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HEROES

In the true spirit of "if you can't beat 'em, join 'em," Internet music retailer Music Boulevard parent N2K Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NTKI)") else Response.Write("(NYSE: NTKI)") end if %> formally announced it will merge with rival CDnow <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CDNW)") else Response.Write("(Nasdaq: CDNW)") end if %> in a stock swap valuing N2K at $7.83 a share, a 42% premium based on yesterday's close. N2K moved up $1/2 to $6, while CDnow slipped $13/16 to $8 5/8, as the announcement was hardly a surprise because the companies early this month confirmed a Wall Street Journal report that they were discussing a possible merger (N2K had been trading below $5 before the initial news). The deal will create the largest online music store, initially called CDnow/N2K Inc., and a formidable force against book and music seller Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %>. Both companies also reported sizable losses for the third quarter: N2K lost $1.39 a share (before charges), which was wider than analysts' expectations of a loss of $1.23. CDnow beat expectations with a Q3 loss of $0.74 a share, but that was worse than last year's loss of $0.36. The combined company should be able to cut costs by eliminating jobs that overlap.

After "surging" 12% yesterday, shares of Adaptec <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADPT)") else Response.Write("(Nasdaq: ADPT)") end if %> gained another $1 7/8, or 13.4%, to $15 7/8 after announcing breakeven fiscal second quarter results compared with IBES estimates for a loss of $0.01 per share. Overall, revenues came in "less weak" than expected -- which bears a subtle difference when contrasted with "stronger" -- at $143.9 million. This showing was attributable to increases from the firm's Asynchronous Transfer Mode (ATM), Small Computer Systems Interface (SCSI), Fast Ethernet, Fibre Channel, and Wide Area Network (WAN) product lines. Adaptec's products increase the data transfer rates between PCs, servers, peripherals and networks, and consist primarily of host adapters, network products, CD recordable software solutions, application specific integrated circuit controllers for hard disk and CD-ROM drives, and storage system solutions that incorporate RAID and Fibre Channel technologies. For a closer look at the company, see today's Fool Plate Special in the Lunchtime News.

QUICK TAKES: Data storage devices maker Iomega <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %> rallied $1, or 24.2%, to $5 1/8 after late yesterday announcing it has hired Jodie Glore as its new president and CEO. Glore, 51, joins Iomega from Rockwell Automation, where he was president and chief operating officer. For all you can possibly stomach on Iomega, click here... Investment banking firm Bankers Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> powered up $5 1/2 to $66 7/8 on renewed takeover rumors and as the company said it has operated profitably this month following its report of a Q3 loss of $488 million, compared with a profit of $246 million a year ago... Credit-card processor BA Merchant Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BPI)") else Response.Write("(NYSE: BPI)") end if %> charged up $2 1/16 to $15 11/16 after announcing that BankAmerica Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAC)") else Response.Write("(NYSE: BAC)") end if %> has offered to buy all of its outstanding Class A shares for $15.50 a share in cash, a 14% premium to BA Merchant's close of $13 5/8 yesterday. Bank of America owns 100% of BA Merchant's Class B shares, or 95.2% of the voting rights.

Baxter International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAX)") else Response.Write("(NYSE: BAX)") end if %> added $1 7/8 to $58 7/8 after announcing that the FDA is allowing the medical products company to make Recombinate Antihemophilic Factor at its new biotechnology facility in Thousand Oaks, California, enabling it to increase its global supply of recombinant Factor VIII by up to 40%... Agouron Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AGPH)") else Response.Write("(Nasdaq: AGPH)") end if %> rose $2 to $39 1/8 after The Wall Street Journal's "Heard on the Street" column reported that the company could benefit from industry consolidation... Medical device maker Cytyc Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYTC)") else Response.Write("(Nasdaq: CYTC)") end if %> finished up $2 3/4, or 21%, to $15 7/8 after reporting a Q3 loss of $0.07 a share versus a loss of $0.36 last year. Analysts had been anticipating a loss of $0.30 a share.

A vote of confidence in the form of ratings upgrades from BancBoston Robertson Stephens gave further boost to several semiconductor equipment makers. PRI Automation <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRIA)") else Response.Write("(Nasdaq: PRIA)") end if %> jumped $2 7/8 to $17 5/8, Asyst Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASYT)") else Response.Write("(Nasdaq: ASYT)") end if %> moved up $1 5/8 to $12 3/16, Applied Materials <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMAT)") else Response.Write("(Nasdaq: AMAT)") end if %> added $1 1/16 to $33 15/16, KLA-Tencor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KLAC)") else Response.Write("(Nasdaq: KLAC)") end if %> rose $1 3/8 to $33 15/16, ASM Lithography <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASMLF)") else Response.Write("(Nasdaq: ASMLF)") end if %> gained $11/16 to $23 1/8, and ETEC Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ETEC)") else Response.Write("(Nasdaq: ETEC)") end if %> climbed $2 7/8 to $34 3/8. Yesterday, Douglas Schatz, chairman of Advanced Energy Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AEIS)") else Response.Write("(Nasdaq: AEIS)") end if %>, reportedly said he sees the capital equipment sector hitting bottom in Q4. Advanced Energy was up $1 11/16 to $11 7/8.

