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HEROES

Hilton Hotels Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HLT)") else Response.Write("(NYSE: HLT)") end if %> booked a $1 7/8 gain to $14 5/8 after announcing late Thursday that it has completed the separation of its lodging and gaming units. Under the terms of the transaction, Hilton shareholders will receive one share in the newly formed Park Place Entertainment Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PPE)") else Response.Write("(NYSE: PPE)") end if %> for each Hilton share owned. Park Place, which rose $1 1/8 to $7 1/2 in its debut today, will operate Hilton's casino gaming holdings in Atlantic City, N.J. and Las Vegas, as well as the three Mississippi casinos recently acquired from Grand Casinos <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GND)") else Response.Write("(NYSE: GND)") end if %>. While the deal was supposed to "unlock" the value of both companies under the standard "sum of the parts is greater than the whole" scenario, investors still appear to be cautious about Hilton's prospects due to the lingering poor results from the firm's hotel biz.

Gentex Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GNTX)") else Response.Write("(Nasdaq: GNTX)") end if %>, which makes automatically dimming rearview mirrors and commercial fire protection products, gained $2 1/4 to $22 1/4 after saying that better-than-expected unit shipments and margins for its mirrors will result in Q4 EPS $0.03 to $0.04 greater than the $0.19 the company said analysts had been anticipating. While the company's NVS headlight glare-busting interior mirror was standard 1998 equipment for high-end nameplates such as General Motors' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> Cadillac and Toyota's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TOYOY)") else Response.Write("(Nasdaq: TOYOY)") end if %> Lexus line, it is mostly still an option in the important high-volume auto segment. But with a 90% share of the global market for advanced mirrors and long-term supply contracts with the U.S. big three, unit shipments are poised to accelerate if the mirrors become a standard feature in high-volume vehicles such as GM's C/K pickups and Ford's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %> Explorer SUVs in the future.

QUICK TAKES: Audio Book Club <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KLB)") else Response.Write("(NYSE: KLB)") end if %> recorded a $1 3/8 gain to $13 after agreeing to acquire Columbia House Audiobook Club from Columbia House Co., a joint venture between Sony Corp.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SNE)") else Response.Write("(NYSE: SNE)") end if %> Sony Music Entertainment Inc. and Time Warner <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TWX)") else Response.Write("(NYSE: TWX)") end if %>, for an unspecified amount of cash and stock... Online brokerage firm E*Trade Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGRP)") else Response.Write("(Nasdaq: EGRP)") end if %> traded up $8 21/32 to $55 7/16 after saying it will split its stock 2-for-1 after the close of trading on January 29... Teenage apparel retailer dELiA*s Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLIA)") else Response.Write("(Nasdaq: DLIA)") end if %> jumped $3 1/4 to $15 3/4 after announcing plans to file a registration statement with the SEC for an initial public offering of an undisclosed stake in its Internet-related businesses, including its www.gURL.com community site and www.delias.com e-commerce site.

Sports information website operator SportsLine USA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLN)") else Response.Write("(Nasdaq: SPLN)") end if %> scored a $2 gain to $17 9/16 after signing an e-commerce agreement with e-tailer Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %>, which will become SportsLine's online retail partner for books, videos, and music sales. Separately, Amazon added $33 11/16 to $354 15/16 today... Communications chipsets supplier Conexant Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNXT)") else Response.Write("(Nasdaq: CNXT)") end if %> rose $2 1/16 to $18 13/16 in its first day of trading after being spun out of Rockwell International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ROK)") else Response.Write("(NYSE: ROK)") end if %>. NationsBanc Montgomery Securities started coverage of the company with a "hold" rating... Wholesale drug distributor Bindley Western Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BDY)") else Response.Write("(NYSE: BDY)") end if %> advanced $5 13/16 to $31 13/16 after completing the spin-off of its remaining 82% stake in specialty pharmaceuticals and medical supplies company Priority Healthcare Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PHCC)") else Response.Write("(Nasdaq: PHCC)") end if %>. Priority fell $9 to $42 7/8.

