DJIA 7945.35 +149.85 (+1.92%) S&P 500 1029.71 +20.65 (+2.05%) Nasdaq 1665.69 +24.05 (+1.46%) Value Line Index 791.36 +13.20 (+1.70%) 30-Year Bond 104 2/32 unch 5.23 Yield
Electrical connectors maker AMP Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMP)") else Response.Write("(NYSE: AMP)") end if %> jumped $3 1/16 to $42 1/16 after hostile suitor AlliedSignal <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALD)") else Response.Write("(NYSE: ALD)") end if %> said 72% of AMP's common shares have been tendered to AlliedSignal, which shows that AMP's shareholders have "no confidence" in the company's current management. Recently installed AMP chairman and CEO Robert Ripp downplayed the significance of the tendered shares, saying it only suggests that "AMP shareholders want value and that's what we'll deliver." Ripp said he is "exploring options to produce greater value in the near-term" in an attempt to persuade shareholders to throw their support behind his restructuring plan rather than AlliedSignal's $44.50 per share cash bid, which AMP's board rejected last month. One possible quick value fix is a share buyback program, which Ripp is rumored to be considering. For its part, AlliedSignal rose $2 7/16 to $36.
Computer-based medical diagnostic equipment maker Elscint Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ELT)") else Response.Write("(NYSE: ELT)") end if %> rose $3 1/8 to $12 3/8 after agreeing to sell its computed tomography (CT) division to a unit of Britain's General Electric Co. PLC for $275 million in cash. The company also agreed to sell its nuclear medicine and magnetic resonance imaging (MRI) business to the other General Electric's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> GE Medical Systems unit for $100 million. The CT acronym is often bandied about by those attractive doctors on the TV show ER and refers to the scanning equipment that allows doctors to view cross sections of human organs. In an MRI, magnets and radio waves are used to generate images of internal body parts. Higher up the Elscint food chain, Elbit Medical Imaging <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EMITF)") else Response.Write("(Nasdaq: EMITF)") end if %>, which owns a 57% stake in the firm, climbed $2 to $10 3/8 and 40% stakeholder Elron Electronic Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ELRNF)") else Response.Write("(Nasdaq: ELRNF)") end if %> gained $1 to $15 3/4.
QUICK TAKES: Air carrier Northwest Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NWAC)") else Response.Write("(Nasdaq: NWAC)") end if %> rose $2 1/4 to $30 1/8 after its pilots' union approved a new four-year contract on Saturday, ending a two-week strike at the airline... Other airlines gained altitude as well today as an analyst told Barron's that the sector is "super-cheap." American Airlines parent AMR Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMR)") else Response.Write("(NYSE: AMR)") end if %> gained $4 15/16 to $60 1/2, United Airlines big daddy UAL Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UAL)") else Response.Write("(NYSE: UAL)") end if %> climbed $5 7/16 to $69 3/16, Southwest Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LUV)") else Response.Write("(NYSE: LUV)") end if %> added $1 to $20, and Delta Air Lines <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DAL)") else Response.Write("(NYSE: DAL)") end if %> advanced $8 3/4 to $104 1/8... Automation, avionics, and semiconductor systems maker Rockwell International Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ROK)") else Response.Write("(NYSE: ROK)") end if %> rose $2 to $40 9/16 after saying it will record about $265 million in special charges and after-tax operating losses in fiscal Q4 related to the resizing and eventual spin-off of its semiconductor unit.
