor laser beam mask making equipment company Etec Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ETEC)") else Response.Write("(Nasdaq: ETEC)") end if %> was burned for $1 5/8 to $27 3/8 after reporting fiscal Q4 EPS of $0.80, beating the Street's mean estimate of $0.77. However, the company said it is "cautious" about its short-term business prospects.

Dense wavelength division multiplexing (DWDM) systems maker Ciena <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> fell another $2 9/32 to $26 3/16 and voice and data transport and access systems maker Tellabs <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %> lost $1 5/16 more to $42 7/16 after the two companies announced yesterday that they will delay the shareholder votes for their proposed merger from September 9 to sometime in mid-November... Engineering software solutions developer ANSYS Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ANSS)") else Response.Write("(Nasdaq: ANSS)") end if %> moved down $1/2 to $6 5/8 after CFO John Sherbin said he would resign at the end of the month "to pursue a new opportunity"... Semiconductor, cryogenic, and vacuum equipment maker Helix Technology Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HELX)") else Response.Write("(Nasdaq: HELX)") end if %> was doubled up for a $5/8 loss to $10 after saying it will cut 60 jobs and close a leased production facility as part of a restructuring.

Xilinx <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XLNX)") else Response.Write("(Nasdaq: XLNX)") end if %> slipped $1 3/4 to $31 1/2 after Adams, Harkness & Hill reportedly reduced the programmable logic chip company's fiscal 1999 earnings estimate to $1.58 per share from $1.63... Women's casual apparel retailer Talbots <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLB)") else Response.Write("(NYSE: TLB)") end if %> slid $15/16 to $22 7/8 after reporting a 3.7% drop in same-store sales in August compared to a year ago... Corrugated containers and paperboard company Temple-Inland <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TIN)") else Response.Write("(NYSE: TIN)") end if %> sank $1 3/4 to $44 1/16 after agreeing to acquire two medium density fiberboard plants from Canada's MacMillan Bloedel Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MMBLF)") else Response.Write("(Nasdaq: MMBLF)") end if %> for about $104 million in cash.

FOOL ON THE HILL
An Investment Opinion
by Alex Schay

Power Play

Doomsday forecasts about deregulation, dividend cuts, and the verisimilar notion that greener pastures lie elsewhere have sent investors fleeing the electric utility segment. Even with the market's recent drop, the traditional haven for widows and orphans has been shunned. Electric utilites are still in a kind of a limbo on the regulatory front (despite the April '96 Federal Energy Regulatory Commission guidelines for opening transmission systems and subsequent actions by various states), and tense electric utility executives have elected to limit their infrastructure investments given the lack of state-by-state visibility.

Don't misunderstand, competition is inevitable, and smart companies have thrown themselves into the fray with strategic plans in place -- it's just that even a basic policy groundwork for how competitve markets will be regulated on a regional basis (hence, industry use of the word "reregulation" rather than deregulation) has yet to materialize. Despite this, how bad has the segment performed over the last year?

         Simple Apprec.  Div. Reinvested in Index 
 S&P500            5.86%              7.52% 
 Dow 30           -2.69%            -.9884% 
 Nasdaq Comp      -2.86%                 NA 
 Wilshire 5000    .8803%                 NA 
  
 S&P Utility      15.02%              20.29% 
 DJ Utility       14.94%              19.64% 
 Phil. Utility    24.54%              30.73% 
 NYSE Utility     23.58%              27.50%

           Simple Apprec.   Div. Reinvested in Index 
 Duke Energy    21.91%               26.92% 
 Southern Co.   23.47%               30.20%   
 FPL Group      35.67%               40.25% 
 CMS Energy     15.02%               18.50%

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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