Drug distributor AmeriSource Health Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AAS)") else Response.Write("(NYSE: AAS)") end if %> picked up $6 5/8 to $71 5/8 after Morgan Stanley Dean Witter raised its rating to "outperform" from "neutral." The company also said it was named a preferred pharmaceutical distributor for privately held healthcare system operator Premier Inc. for the next five years... Internet domain registration firm Network Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSOL)") else Response.Write("(Nasdaq: NSOL)") end if %> soared $24 1/8 to $155 after the company set a two-for-one stock split, payable March 23... Satellite and wireless communications products maker ViaSat <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VSAT)") else Response.Write("(Nasdaq: VSAT)") end if %> was launched $1 3/4 to $11 13/16 after ING Barings Furman Selz started coverage of the firm with a "strong buy" rating.

Micromuse <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MUSE)") else Response.Write("(Nasdaq: MUSE)") end if %> picked up $1 1/16 to $20 9/16 after BancBoston Robertson Stephens raised its rating on the service-level management software company to "buy" from "long-term attractive," saying the firm's fiscal first quarter earnings will "at least meet" the Zacks mean estimate of $0.05 per share... Oil and gas drilling services firm Pool Energy Services Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PESC)") else Response.Write("(Nasdaq: PESC)") end if %> gained $1 13/16 to $12 5/8 after saying it has started merger discussions with Nabors Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: NBR)") else Response.Write("(AMEX: NBR)") end if %>. Pool blew off the drilling rig operator's $486 million hostile bid last year. Nabors rose $15/16 to $14 7/16... British mobile phone service provider Vodafone Group PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VOD)") else Response.Write("(NYSE: VOD)") end if %> dialed up a $13 1/2 gain to $174 5/8 after saying it signed up 4 million new customers worldwide in 1998, more than double the 1997 figure.

GOATS

Investors were wary about the news that wireless communications company AirTouch Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ATI)") else Response.Write("(NYSE: ATI)") end if %> is in talks to be bought by local phone company Bell Atlantic <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEL)") else Response.Write("(NYSE: BEL)") end if %> for approximately $44 billion in stock. Despite widespread sentiment that the companies make a cute couple, both stocks fell today, AirTouch slipping $4 3/16 to $68 1/4 and Bell Atlantic dropping $2 1/16 to $51 15/16. Some of the pessimism may reflect worries that the deal would saddle Bell with billions of dollars of goodwill that could hurt earnings for years if the deal can't be accounted for as a pooling of interests. Worries about regulatory issues -- Bell is already under the scrutiny of the FCC and the Department of Justice by way of its pending merger with GTE Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTE)") else Response.Write("(NYSE: GTE)") end if %> -- may also be hovering. Wireless network competitor AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> picked up $2 1/8 to $77 7/8 today, but Sprint <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FON)") else Response.Write("(NYSE: FON)") end if %> slowed $2 5/16 to $81 13/16. A deal, according to reports, could be announced tomorrow.

Well, which is it? Mainframe re-engineering software developer SEEC Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEC)") else Response.Write("(Nasdaq: SEEC)") end if %> fell $1 3/32 to $5 11/32 after it named a broad market slowdown in Year 2000 activity among the reasons for a projected earnings shortfall in fiscal Q3. Meanwhile, human resource software developer Clarus Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLRS)") else Response.Write("(Nasdaq: CLRS)") end if %> said an increased focus on Year 2000 preparedness among its customers, among other things, is taking attention away from its own products. Either way, it meant bad news for both companies' shareholders today. SEEC expects fiscal Q3 results to come in between break-even and a $0.02 per share profit, below the $0.06 per share projection one analyst gave First Call. Clarus retreated $1 31/32 to $4 1/32 after saying it expects Q4 revenues of between $10.6 and $10.9 million, missing analysts' estimated $14.0 to $15.6 million range. The company doesn't yet know the impact on earnings.