Bank holding company Citibank <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> moved up $5 to $101 after saying it will take a "significant equity interest" in TransPoint, the electronic bill payment joint venture between Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> and First Data Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDC)") else Response.Write("(NYSE: FDC)") end if %>... Paine Webber Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PWJ)") else Response.Write("(NYSE: PWJ)") end if %> picked up $2 3/8 to $35 7/8 after a German newspaper reported that the investment bank and brokerage firm was on the agenda for Germany's Dresdner Bank's board meeting scheduled for today. Dresdner has been mentioned as a possible suitor in prior merger rumors regarding Paine Webber... Other brokers picked up ground as well. Lehman Brothers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEH)") else Response.Write("(NYSE: LEH)") end if %> tacked on $3 5/16 to $39 1/8, Morgan Stanley Dean Witter <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MWD)") else Response.Write("(NYSE: MWD)") end if %> added $2 1/8 to $53 1/8, and Hambrecht & Quist <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HQ)") else Response.Write("(NYSE: HQ)") end if %> advanced $2 1/2 to $21.
The Wall Street Journal reported that the Organization of Petroleum Exporting Countries (OPEC) came close to its goal of cutting oil supply by about 3.5% of the world total in August, sending shares of several oil services firms higher. Schlumberger <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLB)") else Response.Write("(NYSE: SLB)") end if %> gained $1 7/16 to $52 9/16, Halliburton <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HAL)") else Response.Write("(NYSE: HAL)") end if %> added $1 to $33 13/16, and Cooper Cameron Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RON)") else Response.Write("(NYSE: RON)") end if %> climbed $1 13/16 to $33 13/16... Beverage and snack food maker PepsiCo <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PEP)") else Response.Write("(NYSE: PEP)") end if %> bubbled $1 9/16 higher to $31 5/16 after launching a national ad campaign touting the wonders of its olestra-spiked Wow! potato chips, which are made by Pepsi's Frito-Lay unit... Aluminum and plastic containers maker Crown Cork & Seal Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCK)") else Response.Write("(NYSE: CCK)") end if %> uncorked a $13/16 gain to $35 15/16 after being upgraded by CS First Boston to "strong buy" from "buy."
Internet services conglomerate America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> picked up $3 to $98 after Japanese electronics giant Sony Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SNE)") else Response.Write("(NYSE: SNE)") end if %> agreed to feature an icon for pre-installed AOL software on the desktop of all of its PCs sold in Canada and the U.S... Business Internet infrastructure provider and consultant Icon CMT Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICMT)") else Response.Write("(Nasdaq: ICMT)") end if %> moved up $3 1/4 to $10 1/2 after agreeing to merge with fiber optic network operator Qwest Communications International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QWST)") else Response.Write("(Nasdaq: QWST)") end if %> in a stock swap valued at about $185 million... Wireless communications, semiconductors, and advanced electronics systems maker Motorola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> gained $4 3/8 to $45 3/4 after unveiling a new multimedia set-top box, code-named "Blackbird," which can support Internet access, 3-D graphics, broadband networking, and other features.
Broadband cable modem systems maker Terayon Communication Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TERN)") else Response.Write("(Nasdaq: TERN)") end if %> gained $1 13/16 to $9 9/16 after BT Alex. Brown started coverage with a "strong buy" rating. The investment bank was an underwriter of Terayon's initial public offering last month... Cardiac medical devices maker St. Jude Medical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STJ)") else Response.Write("(NYSE: STJ)") end if %> paced ahead $1 to $20 1/2 after the company told Reuters that CS First Boston presented a review of the firm's strategic options to St. Jude's board on Friday... Drug developer EntreMed <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENMD)") else Response.Write("(Nasdaq: ENMD)") end if %> moved up $1 7/8 to $20 1/2 after signing a five-year research and development agreement with the National Cancer Institute regarding its endostatin protein, which has shown some cancer-fighting traits.