Transaction processing services company First Data Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDC)") else Response.Write("(NYSE: FDC)") end if %> was credited $3 1/4 to $25 13/16 after reporting Q3 EPS of $0.42, which was $0.02 better than last year and a penny ahead of estimates... Beauty products direct seller Avon Products <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AVP)") else Response.Write("(NYSE: AVP)") end if %> got made up, rising $2 5/16 to $38 1/4 after reporting Q3 EPS of $0.30 (before charges), up 15% from $0.26 a year ago and saying it is "highly confident" that it will achieve the low end of its 16% to 18% target range for annual EPS growth this year... Discount broker Charles Schwab <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SCH)") else Response.Write("(NYSE: SCH)") end if %> gained $1 3/8 to $45 3/8 after announcing a 3-for-2 stock split payable Dec. 11 and a 5% increase in its quarterly dividend... Data center systems company Sequent Computer Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SQNT)") else Response.Write("(Nasdaq: SQNT)") end if %> advanced $1 3/8 to $9 1/2 after reporting a breakeven third quarter -- better than expectations of a loss of $0.04 a share -- and saying that it hit its unreported bookings target for the quarter.

Global technology systems company EG&G Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EGG)") else Response.Write("(NYSE: EGG)") end if %> served up a $2 5/8 gain to $24 15/16 after announcing plans to buy back up to an additional 5 million shares, or roughly 11% of its outstanding shares... KeraVision Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KERA)") else Response.Write("(Nasdaq: KERA)") end if %>, which is developing a non-laser approach for correcting low to moderate myopia, spotted a $1 3/16 gain to $6 3/16 after reporting a Q3 loss of $0.48 a share, better than analysts mean estimate of a loss of $0.51... Wireless communications components maker Vari-L Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VARL)") else Response.Write("(Nasdaq: VARL)") end if %> added $1 7/16 to $8 7/16 after reporting Q3 EPS of $0.14, up from $0.11 a year ago and in line with estimates.

Earnings Movers

Autoliv Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALV)") else Response.Write("(NYSE: ALV)") end if %> up $3 5/16 to $31 11/16; Q3 EPS: $0.37 vs. $0.34 last year; Estimate: $0.38

Hyperion Solutions Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HYSL)") else Response.Write("(Nasdaq: HYSL)") end if %> up $2 1/8 to $26 3/8; fiscal Q1 EPS: $0.28 (before charges) vs. $0.17 last year; Estimate: $0.19

Knight Ridder <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KRI)") else Response.Write("(NYSE: KRI)") end if %> up $1 to $44; Q3 EPS: $0.58 vs. $0.46 last year; Estimate: $0.55

K-Swiss Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KSWS)") else Response.Write("(Nasdaq: KSWS)") end if %> up $1 to $25; Q3 EPS: $0.53 vs. $0.29 last year; Estimate: $0.39

RadiSys Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RSYS)") else Response.Write("(Nasdaq: RSYS)") end if %> up $7/8 to $16 1/2; Q3 EPS: $0.08 vs. $0.49 last year; Estimate: $0.05

Total Control Products <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCPS)") else Response.Write("(Nasdaq: TCPS)") end if %> up $1 1/2 to $9 1/16; fiscal Q2 EPS: $0.20 vs. $0.14 lst year; Estimate: $0.20

VeriSign Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VRSN)") else Response.Write("(Nasdaq: VRSN)") end if %> up $1 5/8 to $31 5/8; Q3 EPS: loss of $0.18 (before charges) vs. loss of $0.40; Estimate: loss of $0.19

GOATS

As any parent knows who's ever heard his or her teenager whine about the latest incarnation of virtual plumber Mario, the holiday season is of grave importance for video game developers. Case in point: Midway Games <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MWY)") else Response.Write("(NYSE: MWY)") end if %>, the creator of the megahit "Mortal Kombat" series, fell $2 1/2 to $9 1/4 after saying late yesterday that anticipated delays in product introductions would probably mean fiscal Q2 (which ends Dec. 31) EPS between $0.28 and $0.32. That would be down from the $0.48 earned last year and a far cry from Wall Street's $0.49 consensus estimate. For comparison, check out the latest news from THQ Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THQI)") else Response.Write("(Nasdaq: THQI)") end if %>. The maker of several popular pro wrestling video games (that stuff's all fake, you know) kicked butt yesterday, leaping up more than 8% after CEO Brian Farrell said he expects the company to meet or beat last year's Q4 EPS of $0.56 thanks to "stronger than expected" retail demand.