QUICK CUTS: Spyglass Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPYG)") else Response.Write("(Nasdaq: SPYG)") end if %>, a developer of Internet software and technologies for TV set-top boxes, network computers, and cellular phones, cracked today, falling $7 to $15 after pre-announcing a fiscal Q1 loss of between $0.16 and $0.14 per share, better than last year's $0.28 loss but below First Call's three-analyst $0.01 per share profit estimate... U.K. chemicals giant Imperial Chemical Industries' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ICI)") else Response.Write("(NYSE: ICI)") end if %> American depositary receipts shed $1 9/16 to $33 3/8 following the announcement of the cancellation of plans to sell chemical assets to DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> and NL Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NL)") else Response.Write("(NYSE: NL)") end if %> because of objections by the FTC. DuPont gained $2 5/16 to $55 3/8 while NL advanced slightly... MCI WorldCom <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %> slipped $1 7/8 to $69 7/8 after CIBC Oppenheimer cut its rating on the telecommunications giant to "buy" from "strong buy."

Shares of drugstore owner Walgreen Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WAG)") else Response.Write("(NYSE: WAG)") end if %> slipped $1 11/16 to $56 7/8 this morning as the company announced earnings per share for its first fiscal quarter (ending November 30) of $0.21, meeting First Call's consensus estimate. Today's Lunchtime News takes a closer look... Call center management software provider Davox Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DAVX)") else Response.Write("(Nasdaq: DAVX)") end if %> hung up $1 3/16 to $6 7/16 following its announcement that Q4 EPS is seen coming in between $0.05 and $0.07 per share, approximately one-half Wall Street's $0.12 projection... Patient records transcription service company MedQuist Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MEDQ)") else Response.Write("(Nasdaq: MEDQ)") end if %>, which Merrill Lynch downgraded to "near-term neutral" from "near-term accumulate" today, lost $3 to $36 1/2... Analytic application software developer Hyperion Software Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HYSL)") else Response.Write("(Nasdaq: HYSL)") end if %> dropped $1 9/32 to $16 23/32 after Goldman Sachs cut its rating on the company to "market outperform" from "recommended."

QualMark Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QMRK)") else Response.Write("(Nasdaq: QMRK)") end if %>, which provides accelerated life testing services and equipment primarily for electronics manufacturers, lost $1 to $4 3/8 after it said three delayed orders will result in a revenue shortfall for Q4... Construction industry aggregates manufacturer Martin Marietta Materials <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MLM)") else Response.Write("(NYSE: MLM)") end if %> wore down $4 3/16 to $58 after Scott & Stringfellow downgraded the stock to "hold" from "strong buy"... High-end storage systems company Box Hill Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BXH)") else Response.Write("(NYSE: BXH)") end if %> unpacked $3/8 to $5 after the company said it expects to report a "slight profit that is significantly below expectations" when it turns in Q4 results in February... Cruise-line operator Carnival Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCL)") else Response.Write("(NYSE: CCL)") end if %> lost $2 9/16 to 45 7/16 today after Donaldson, Lufkin & Jenrette downgraded the stock to "market perform" from "buy."

Shares of Pope Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: POPEZ)") else Response.Write("(Nasdaq: POPEZ)") end if %> toppled $3 1/2 to $29 after its Olympic Resource Management timberland management subsidiary completed the acquisition of Simons Reid Collins, a forestry consulting services company... Telecommunications equipment maker Tellabs <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %>, which saw CFO Peter Guigliemi return from a five-month leave of absence today, lost $2 13/16 to $65 3/4... Marketing software developer Exchange Applications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EXAP)") else Response.Write("(Nasdaq: EXAP)") end if %> lost $2 1/8 to $17 1/2 despite the fact that both BT Alex. Brown and Hambrecht & Quist started coverage of the company with a "buy"... Cable TV and Internet access customer billing services firm CSG Systems International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSGS)") else Response.Write("(Nasdaq: CSGS)") end if %> fell $7 3/4 to $71 1/4 after BancBoston Robertson Stephens lowered its long-term rating on the company to "attractive" from "buy."