Managed care provider PacifiCare Health Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PHSYB)") else Response.Write("(Nasdaq: PHSYB)") end if %> rose $7 1/4 to $77 on rumors that it is a takeover target... Photographic and imaging products maker Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> developed a $2 5/16 gain to $80 5/16 after agreeing to sell its NanoSystems drug delivery subsidiary to Ireland's Elan Corp. PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ELN)") else Response.Write("(NYSE: ELN)") end if %> for $150 million in cash and Elan stock purchase warrants... TV and radio station operator Emmis Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EMMS)") else Response.Write("(Nasdaq: EMMS)") end if %> tacked on $3 15/16 to $33 1/4 after saying its fiscal Q2 broadcast cash flow and after tax cash flow will "significantly exceed" analysts' expectations... K-12 educational software developer Advantage Learning Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ALSI)") else Response.Write("(Nasdaq: ALSI)") end if %> tacked on $6 15/16 to $31 1/2 after saying strong demand for its products will result in fiscal Q3 EPS between $0.22 and $0.24, ahead of the $0.15 expected by the Street.
Gaming company Hollywood Park <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HPK)") else Response.Write("(NYSE: HPK)") end if %> rolled $1 7/16 higher to $11 7/8 after winning Indiana's last remaining riverboat gaming license for the Ohio River... Telecommunications services provider WinStar Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCII)") else Response.Write("(Nasdaq: WCII)") end if %> rose $3 to $24 after winning a federal court case that will allow multi-million dollar federal local telecommunications contracts to be awarded to more than one bidder... Web-based network reporting and analysis tools maker Concord Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CCRD)") else Response.Write("(Nasdaq: CCRD)") end if %> climbed $3 5/16 to $41 9/16 after announcing an arrangement with Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> to use data from Cisco's routers to better gauge network services across large enterprise networks... Auto and specialty property and casualty insurer Progressive Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PGR)") else Response.Write("(NYSE: PGR)") end if %> tacked on $4 3/16 to $108 after CS First Boston upgraded the firm to "strong buy" from "buy" based on price... Human resource staffing firm Vincam Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VCAM)") else Response.Write("(Nasdaq: VCAM)") end if %> climbed $1 5/8 to $10 7/16 thanks to a Hambrecht & Quist upgrade to "strong buy" from "buy."
Walt Disney Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %> slid $1 1/4 to $24 9/16 after announcing late Friday that it expects fiscal fourth quarter earnings of $0.15 to $0.16 a share (before charges of about $0.02), down from $0.19 for the same year-earlier period, due to the economic downturn in Asia as well as weakness in the company's filmed entertainment business -- apparently, summer movies such as Armageddon, The Parent Trap, and Jane Austen's Mafia weren't the big hits the company had hoped for. Analysts had been expecting about a nickel more in EPS, something closer to $0.21 a share. For the fiscal year ending September 30, the Mickey Mouse operation expects EPS of $0.88 to $0.89, just edging out last year's $0.86 but short of analysts' mean estimate of $0.95. As Dale Wettlaufer illuminated in today's Fool Plate Special, numerous sell-side analysts downgraded the company today even though the course and the velocity of the business haven't changed much. Of course, because Disney won't allow individual investors to listen to its conference calls, the guidance available to analysts is most likely far more informative than the spartan details given in the company's press release for us plebeians.
Voice and data transport and access systems company Tellabs <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %> and dense wavelength division multiplexing (DWDM) systems maker Ciena <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> this morning announced that they have called off their proposed merger with neither owing the other a break-up fee. The companies made the decision following announcements in the last few weeks that Ciena would not be getting expected contracts from AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> and privately held Digital Teleport. Tellabs, which sank $7 5/16 to $37 11/16, said in a conference call today that it expects third quarter revenue just slightly above that of the second quarter and a tad below expectations, and earnings to be about $0.46 per share, roughly in line with analysts' current mean estimate of $0.47. Meanwhile, Ciena, which lost $2 3/4 to $13 3/16, today also reported fiscal Q3 EPS of $0.15 (excluding charges), down from $0.34 and basically in line with downwardly revised estimates. The whammy came in Ciena's warning that Q4 results will be "materially below" those of Q3 and that it now expects "modest growth" year-on-year in revenue and earnings in fiscal 1999. To listen to a replay of the Tellabs conference call, dial (800) 633-8284 and enter reservation number 4716955.
