<% ' AvantGo:MarketClose %>DJIA 9116.55 -216.53 (-2.32%) S&P 500 1163.63 -28.66 (-2.40%) Nasdaq 1949.54 -66.90 (-3.32%) Value Line ndx 891.20 -13.48 (-1.49%) 30-Year Bond 102 24/32 +1 13/32 5.07% Yield<% ' AvantGo:End %>
<% ' AvantGo:Heroes %>CD and software distributor Navarre Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NAVR)") else Response.Write("(Nasdaq: NAVR)") end if %> jumped $2 13/16 to $15 today, trading as high as $27 per share at one point. The boost was a continuation of Friday's upward trend, when the company's shares rose 107% as reports circulated that an investment banker had been hired to help sell part of the company's 85% stake in online radio network NetRadio to the public. The phrase "long-time Navarre shareholder" is probably an oxymoron, considering the company's 13.5 million outstanding shares changed hands twice today alone. But for the rare Navarre shareholders who may measure their holding periods in months rather than in hours, last week's news was a non-event. The company announced plans for the NetRadio initial public offering back in July, but canceled the deal after market conditions took a turn for the worse in late summer. That the IPO is being revived now, following a few days of 1996-like performances by Internet companies, is not exactly a shocker.
Coronary stent maker Arterial Vascular Engineering <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVEI)") else Response.Write("(Nasdaq: AVEI)") end if %> ballooned $16 1/2 to $48 7/8 after pacemaker and medical device maker Medtronic <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MDT)") else Response.Write("(NYSE: MDT)") end if %> agreed to acquire the company for $54 per share in stock, as long as Medtronic stays above $61.20 per share. The transaction will be the fifth acquisition for Medtronic in as many months and sends Arterial Vascular CEO Scott Solano, who worked at Medtronic between 1991 and 1995, back in to his old employer. The merger should be quite accretive to Medtronic, as its stock is trading at 41 times calendar 1999 earnings estimates while the offer is for only 21 times Arterial Vascular's estimated earnings. The hefty stock multiple has allowed Medtronic be a voracious acquirer, thus dramatically enhancing its competitive position vis-a-vis Guidant <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GDT)") else Response.Write("(NYSE: GDT)") end if %> and Johnson & Johnson <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %> in the acquisition-driven medical device sector.
QUICK TAKES: The share price of seed developer Dekalb Genetics Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DKB)") else Response.Write("(NYSE: DKB)") end if %> grew $4 3/4 to $99 3/4 after life sciences company Monsanto Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MTC)") else Response.Write("(NYSE: MTC)") end if %> said it has "resolved all issues raised" by the Justice Department's Antitrust Division concerning the company's proposed acquisition of Dekalb, clearing the way for Monsanto to complete its $100 per share cash tender offer for the company... Digital broadcast satellite (DBS) television system operator EchoStar Communications Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DISH)") else Response.Write("(Nasdaq: DISH)") end if %> gained $3 13/16 to $38 13/16 after the company said it will receive certain DBS assets from News Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NWS)") else Response.Write("(NYSE: NWS)") end if %> and MCI WorldCom <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %>. In exchange, EchoStar agreed to carry News Corp.'s Fox News Channel on its DISH network and gave MCI the right to bundle its DBS offerings with MCI's telephony services.
Cellular telephone systems operator Centennial Cellular Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYCL)") else Response.Write("(Nasdaq: CYCL)") end if %> rang up $3 1/8 to $40 despite the decision of investment firm Welsh, Carson, Anderson & Stowe to reduce the cash consideration of its previously announced $43.50 per share cash and debt buyout offer for the firm to $41.50 per share. However, Welsh Carson and other investors also agreed to increase their equity investment in Centennial to $400 million from $350 million... Business and consumer services firm Cendant Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CD)") else Response.Write("(NYSE: CD)") end if %> ascended $1 1/8 to $19 1/8 after Goldman Sachs upgraded the firm to "recommended list" from "market perform" and set a 12-month price target of $24 per share... Real estate marketing and property management company Kennedy-Wilson Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KWIC)") else Response.Write("(Nasdaq: KWIC)") end if %> gained $1 3/4 to $12 3/4 after setting a three-for-two stock split payable on Dec. 15.