Branded fruit processor and distributor Dole Food Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DOL)") else Response.Write("(NYSE: DOL)") end if %> was pared by a $5 loss to $29 5/8 after saying El Nino-induced bad weather and the economic turmoil in Russia will result in Q3 EPS about 35% below the $0.40 per share earned last year. The First Call mean estimate had called for EPS of $0.47 in the quarter. This year's crop of bananas -- which is Dole's most important product -- has been driving Dole bonkers all year. Earlier this year, El Nino produced a bumper crop of bananas, which drove down prices. Then, in the second half of the year, the entire Russian fruit market spoiled, forcing Dole to unload its bananas and other perishable products on other markets. That move caused oversupplies and drove down prices again. Deutsche Bank Securities and Piper Jaffray, which apparently think the whole situation is rotten, cut their ratings on the company today.

QUICK CUTS: Bank holding company U.S. Bancorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: USB)") else Response.Write("(NYSE: USB)") end if %> fell $3 9/16 to $35 7/16 after two brokerages downgraded the firm today. Yesterday, the company reported Q3 EPS of $0.50 (before a charge), missing the First Call mean estimate by a penny... E-commerce application software developer Open Market <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OMKT)") else Response.Write("(Nasdaq: OMKT)") end if %> sank $1 to $6 1/4 after reporting a Q3 loss of $0.19 per share, which was in line with analysts' expectations. However, the company said it will take a $2 million to $4 million charge in Q4 to restructure its operations... Electronic design automation (EDA) tools maker Avant! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVNT)") else Response.Write("(Nasdaq: AVNT)") end if %> slid $1 1/4 to $15 11/16 after Deutsche Bank Securities cut its rating on the company to "accumulate" from "buy."

Coronary stent and related medical devices maker Boston Scientific <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSX)") else Response.Write("(NYSE: BSX)") end if %> slipped $2 13/16 to $54 1/2 on reports that it will postpone the release of its Q3 earnings statement, planned for Tuesday, in order to clear up matters in connection with its $2.1 billion purchase of Schneider Worldwide from Pfizer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %>... Internet software developer Inktomi Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INKT)") else Response.Write("(Nasdaq: INKT)") end if %> fell $6 1/8 to $84 7/16 after saying 1.1 million shares will become available for sale Oct. 28 pending their release from lock-up restrictions by Goldman Sachs, which was the lead underwriter of the firm's initial public offering earlier this year... Online travel services provider Preview Travel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTVL)") else Response.Write("(Nasdaq: PTVL)") end if %> voyaged $1 1/4 lower to $11 after reporting a Q3 loss of $0.35, which was not quite as bad as the $0.40 per share loss expected by the Street. However, the firm said it will take a $4 million to $5 million charge to spin off its TV broadcast unit to a group of employees and investors.

Broadband cable TV and wireless communications network operator Comcast Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMCSA)") else Response.Write("(Nasdaq: CMCSA)") end if %> fell $2 5/16 to $48 following a Donaldson, Lufkin & Jenrette downgrade to "buy" from "top pick"... Teen and young adult casual apparel retailer Pacific Sunwear of California <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSUN)") else Response.Write("(Nasdaq: PSUN)") end if %> was burned for $5 7/16 to $20 13/16 as Robinson-Humphrey lowered its short-term rating on the company to "market perform" from "buy"... Helpdesk software firm Remedy Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMDY)") else Response.Write("(Nasdaq: RMDY)") end if %> slid $3 to $9 9/16 after reporting Q3 EPS of $0.21, missing the Street's mean estimate of $0.24. Product revenues slipped 4% to $25.9 million compared with the same quarter a year ago, according to the company.

Several oil services and offshore drilling companies fell as Prudential Securities issued downgrades to "hold" from "accumulate" for several companies. Cooper Cameron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RON)") else Response.Write("(NYSE: RON)") end if %> dropped $1 7/8 to $35 3/16, Diamond Offshore Drilling <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DO)") else Response.Write("(NYSE: DO)") end if %> lost $1 to $30 1/4, Schlumberger <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLB)") else Response.Write("(NYSE: SLB)") end if %> dropped $2 7/16 to $51 1/16, and Ensco International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ESV)") else Response.Write("(NYSE: ESV)") end if %> was off $11/16 to $12 1/4... Contract-drilling service company Parker Drilling <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PKD)") else Response.Write("(NYSE: PKD)") end if %>, also downgraded by Prudential, slipped $3/8 to $5 5/16 after handing in a fiscal Q4 loss of $0.01 per share, just shy of the Street's mean estimate of breakeven results... Offshore drilling platform maker Gulf Island Fabrication <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GIFI)") else Response.Write("(Nasdaq: GIFI)") end if %> sank $1 15/16 to $16 1/16 after saying the dollar value of available projects is well below last year's levels, even though its pro forma Q3 EPS of $0.45 beat the Street's expectations by $0.03.