QUICK CUTS: Office supplies retailer OfficeMax <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OMX)") else Response.Write("(NYSE: OMX)") end if %> was shredded $1 1/16 to $9 15/16 after announcing it has ended talks regarding a possible business combination with an unnamed company... Complying with a temporary restraining order, computer security software firm Symantec Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYMC)") else Response.Write("(Nasdaq: SYMC)") end if %> dropped $2 1/8 to $14 1/8 after announcing it has removed Norton Uninstall Deluxe from Norton SystemWorks, and will ship a "significantly enhanced" version of SystemWorks in the U.S. this week with free software. The company estimates the revenue impact this quarter will be less than $5 million... Information technology training software developer CBT Group PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBTSY)") else Response.Write("(Nasdaq: CBTSY)") end if %> plunged $15 1/4, or 27.5%, to $40 1/8 after its CEO reportedly said that the company's sales and marketing expenses rose to 46% of revenues in the first half of fiscal 1998, higher than last year's 42% and the company's stated goal of 40% for the year.
Farm, construction, and forestry equipment manufacturer Deere & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DE)") else Response.Write("(NYSE: DE)") end if %> was mowed down $1 3/4 to $31 7/16 after announcing it expects lower year-on-year performance in the fiscal fourth quarter but still anticipates double-digit earnings growth for the year... Laser maker Cymer Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYMI)") else Response.Write("(Nasdaq: CYMI)") end if %> fell $1 7/16 to $8 11/16 as the law firm of Entwistle & Cappucci LLP announced a class action lawsuit against the company, charging that the company disseminated false and misleading statements... Information technology outsourcer and consultant Alternative Resources Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ALRC)") else Response.Write("(Nasdaq: ALRC)") end if %> sank $1 to $5 1/16 after saying it will take $25 to $30 million in acquisition and restructuring charges in fiscal Q3 and that EPS will be between $0.08 and $0.10 for the quarter, short of expectations of $0.21.
Hotel and casino operator Hilton Hotels Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HLT)") else Response.Write("(NYSE: HLT)") end if %> shed $5/8 to $18 1/2 after saying its fiscal Q3 earnings will be in the low $0.30 per share range, lower than the $0.35 per share earned last year and below the First Call mean estimate of $0.38 per share... Drug developer BioChem Pharma <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BCHE)") else Response.Write("(Nasdaq: BCHE)") end if %> lost $1 13/16 to $18 1/16 after its CEO said at a NationsBanc Montgomery Securities conference that the company doesn't expect to sustain the 50% annual revenue growth of recent years, although it may achieve 40% in annual income growth for the next four to five years.
Plastic parts and components manufacturer Deswell Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DSWLF)") else Response.Write("(Nasdaq: DSWLF)") end if %> was pounded for a $1 3/8 loss to $8 1/2 after announcing it anticipates a 50% reduction in orders from one of its major customers for the next three months due to restructuring of the client's parent company... Industrial Distribution Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IDG)") else Response.Write("(NYSE: IDG)") end if %> slid another $1 9/16 to $5 1/2 after Merrill Lynch lowered its near-term rating on the maintenance, repair, operating and production products and services company to "neutral" from "accumulate" while maintaining a long-term "buy" rating.
[Ed. Note: The following Fool on the Hill column was originally published on Nov. 12, 1997.]
FOOL
ON THE HILL
An Investment Opinion
by
Randy Befumo
When NOT to Invest
Unfortunately, many investors who are seduced by the lure of easy money try to become "active" investors before they have the skills, the resources, or the appropriate intellectual framework to do so. This is not to say that investing in stocks is extraordinarily difficult -- it is not. However, beating the market on a regular basis is far from easy and requires that an investor bring to the investing process a singular discipline, knowledge, or passion that will allow him to rise above the herd. Like any other competition, not everyone can win. In fact, net of new cash in-flows into the market, for every dollar that outperforms a market index, somebody else's dollar is not doing quite so well.
