Monday, April 29, 1996
THE MARKET MIDDAY
FOOL PLATE SPECIAL
Personal computer sales have been the bugaboo of investors for the entire
first quarter, with fears of a slump hammering computer-related issues over
the past few months. Numbers released this morning by Dataquest and International
Data Corp. (IDC) suggest that much of this hand-wringing was for naught,
implying computer shipments rose somewhere between 14% to 15% in the first
quarter, with worldwide unit growth up 18%. Now the problems of the past
few months are suddenly viewed as "company specific" and not indicative of
an industry slowdown. Surprises in today's release include IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>
falling from the top five for the first time since it started making PCs
and Hewlett-Packard's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> leap to the number-three spot after doubling
its unit volume. Dataquest is maintaining its estimate of 19.1% worldwide
growth for 1996 while IDC prefers to take a long-term view, estimating an
average worldwide growth rate of 15% over the next five years.
UPGRADES & DOWNGRADES
Wafer fabrication maker Novellus Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NVLS)") else Response.Write("(NASDAQ: NVLS)") end if %> was downgraded
by Hambrecht & Quist today from "buy" to "hold", dropping $2 1/2 to $56.
Goldman Sachs started covering Sapient Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SAPE)") else Response.Write("(NASDAQ: SAPE)") end if %>, rating it
a "buy", sending shares up $2 1/4 to $43.
Two Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LCOS)") else Response.Write("(NASDAQ: LCOS)") end if %> underwriters began the company as a "buy" today,
boosting shares $3/4 to $18 3/4 and proving once again that investment banking
underwriters correlate well with later analyst ratings. (In other words,
if investment banker ABC underwrites a public offering of a company, we shouldn't
be surprised if several months later firm ABC starts coverage of said company
with a "buy" rating.)
Progress Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PRGS)") else Response.Write("(NASDAQ: PRGS)") end if %> fell $7/8 to $16 1/4 when Alex Brown
took it off its "focus list".
Morgan Stanley downgraded photorefractive keratecomy (PRK) concern Summit
Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BEAM)") else Response.Write("(NASDAQ: BEAM)") end if %> to "neutral" from "strong buy", knocking $2 3/8
off of its share price to $17 1/8.
EARNINGS SURPRISES
DST Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DST)") else Response.Write("(NYSE: DST)") end if %> beat estimates by a penny today, rising $2 to
$37 1/2 as its just reward.
The new addition to the Borefolio, Zytec <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZTEC)") else Response.Write("(NASDAQ: ZTEC)") end if %> started strong
this morning, up $3 1/2 to $27 1/2 on one and a half times normal volume.
Canandaigua Wine <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WINEA)") else Response.Write("(NASDAQ: WINEA)") end if %> was crushed today, falling $6 5/8 to
$29 7/8 after the company forecast fiscal 1996 net of $0.17 EPS and fiscal
1997 net of $2.30 to $2.50 EPS.
Another surprisingly huge loss at Indigo NV <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INDGF)") else Response.Write("(NASDAQ: INDGF)") end if %> caused the
printing press manufacturer to slide $1 7/8 to $14 1/8.
Earnings $0.14 below estimates of $0.37 EPS was the reason for health
maintenance organization Mid-Atlantic Medical's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MME)") else Response.Write("(NYSE: MME)") end if %> giving back $4
3/8 to $19 3/8 this morning.
ODDS & ENDS
Computer Sciences <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSC)") else Response.Write("(NYSE: CSC)") end if %> and Continuum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CNU)") else Response.Write("(NYSE: CNU)") end if %> are tying the
knot in a merger valued at $1.5 billion, with stockholders getting 0.79 shares
of Computer Sciences for each share of Continuum they hold. Continuum shares
rose $12 7/8 to 58 1/4, while Computer Sciences shares dropped slightly.
An alliance with NEC Corp. to develop digital cellular "smart phones"
boosted shares of Geoworks <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GWRX)") else Response.Write("(NASDAQ: GWRX)") end if %> $2 to $34 3/4 this morning.
A shareholder suit against AnnTaylor <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANN)") else Response.Write("(NYSE: ANN)") end if %> and its majority shareholder
Merrill Lynch dropped shares of the women's clothing retailer $1 to $17 at
the open.
Gensia <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GNSA)") else Response.Write("(NASDAQ: GNSA)") end if %> plummeted $1 to $4 3/8 after the company was informed
by the Food & Drug Administration that its New Drug Application for the
GenESA System was "not currently approvable".
Randy Befumo (MF Templar), a
Fool Transmitted: 4/29/96
Selena Maranjian (MF Selena),
another Fool