Leading cranberry grower Northland Cranberries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBRYA)") else Response.Write("(Nasdaq: CBRYA)") end if %> got smushed today, dropping $1 1/4 to $11 3/16 after saying it expects calendar 1998's crop to be 6% smaller than last year's haul. Northland's fiscal Q4 EPS of $0.12 missed the Street's estimates by a penny but easily outdid last year's $0.07 loss... Broadband cable TV and telecommunications network operator Cox Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COX)") else Response.Write("(NYSE: COX)") end if %> fell $5 to $56 after Donaldson Lufkin & Jenrette downgraded the company to "market perform" from "buy" due to the firm's current valuation... Polymer components manufacturer Furon Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FCY)") else Response.Write("(NYSE: FCY)") end if %> lost $11/16 to $12 13/16 after announcing that lower September sales are expected to result in Q3 EPS around $0.20 to $0.24, down from $0.29 last year and well off the Street's $0.32 to $0.34 estimated range.

GTECH Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTK)") else Response.Write("(NYSE: GTK)") end if %> fell $2 1/16 to $13 3/8 after the computerized lottery products developer said it is in talks to buy point-of-sale processing service provider Transaction Network Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TNSI)") else Response.Write("(Nasdaq: TNSI)") end if %>... Pharmaceutical promotions consultant Boron LePore Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BLPG)") else Response.Write("(Nasdaq: BLPG)") end if %> dropped $8 5/16 to $31 1/2 after client Glaxo Wellcome <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GLX)") else Response.Write("(NYSE: GLX)") end if %> said it will not use Boron's services for certain speaker training meetings or advisory panels in 1999... Prepaid calling card company SmarTalk TeleServices <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMTK)") else Response.Write("(Nasdaq: SMTK)") end if %> was hushed today, dropping $3/4 to $6 after it revised its revenues for the first half of 1998 and all of 1997 downward because of an accounting review, adding that results for the rest of 1998 will fall as well.

Florida electricity company FPL Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FPL)") else Response.Write("(NYSE: FPL)") end if %> faded $3 15/16 to $61 9/16 on concern that state regulators may rule that the company is earning too much and order it to issue refunds to its customers, according to Bloomberg News... Catastrophe reinsurer LaSalle Re Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LSH)") else Response.Write("(NYSE: LSH)") end if %> dropped $15/16 to $22 3/8 after saying the impact of Hurricane Georges would likely drag Q4 EPS "significantly" below Wall Street's $0.33 mean estimate.

Earnings Movers

Franklin Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEN)") else Response.Write("(NYSE: BEN)") end if %> down $3 1/8 to $33 1/4; Q4 EPS: $0.44 vs. $0.50 last year; Estimate: $0.49

Ontrack Data International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ONDI)") else Response.Write("(Nasdaq: ONDI)") end if %> down $2 3/8 to $7 1/4; Q3 EPS: $0.13 vs. $0.14 last year; Estimate: $0.16

Scientific-Atlanta <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SFA)") else Response.Write("(NYSE: SFA)") end if %> down $1 to $14 1/4; fiscal Q1 EPS: $0.03 vs. $0.21 last year; Estimate: $0.03

WavePhore Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WAVO)") else Response.Write("(Nasdaq: WAVO)") end if %> down $3/8 to $4 7/8; Q3 EPS: loss of $0.35 vs. loss of $0.31 last year; Estimate: loss of $0.25

FOOL ON THE HILL
An Investment Opinion
by Dale Wettlaufer

Gangway for Gateway

Bovine boxmaker Gateway <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTW)") else Response.Write("(NYSE: GTW)") end if %> gained $1 7/8 to $51 5/8 on reporting strong third quarter results last night after the bell. The number-two direct marketer of PCs reported unit growth of 43% for the quarter, strongly ahead of first half unit growth of 36%. For the quarter, 887,000 units shipped, up from 622,000 last year. For the three quarters of 1998, unit shipments looked like this:

     1997     1998   growth rate % 
              (000) 
 Q1   555        767     38.2 
 Q2   554        736     32.8 
 Q3   622        887     42.6