Online and catalog retailer Sharper Image <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHRP)") else Response.Write("(Nasdaq: SHRP)") end if %> jumped $13 5/8 to $21 3/16 on good vibes about its prospects in the all-important holiday shopping season. Fellow catalog retailer Lands' End <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LE)") else Response.Write("(NYSE: LE)") end if %> gained $2 to $22 5/8, Brylane <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BYL)") else Response.Write("(NYSE: BYL)") end if %> moved up $2 15/16 to $15 7/8, and Fingerhut Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FHT)") else Response.Write("(NYSE: FHT)") end if %> rose $1 7/16 to $11 1/8... Advertising holding company True North Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TNO)") else Response.Write("(NYSE: TNO)") end if %> climbed $1 5/8 to $28 1/8 after filing a registration statement with the SEC to sell a minority stake in its Modem Media Poppe Tyson Inc. online marketing services unit in an initial public offering... Lawn mower and snowblower maker Toro Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TTC)") else Response.Write("(NYSE: TTC)") end if %> bullied ahead $2 1/16 to $26 1/2 after announcing a plan to repurchase up to 1 million of its outstanding common shares.
Video rental store operator Hollywood Entertainment Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HLYW)") else Response.Write("(Nasdaq: HLYW)") end if %> sashayed $3 higher to $24 after Chairman and CEO Mark Wattles reportedly told analysts that he sees same-store sales rising 15% in Q4 and total fiscal 1999 sales rising 9%, which would both top previous estimates... Digital imaging software tools maker MetaCreations Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCRE)") else Response.Write("(Nasdaq: MCRE)") end if %> leapt $4 1/4 to $8 1/16 after saying it "expects" software giant Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> to distribute its MetaStream graphics product with Microsoft's Windows 98 operating system... Hardee's fast-food restaurant operator CKE Restaurants <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CKR)") else Response.Write("(NYSE: CKR)") end if %> added $3 to $24 7/16 after Merrill Lynch raised its near-term rating to "accumulate" from "neutral."
International power plant operator AES Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AES)") else Response.Write("(NYSE: AES)") end if %> charged ahead $2 to $45 3/4 after Pakistan withdrew several official notices issued in July that would have terminated certain projects run by AES subsidiaries in the country... Pawnshop operator Cash America International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PWN)") else Response.Write("(NYSE: PWN)") end if %> gained $1 1/4 to $16 7/8 after bank holding company First Union <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FTU)") else Response.Write("(NYSE: FTU)") end if %> agreed to deploy up to 10 of the company's Mr. Payroll self-service check cashing machines in certain East Coast bank branches... Computer maintenance and support services firm DecisionOne Holdings Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DOCI)") else Response.Write("(Nasdaq: DOCI)") end if %> rose $2 5/8 to $7 5/8 after PC direct marketer Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> added the company to its Dell Service Provider program... Specialty retailer Barbeques Galore <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BBQZY)") else Response.Write("(Nasdaq: BBQZY)") end if %> cooked up a $1 1/2 gain to $7 1/2 after reporting Q3 EPS of $0.11, which was $0.03 ahead of the Street's estimate.<% ' AvantGo:End %>
<% ' AvantGo:Goats %>PC manufacturers took hits today as market watchers expressed concerns about growth projections. Cow-box maker Gateway <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTW)") else Response.Write("(NYSE: GTW)") end if %> stumbled $5 1/2 to $56 1/8 after Piper Jaffray analyst Ashok Kumar said he expects the company to turn in fourth-quarter earnings $0.06 per share below Wall Street's consensus estimate of $0.72 per share. "This is expected to be the lowest revenue growth, sequentially and [year-to-year] recorded by the company in the December quarter over the last four years," read a note by Kumar, who sees unit growth at 30%, "well below guidance level" of 40%. The downgrade may signal a change in the winds propelling the PC industry, as Gateway was comfortable with its ability to meet Street projections for Q4 when it reported Q3 results late last month. Other PC makers also felt the heat, with Dell <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> slumping $3 to $60 13/16, Apple <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> falling $3 1/8 to $31 15/16, Compaq <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> retreating $1 5/8 to $32 7/16, and IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> losing $4 7/8 to end at $165 1/8.
Investors who thought today's carnage in Internet stocks was oddly familiar were right. Leave it to hindsight to come after the fact... "Virtual stocks" took a beating across the board today as investors appeared to see through Friday's industry-wide run-up. There wasn't much news out there today, but two companies that did have something to say fell nonetheless. Bookselling giant Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %> slid $24 5/8 to $192 despite reports of a partnership with streaming media aggregator Broadcast.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BCST)") else Response.Write("(Nasdaq: BCST)") end if %>, while software retailer Egghead.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGGS)") else Response.Write("(Nasdaq: EGGS)") end if %> cracked $6 1/8 to $25 1/2 after launching "a newly redesigned, faster and more scalable web site at www.egghead.com." The selloff wasn't confined to book and software retailers, however. Auctioneer Onsale Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ONSL)") else Response.Write("(Nasdaq: ONSL)") end if %> gave back $36 1/8 to $61 1/2, music retailer N2K Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NTKI)") else Response.Write("(Nasdaq: NTKI)") end if %> retreated $3 13/16 to $16 1/4, and travel services provider Preview Travel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTVL)") else Response.Write("(Nasdaq: PTVL)") end if %> lost $5 to close at $19.
