Thursday, May 2, 1996
Economic indicators tend to send the market on a roller-coaster ride. When
large institutions cannot figure out what is happening in the big picture,
their actions in the stock market become more constrained, volatile, arbitrary
and erratic. The buzz going around is that the economy in the first quarter
was stronger than anyone expected. . . Gross Domestic Product (GDP) up 2.8%,
hourly wages up seven cents to the highest level since 1991, along with
hard-to-interpret jobs increases. Although the non-farm payroll number only
rose 2,000 for April, far less than expected, the jobless rate continued
to plummet, down 0.2% to 5.4% -- the lowest level in 14 months. What does
this all mean for Fools? Not a lot. Fools like to see the economy do well
and view short-term sell-offs due to bad economic news as opportunities to
buy into the growth that will come down the pike in a few weeks. Fools like
to get behind the big ol' economy and cheer it on -- even if it means inflation
clicks up from thirty-year lows and the Fed does not cut interest rates.
It is only when people are confident and have more money to spend that they
can go out and buy all the cool stuff Foolish companies make. So look to
the coming volatility as institutions change their macro-economic picture
as an opportunity to buy great companies during temporary, panic-inspired
fire sales.
UPGRADES & DOWNGRADES
~~~~~~~~~~~~~~~~~~~~~~~
AML Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMLJ)") else Response.Write("(NASDAQ: AMLJ)") end if %> surged another $2 3/8 to $28 3/4 after
a similar gain yesterday on news that Dabney Resnik had initiated coverage
of the company with a "long-term buy" rating, calling the company an "attractive
takeover target".
ProNet <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PNET)") else Response.Write("(NASDAQ: PNET)") end if %> had its rating lowered from "outperform" to "neutral"
by Morgan Stanley today. Despite the fact that it has "net" in its name,
shares of the healthcare paging systems developer fell $2 1/8 to $31 3/8.
EARNINGS SURPRISES
~~~~~~~~~~~~~~~~~~
Microtouch Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MTSI)") else Response.Write("(NASDAQ: MTSI)") end if %> might finally be turning around. Up $1
15/16 to $19 3/4, the developer of touch-screen interfaces reported earnings
of $0.15 per share (EPS), two cents higher than the Street was looking for.
John Alden <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JA)") else Response.Write("(NYSE: JA)") end if %> was up $1 7/8 to $21 this morning on
much-stronger-than-expected earnings of $0.71 EPS before restructuring charges.
The midwest health insurance concern has been battered in the past year over
worse-than-expected earnings, beginning the sell-off in health maintenance
organizations (HMOs) in 1995.
Biotech company Intercardia <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ITRC)") else Response.Write("(NASDAQ: ITRC)") end if %> rose $4 to $29 after reporting
a loss of $0.11 EPS for the fiscal second quarter after the bell yesterday.
Reporting a 60% increase in quarterly sales and a net profit of $0.18 EPS
versus a loss of $0.33 EPS a year ago, Odetics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ODETA)") else Response.Write("(NASDAQ: ODETA)") end if %> soared $1
3/4 to $11.
Printer-developer Kentek Information <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: KNTK)") else Response.Write("(NASDAQ: KNTK)") end if %> shot out the lights last
evening, posting a net of $0.51 EPS compared to all of $0.13 EPS a year ago,
and rising $1 3/4 to $11 1/2 this morning.
A small-cap that missed its earnings estimates: TechForce <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TFRC)") else Response.Write("(NASDAQ: TFRC)") end if %>
flopped $1 to $11 1/2 this morning on earnings of $0.11 EPS versus a penny
last year. The company provides integrated support solutions for the computer
and networking industries.
IPC Information Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IPCI)") else Response.Write("(NASDAQ: IPCI)") end if %>, supplier of communications solutions
to financial services companies, only managed to report $0.34 EPS versus
$0.31 EPS a year ago, getting clobbered for $2 to $18 today.
Pediatric Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PSAI)") else Response.Write("(NASDAQ: PSAI)") end if %> missed earnings estimates of $0.22 EPS
by two cents this morning, getting whacked for $4 3/4 to $20 as a result.
Raymond Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RAYM)") else Response.Write("(NASDAQ: RAYM)") end if %>, a maker of flow-control equipment, dropped
$1 to $17 when it posted earnings of $0.45 EPS compared to estimates of $0.47
EPS and $0.44 EPS last year.
Centigram Comm. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CGRM)") else Response.Write("(NASDAQ: CGRM)") end if %> got nailed $5 3/8 to $17 1/2 after the company
reported that it expects to lose $0.20 to $0.26 EPS in the second quarter
on only $24 to $25 million in revenues. The developer of integrated
communications products was also cut by Smith Barney from "outperform" to
"neutral".
ODDS & ENDS
~~~~~~~~~~~~
Cascade Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CSCC)") else Response.Write("(NASDAQ: CSCC)") end if %> surged $5 3/4 to $104 3/4 this morning
after announcing a 2-for-1 split. The developer of frame relay and asynchronous
transfer mode (ATM) switches was recently jilted by Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CSCO)") else Response.Write("(NASDAQ: CSCO)") end if %> for Stratacom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: STRM)") else Response.Write("(NASDAQ: STRM)") end if %> in spite of the similarity in the tickers.
Privately-held CertainTeed Corp. must prefer two in the bush to a bird in
the hand, as it announced that it ended its tender offer for Bird Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BIRD)") else Response.Write("(NASDAQ: BIRD)") end if %>, meaning that the two construction companies will not be merging after
all. Bird Corp. was plucked $2 1/2 to $4 1/2 on the news.
Troubles continue to mount at WellCare <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WELLE)") else Response.Write("(NASDAQ: WELLE)") end if %>. First forced to find
a new accountant after revelations in Barron's about funky accounting practices
came to light, the Nasdaq has now decided to delist the New York-based HMO,
causing it to drop $2 to $11 this morning.
Micro-catheter-maker Target Therapeutics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TGET)") else Response.Write("(NASDAQ: TGET)") end if %> slipped $3 to $47
as investors tried to figure out whether or not an acquisition the development
stage biotech made this week might decrease its chances of being bought out
by a larger firm later.
Zenith Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ZE)") else Response.Write("(NYSE: ZE)") end if %> has been springing to life lately, announcing
deals with Motorola, Cisco Systems, and US Robotics to develop cable modems
and get into the Internet market. The stock was up $1 7/8 to $14 7/8.
Modem-maker US Robotics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: USRX)") else Response.Write("(NASDAQ: USRX)") end if %> continued in its volatile ways, surging
forward $10 1/2 to $163 1/2 to make up for a comparable slip yesterday.
Randy Befumo (MF Templar), a
Fool
Transmitted: 5/2/96 4:00 PM
THE MARKET MIDDAY
FOOL PLATE SPECIAL
Selena Maranjian (MF Selena), another
Fool