Telecommunications services company Level 3 Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LVLT)") else Response.Write("(Nasdaq: LVLT)") end if %> descended $2 1/8 to $41 after Salomon Smith Barney gave the stock an "outperform speculative" rating... Online reservations company 800 Travel Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IFLY)") else Response.Write("(Nasdaq: IFLY)") end if %> dropped $1 15/16 to $10 5/16 despite launching its Internet service, lowairfare.com, today... Wine and wine products direct marketer Geerlings & Wade <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GEER)") else Response.Write("(Nasdaq: GEER)") end if %> dripped off $1 9/16 to $7 5/8 after advancing $1 15/16 on Friday following news of planned changes for its website... Airborne Freight Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ABF)") else Response.Write("(NYSE: ABF)") end if %> unloaded $2 to $34 1/16 after PaineWebber downgraded the stock to "attractive" from "buy," setting a 12-month target price of $41 per share.

FOOL ON THE HILL
An Investment Opinion
by Alex Schay

Adaptec Adapts

In the investment world, there is rarely consensus when a company hits rock bottom. While the factors that caused the sinking are usually identifiable, the waters that swallow up the unfortunate investment are always murky -- and often very deep. Restructuring -- accompanied by expectation for a turnaround -- presents an interesting scenario for investors. An admission has been made by the company that capital has been misallocated, and the investor then gets to make an assessment about the firm's "new" or "re-newed" focus.

To continue with the ship metaphor, a firm that announces a restructuring has hit an underwater shelf and is poised to be successfully "found" and raised to the surface, or sent to the bottom of the sea by the strong tides of business change. Mercifully, we'll end the metaphor here and talk about Adaptec <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADPT)") else Response.Write("(Nasdaq: ADPT)") end if %>. The data transfer rate booster was up $1 to $18 9/16 today on some product news -- a ship with a new crew charting a bold new course (sorry). At midyear 1998, Adaptec was already taking on water -- OK, I'll stop -- finishing the month of June down over 60% on the year, and en route to a price well below $10 by early October. Here's what we had to say at midyear:

"So, inside the machine, for cost conscious end users and manufacturers some flavor of integrated drive electronics (IDE) will prevail. Indeed, the technology has become standard fare in most PCs because it is cheaper than SCSI and is suitable for most single-tasking desktop environments. Outside the box, and where cost is an issue, SCSI will continue to be employed because of its ability to support longer cable runs. However, the bears argue that even in this case the now higher cost fibre will still ultimately displace SCSI and become the connection medium of choice for "inter-box" link-ups. Therefore, the combination of EIDE (or some derivative) dominating the intra-box connections, fibre dominating inter-box connections, workstation vendors dropping SCSI as the standard expansion interface, and the scuttled Symbios merger axing Adaptec's plans for a quick entry into the high-end UNIX based server market make the future look pretty grim."

"The bulls don't quite think all is lost, however. After all, Adaptec has been at it for more than 16 years and is certainly not blind to the competitive issues outlined above. The company sees enormous opportunity ahead in storage and RAID sub-systems in NT/Intel environments, as well as in high-performance servers that will use the most advanced forms of SCSI available. The bottom line is that Adaptec has roughly $700 million in cash and marketable securities at its disposal to invest in whatever technologies it feels will make the firm competitive again. The firm has gone from a $6.2 billion company to a $1.4 billion firm in less than a year, and the bulls feel it has hit rock bottom, trading at 9 times forward estimates and less than 2 times book value. This valuation level not only makes the firm attractive to acquirers, but to itself as well -- assuming Adaptec looks in the mirror and likes what it sees, it may utilize some of its substantial free cash flow to buy back shares."

CONFERENCE CALLS

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Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), another Fool David Marino-Nachison (TMF Braden), a new Fool Editing Brian Bauer (TMF Hoops), another Fool Bob Bobala (TMF Bobala), a Fool's Fool Jennifer Silber (TMF Amused), Fool at last