Wednesday, May 1, 1996
Although America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMER)") else Response.Write("(NASDAQ: AMER)") end if %> reports earnings in the middle of
next week, I have been ruminating on its valuation for the past 24 hours
after the UUNet Tech <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: UUNT)") else Response.Write("(NASDAQ: UUNT)") end if %> buy-out. What's the connection? Advanced
Network Services (ANS), another virtual private data network service that
offers Internet connectivity, security software and customized applications.
America Online bought ANS in February of 1995 for $35 million -- UUNet
Technologies was bought out yesterday by MFS Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MFST)") else Response.Write("(NASDAQ: MFST)") end if %>
for $2 billion. Certainly, many will tell you that UUNet provides higher-end
service than ANS, with stuff like T1 access as part of their product portfolio
where ANS cannot support this. However, the similarities between the two
companies are pretty significant. Imagine for a moment if ANS is worth about
half of what UUNet was to an acquirer -- 15% of America Online's fully diluted
market cap suddenly becomes ANS alone. Makes you think, at least.
UPGRADES AND DOWNGRADES
~~~~~~~~~~~~~~~~~~~~~~~~~~
Station Casinos <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: STCI)") else Response.Write("(NASDAQ: STCI)") end if %> hit the jackpot today, rising $7/8 to $14
1/8 after a Smith Barney upgrade to "buy" from "neutral".
Sierra Health Services also benefited from an upgrade, as Donaldson Lufkin
Jenrette moved the company from "market perform" to "outperform" and shares
rose $1 1/8 to $34 1/8.
EARNINGS SURPRISES
~~~~~~~~~~~~~~~~~~
The so-called "son of Iomega", IMP Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IMPX)") else Response.Write("(NASDAQ: IMPX)") end if %>, rose $7/8 to $16
1/4 after reporting earnings of $0.08 EPS in the most recent quarter. Eight
cents per share was in line with expectations. Iomega <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IOMG)") else Response.Write("(NASDAQ: IOMG)") end if %> rose
$4 3/8 to $59 1/8, apparently on this news.
Discreet Logic <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DSLGF)") else Response.Write("(NASDAQ: DSLGF)") end if %> was eviscerated by $7 to $9 5/8 after the
company forecast "significant" third quarter losses in a press release today
on revenue of $17 to $18 million.
Macintosh scanner-gadget maker Visioneer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VSNR)") else Response.Write("(NASDAQ: VSNR)") end if %> crashed, down $4
1/2 to $10 1/2 after saying it saw revenues for the second and third quarter
falling below the first quarter.
Goodmark <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GDMK)") else Response.Write("(NASDAQ: GDMK)") end if %>, maker of Slim Jims and other "meat products", said
fourth quarter revenues will be 8% to 10% below last year's levels, dropping
$1 3/4 to $14 3/8. Chew on that.
JPEG chipset developer Zoran Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZRAN)") else Response.Write("(NASDAQ: ZRAN)") end if %> got whacked for $3 7/8
to $27 7/8 after beating estimates last night. . . apparently in a profit
taking move. The stock is up from the low 'teens a month ago after IBM's
announcement that it is selling three MPEG-1 chipsets.
Physicians Health Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHSV)") else Response.Write("(NASDAQ: PHSV)") end if %> dropped $5 3/4 to $27 after warning
that its first quarter earnings would be "below expectations".
ODDS & ENDS
~~~~~~~~~~~
Crompton & Knowles <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CNK)") else Response.Write("(NYSE: CNK)") end if %> is buying out Uniroyal Chemical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: UCHM)") else Response.Write("(NASDAQ: UCHM)") end if %> for about $1.4 billion today, or $15 a share, translating into a $2
7/8 to $14 5/8 increase for Uniroyal shareholders.
Cellpro <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CPRO)") else Response.Write("(NASDAQ: CPRO)") end if %> got the thumbs up from the Food & Drug Administration
for its Ceprate SC Stem Cell Concentration System yesterday, pushing the
shares up $1 3/4 to $18. Cellpro is a a biotech specializing in "continuous-flow
cell-selection systems."
Intervac <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IVAC)") else Response.Write("(NASDAQ: IVAC)") end if %> got a boost from a mention in Investor's Business
Daily's New America page, up $3/8 to $15 1/4 after reporting it will start
making flat-panel display systems for the computer industry.
Thinly traded embroidery concern Hirsch International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HRSH)") else Response.Write("(NASDAQ: HRSH)") end if %> got
a $1 to $16 3/4 pop from a mention on the New America page as well.
Cheyenne Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: CYE)") else Response.Write("(AMEX: CYE)") end if %> dropped $3 3/4 to $20 1/4 after McAfee Software
<% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MCAF)") else Response.Write("(NASDAQ: MCAF)") end if %> dropped its offer to buy-out the company.
French-based Business Objects <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BOBJY)") else Response.Write("(NASDAQ: BOBJY)") end if %> has adjusted the ratio at which
ordinary shares will be converted to American Depository Receipts, effectively
doing a 2-for-1 split as it doubles the amount of ADRs outstanding. The stock
was up $4 1/4 to $90 3/4 on the news.
Transmitted: 7/16/96 1:50 PM (ln050196)
Randy Befumo (MF Templar), a
Fool
THE MARKET MIDDAY
FOOL PLATE SPECIAL
Selena Maranjian (MF Selena), another
Fool