How can you tell if you are ready to become an "active" investor? Not an investor who buys and sells stocks on a regular basis, but active in the way the academics mean it -- someone who selects his own stocks. It is not like there is a licensing process or anything. In fact, there is not even a formal course of instruction. Much like parenting, you tend to find out if you are really cut out to be an investor only after you have made a pretty substantial commitment. Today, I want to give some pointers based on some recent e-mail I have received in an attempt to give some guidance as to when you should start buying your own stocks.
In my opinion, you should NOT be investing in stocks...
...if you need the money within two to three years at the least, five years as an intermediate time, and ten years if you are really risk averse.
...if you don't like to do math.
...if you use the word "play," "gamble," "flyer," or any similar speculation-oriented word when you describe your investments.
...if you think indexes matter more than what companies you own.
...if you are unprepared for volatility. A lot of people look at the returns for the stock market only to turn pale at the first loss. If you cannot stand to lose money, you should not own stocks. Period.
...if you think you will only ever buy stocks that go up. News flash -- you are not perfect. No system is perfect. No provider of advice is perfect. You can -- and will -- lose money at some point during your investment career. You can minimize this loss if you do your homework and are careful about valuation, but money lost is money lost.
...if you believe that the share price alone or share price movements alone tell you anything about the underlying quality of the company or its business. All too often people buy low-priced shares with the idea that they are cheap, only to find out that they are low-priced because the underlying business sucks.
...if you couldn't write down a list of why you bought and what might make you sell. If you don't know why you bought a stock in the first place, how can you know when to sell it? Bad scene. Avoid it.
...if you cannot tell the difference between a balance sheet and an income statement. Especially if you don't even know where to find a copy of either.
...if you don't know how to get the phone number for Investor Relations at the company in case you have question.
...if you cannot make a rudimentary assessment of the underlying quality of a company.
...if you cannot define any of the following words: gross margin, operating margin, profit margin, earnings per share, costs of goods sold, dilution, share buyback, revenues, receivables, inventories, cash flow, estimates, depreciation, amortization, capital expenditure, GAAP, market capitalization or valuation, shareholder's equity, assets, liabilities, return on equity.
...if you only have one source of information about the company. I don't care whether it is your best friend, a message board, or some content provider. If you cannot independently verify the facts, you are bound to get unintentionally bamboozled. No one likes to admit he is wrong. If you depend on one source of information, odds are when it finally coughs up the conclusion that it made a bad call it will be too late.
...if you cannot name the major products a company makes or the company's major competitors.
...if you only use one technique to value a company. That is like using one tool to build a house. The house will look like crap and be unlivable. Sales, earnings, cash flow, assets, historical returns, management, underlying quality... are just a few of the ways you can value a company. Don't use only one tool.
...if you don't understand that the earnings estimates you get lag real time. Someone recently wrote to FoolNews commenting that a disk drive-related company looked cheap at five times expected earnings. Unfortunately for that investor, in the past week the earnings estimate had dropped by more than 50%. As estimates are only published once a week for individual investors, if something suddenly changes, the estimates can be very "stale." If that investor had not been following news in the drive industry, he might have made a potentially disastrous investment.
...if you don't follow up on a company at least four times a year. Preferably once a month. These are big investments you are making relative to your savings... put some sweat equity into them.
...if you don't use the Internet. Seriously folks, come on. Almost all of the disadvantage of being an individual investor from the information side was erased by the Internet. If you aren't on it, you are at a major disadvantage to all of the other players. It is like trying to wrestle with no limbs.
...if you buy a stock simply to sell options. Although some might try to convince you this is a conservative, income-oriented approach, the reality is that if you are getting decent premiums for selling the options, you are taking on a lot of risk owning the equity.
...if you refer to management by their first name. This may seem churlish, but nine times out of ten when management is known by their first names the investor has lost all objectivity about the investment.
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
Editing |