QUICK CUTS: Data communications equipment company Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> lost $4 5/8 to $75 3/8 after it completed the acquisition of telephony network system provider Selsius Systems for $145 million in cash and stock... Boeing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %>, the world's largest aircraft maker, got clipped $13/16 to $40 5/8 after the FAA ordered U.S. cargo airlines to inspect and fix fuselage joints on older Boeing 727 aircraft... Drug wholesaler McKesson Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCK)") else Response.Write("(NYSE: MCK)") end if %> fell $3 5/8 to $71 3/16 while merger partner and healthcare management software developer HBO & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HBOC)") else Response.Write("(Nasdaq: HBOC)") end if %> lost $15/16 to close at $24 15/16 despite the announcement that their planned $14.46 billion pairing received antitrust approval.
Texaco Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TX)") else Response.Write("(NYSE: TX)") end if %> dropped $3 1/8 to $57 11/16 after it said it ended discussions with the Royal Dutch/Shell Group about allying their European refining and marketing operations. Group member Royal Dutch Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RD)") else Response.Write("(NYSE: RD)") end if %> dropped $2 3/16 to $46 15/16 while partner Shell Transport & Trading <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SC)") else Response.Write("(NYSE: SC)") end if %> descended $1 1/2 to $36 1/2... A host of contract oil drillers that fell late last week as a meeting of OPEC oil ministers wrapped up without any new pledges of further oil production cuts continued to fall today. Transocean Offshore <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RIG)") else Response.Write("(NYSE: RIG)") end if %> dropped $1 5/16 to $24 11/16, Diamond Offshore <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DO)") else Response.Write("(NYSE: DO)") end if %> slid $1 5/8 to $22 1/4, Noble Drilling <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NE)") else Response.Write("(NYSE: NE)") end if %> shed $3/4 to $11 9/16, and Santa Fe International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SDC)") else Response.Write("(NYSE: SDC)") end if %> fell $1 5/16 to $12 1/4.
Diversified media and electronic commerce company USA Networks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USAI)") else Response.Write("(Nasdaq: USAI)") end if %> drooped $3 3/16 to $31 9/16 after three brokerages downgraded the company... General Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> dimmed $1 15/16 to $90 3/8 on reports in The Wall Street Journal that its GE Capital subsidiary is in talks to buy $7 billion in assets from an affiliate of the defunct Long-Term Credit Bank of Japan that filed for bankruptcy in the fall. GE also sold its Digital Financial Services portfolio to Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %>... The American depositary receipts of Hoechst AG <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HOE)") else Response.Write("(NYSE: HOE)") end if %> and Rhone-Poulenc SA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RP)") else Response.Write("(NYSE: RP)") end if %> fell today -- Hoechst's $2 5/8 to $42 and Rhone-Poulenc's $1 3/16 to $50 -- following reports in The Wall Street Journal that a merger of their drug and agrochemical businesses is expected to be announced tomorrow.
Seagram Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VO)") else Response.Write("(NYSE: VO)") end if %> fizzed away $15/16 to $34 5/16 after Casey Silver resigned as chairman and CEO of its Universal Pictures division after 12 years with the company. He will be replaced by Universal Studios President and COO Ron Meyer... Medical devices maker and developer Boston Scientific <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSX)") else Response.Write("(NYSE: BSX)") end if %> was beaned for a $1 7/8 loss to $49 1/2 after it said it expects the SEC to dispute the $524 million Q3 charge it took in connection with its $2.1 billion acquisition of Schneider Worldwide from Pfizer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %>... Rail freight network operator Kansas City Southern Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KSU)") else Response.Write("(NYSE: KSU)") end if %> rumbled down $4 1/4 to $42 11/16 after Merrill Lynch cut its rating on the company to "neutral" from "accumulate."
Chemical company Millennium Chemicals <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCH)") else Response.Write("(NYSE: MCH)") end if %> burned off $1 3/8 to $23 7/8 after it said in a statement that it expects Q4 earnings to be "near break-even," well off First Call's 10-analyst estimate of $0.23 per share... International long-distance telecommunications services provider Telscape International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TSCP)") else Response.Write("(Nasdaq: TSCP)") end if %> disconnected $1 1/16 to $8 1/2 on Friday's announcement after market close that Q4 revenues will come in between $27 and $31 million, below company expectations... Cable Internet service provider SoftNet Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: SOF)") else Response.Write("(AMEX: SOF)") end if %> softened $1 1/2 to $16 3/8 after the company said it appointed Douglas Sinclair, formerly with privately held test management software provider Silicon Valley Networks Inc., as its CFO.
