FOOL PLATE SPECIAL

We cannot say here at Fool HQ that we were all that surprised by another lower book-to-bill ratio. The questionable indicator of how the dollar amount of semiconductor industry shipments stacks up against semiconductor industry orders came out at 0.78 yesterday, below the 0.85 consensus that analysts had been looking for. Essentially what this tells us is that semiconductor prices have really fallen over the past few months -- something any buyer of 4 meg DRAM can tell you.

With reports of 4 meg DRAM being sold for as low as $3.50 in Southeast Asia versus $12 to $16 only a few months ago and word of similar declines for 16 meg DRAM, the book-to-bill ratio can't climb above 1.0 again until prices stabilize. When might this happen? The second-half of the year, according to most people who follow the industry. Semiconductor and semiconductor-related stocks traditionally hit their lowest prices about three months after the lowest book-to-bill ratio is recorded. Given that this month was the latest low, investors should probably adjust their expectations accordingly.

UPGRADES & DOWNGRADES

Smith Barney initiated coverage of Noven Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NOVN)") else Response.Write("(NASDAQ: NOVN)") end if %> with a "buy" rating, boosting the shares $1 3/8 to $14 5/8 today.

Morgan Stanley retail analyst Sharon Pearson upgraded Fool portfolio holding The Gap <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %> from "outperform" to "buy", raising her 12-month price target to $37 and the stock's price $1/2 to $31.

Merrill Lynch cut its near-term rating on Employee Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ESOL)") else Response.Write("(NASDAQ: ESOL)") end if %> from "buy" to "accumulate", knocking the employee benefits provider down $3 1/8 to $37 1/2.

EARNINGS SURPRISES

Surfing-wear retailer Wet Seal <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WTSLA)") else Response.Write("(NASDAQ: WTSLA)") end if %> rose $3 to $16 7/8 after the company posted a $0.06 EPS profit in the first quarter versus a five cent loss a year ago.

Creative Computers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MALL)") else Response.Write("(NASDAQ: MALL)") end if %>, which benefited from stronger-than-expected PC sales for the first quarter a few weeks back, slumped $1 3/4 to $6 3/4 today after it posted a shocking 25 cent loss for its first quarter. The company reported that its chief financial officer (CFO) was leaving and told the Street that Apple product sales were bad and that it had unusually high theft and fraudulent credit card charges.

CD-Rom storage device developer Pinnacle Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PNCL)") else Response.Write("(NASDAQ: PNCL)") end if %> got fried this morning, losing $2 7/16 to $7 9/16 after posting a huge first quarter loss and reporting that the losses would continue for the next two quarters.

Intersolv <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ISLI)") else Response.Write("(NASDAQ: ISLI)") end if %> slumped $1 5/16 to $10 3/16 after pre-announcing yet another quarter of disappointing results, saying it will only earn between $0.14 to $0.16 per share (EPS) instead of the mid-$0.20s that analysts were looking for.

ODDS & ENDS

Medical products manufacturer UroMed <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: URMD)") else Response.Write("(NASDAQ: URMD)") end if %> popped up $1 5/8 to $12 1/4 after it announced that it had acquired all assets relating to the already-approved Miniguard Patch, a urinary incontinence product, for $30 million from a liquidating trust.

Guildford Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GLFD)") else Response.Write("(NASDAQ: GLFD)") end if %> rose $2 to $30 3/4 after it announced yesterday that the Food & Drug Administration (FDA) had scheduled a review of its new drug application (NDA) for the Gliadel Wafer on June 14th.

Software 2000 <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SFWR)") else Response.Write("(NASDAQ: SFWR)") end if %> rose $1 to $16 after the company announced it would increase its previously-announced secondary offering of shares.

In spite of beating estimates of $0.19 EPS by six cents, Ross Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RTEC)") else Response.Write("(NASDAQ: RTEC)") end if %> fell $1 1/2 to $13 this morning when Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SUNW)") else Response.Write("(NASDAQ: SUNW)") end if %> declined to buy the additional shares stipulated under a previous agreement.

NOTE:

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Randy Befumo (MF Templar), a Fool
Selena Maranjian (MF Selena), another Fool

Transmitted: 05/07/96