Christian website operator Didax Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMEN)") else Response.Write("(Nasdaq: AMEN)") end if %> gave away $4 1/8 to $16 3/4 after it announced plans to expand its personal financial services targeting Christian and conservative investors... Stuffed toys and toy pillows designer Play-By-Play Toys & Novelties <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PBYP)") else Response.Write("(Nasdaq: PBYP)") end if %> lost $11/16 of its stuffing to $7 1/2 after it said fiscal Q1 EPS is expected to come in around $0.20, well below the $0.31 estimate of the five analysts surveyed by First Call... Enterprise storage company EMC Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMC)") else Response.Write("(NYSE: EMC)") end if %> sank $2 1/2 to $72 1/2 after it announced an agreement with NEC Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NIPNY)") else Response.Write("(Nasdaq: NIPNY)") end if %> that lets NEC resell EMC's Symmetrix Enterprise Storage systems with its Windows NT and UNIX-based computer systems.<% ' AvantGo:End %>
FOOL
ON THE HILL
An Investment Opinion
by
Alex Schay
Not "If," but "When"
<% ' AvantGo:FOTH %>Petroleum, also known as crude oil, is a naturally occurring bituminous (what is bitumen?) liquid composed of various organic chemicals, and as we have all heard, contemporary industrial civilization depends on it. The "addict" simile, where society is dependent upon its continued "fix" of abundant, inexpensive petroleum, seems all the more appropriate today. Developing countries, rife with visions of improved living standards, are eager to exploit their natural resources and fulfill the promise that industrialized society offers.
For virtually the last decade, oil service industry stocks have been doing what is appropriate during a bear market -- hibernating. When the price of crude hit $32 a barrel back in 1981, it sparked a competition among the oilfield service companies to determine who could amass the most debt preparing for the coming drilling boom. By the end of 1981, an all-time high of 4,530 rigs were at work in the U.S. When the price of oil went south during the mid-eighties, many oilfield service companies were woefully unprepared. By June of 1992, the U.S. rig count sank to a modern day low of 596. Many companies did not survive.
The major forces in place at the beginning of 1997 that led to some optimism about the segment included major restructuring at many of the larger oilfield services firms, continued consolidation within the industry, increasing levels of outsourcing by the integrated oil companies, continued world industrialization (1%-2% annual growth), strong cash flow at the major oil companies leading to increased capital spending, significant technological improvements, and the sale of smaller oil and gas properties by the majors to independent outfits. These factors, outlined by our own industry analyst at the time, have all seen substantial developments over the last two years.
With oil at below twelve dollars per barrel (January crude fell to $11.22 on the New York Mercantile Exchange today -- a 12-year low), cash flow is drying up at the companies that employ oilfield equipment and services, drilling, and offshore support. This and events in Asia have resulted in poor visibility heading into 1999. As a result, companies in the oil services segment have been dismantled over the last six months. Plumbing the murky depths of the oil industry has been aided recently by the Drip Portfolio, which has chosen to take a look at the segment as its next potential investment opportunity. Interested investors should follow along as they drill for information about the business.
Exploration and production efforts in these lean times are centered around building reserves and cutting costs to scale with declines in output. Since most analysis of reserves entails the discounting of expected future net cash inflows from proved reserves (based on year-end prices and costs) -- the "value" placed on proved reserves becomes of the utmost importance. In the present climate, investors are having little difficulty finding value, with commodity price gains the chief catalyst.
The driving force behind any and all gains in this sector will be continued worldwide petroleum demand growth. With excess production capacity pegged at only 3% of total production, the system is pretty tight. In addition, most of the excess capacity is in the Middle East, which is prone to supply disruption.
This is the primary reason why the fate of oil demand is beholden to so many "what if" scenarios, many of which have been outlined in recent Drip Portfolio columns. Even though Iraq gets by U.N. restrictions by transporting oil on ships with Iranian flags departing from Basra (thanks 60 Minutes), and the effects of production cuts take a long while to work themselves out, all these seemingly intangible elements (and hundreds more) come together to determine commodity prices. The point of all this being -- now is the time to take a look at buying some great oil services companies that have been beaten down by the cyclical flows of the economy. And the Motley Fool can help.
-- Oil & Gas Discussion Board
-- Drip Portfolio archive<% ' AvantGo:End %>
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
WE
DELIVER - Get The Evening News delivered
to your e-mailbox every evening!
See something moving a stock that we didn't cover?
E-mail the
Fool
News Team
and we will start working on the story.
Unfortunately, we cannot answer every e-mail
or respond to individual questions.
|
Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), another Fool David Marino-Nachison (TMF Braden), a new Fool
Editing |