FOOL PLATE SPECIAL

ValuJet Flight 592 crashed into the Florida Everglades minutes after takeoff on Saturday. Sunday at 11:00 AM EDT, the search for survivors in the swampy environs of razor-sharp weeds and alligators was called off and investigators are now concentrating their efforts on retrieving the human remains from the wreckage. The stock of the low-cost, Atlanta-based airline did not escape the fallout from this crash -- it opened down $6 1/8 to $11 3/4 today and was trading at $13 5/8 a share by midday. The questions facing investors are to what degree is the airline responsible for this crash and how much could this tarnish ValuJet's brand and hurt their future bookings? With this kind of uncertainty, it is no surprise that the stock has buckled under the intense pressure.

ValuJet has fallen under increased scrutiny in the past few weeks after the company's 10-Q filing with the Securities Exchange Commission (SEC) revealed that it was scaling back its ambitious growth plans to better manage maintenance and safety issues. Reports that the last message from pilots to the control tower complained of black smoke did nothing to extinguish the fearful image the media painted of a discount airline with an aging fleet of poorly-maintained plans. ValuJet 592 was inspected four days before this tragic crash. Federal Aviation Administration (FAA) records show that the plane was forced to return to airports seven times in the past two years for a loose oil cap, a faulty heat-exchanger, an overheated constant speed drive, a faulty hydralic pump, a rear stair door ajar and on two occasions when the plane lost pressure.

UPGRADES & DOWNGRADES

Merrill Lynch cut De Rigo <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DER)") else Response.Write("(NYSE: DER)") end if %> from "near-term attractive" to "near-term neutral", scalping $1 5/8 off the share price to send it down to $28. The company produces sunglasses and eyeglasses frames.

Prudential slashed Intermet <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INMT)") else Response.Write("(NASDAQ: INMT)") end if %> to "hold" from "buy" this morning, pushing the stock down $1 1/8 to $16. The company develops electronic information and healthcare information systems for the "healthcare informatics" industry.

Montgomery and Hambrecht & Quist both raised their ratings on Qualcomm <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: QCOM)") else Response.Write("(NASDAQ: QCOM)") end if %>, pushing the shares of the CDMA technology provider up $2 to $44 5/8.

EARNINGS SURPRISES

Semiconductor electronic design automation (EDA) software developer Mentor Graphics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MNTR)") else Response.Write("(NASDAQ: MNTR)") end if %> rose $3/4 to $23 7/8 after reporting earnings a penny ahead of the $0.24 EPS consensus.

Flores & Rucks <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FNR)") else Response.Write("(NYSE: FNR)") end if %> popped up $1 3/4 to $25 1/4 after reporting a profit of $0.12 EPS versus a loss of $0.07 EPS a year ago. Analysts were only looking for breakeven earnings. Flores is an oil & gas exploration concern.

System Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SSAX)") else Response.Write("(NASDAQ: SSAX)") end if %> flopped down $5 7/8 to $18 1/4 after the company forecast second quarter earnings to be about breakeven on slightly more than $100 million in revenues.

Why Elcom International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ELCO)") else Response.Write("(NASDAQ: ELCO)") end if %> traded down $3/4 to $13 1/4 after doubling earnings expectations of $0.02 EPS when it reported $0.04 EPS is a mystery to us. The company develops software that allows people to buy and sell goods via computer networks.

Consumer electronics accessory manufacturer Recoton <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RCOT)") else Response.Write("(NASDAQ: RCOT)") end if %> got whacked for $1 1/8 to $17 7/8 when it reported earnings of $0.14 EPS compared to $0.19 EPS a year ago, blaming higher research and marketing expenses for the disappointing decrease in net profit.

Healthsource <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HS)") else Response.Write("(NYSE: HS)") end if %> hasn't opened yet, but it is indicated down, after warning of an earnings disappointment.

ODDS & ENDS

Isco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ISKO)") else Response.Write("(NASDAQ: ISKO)") end if %> surged $2 3/4 to $12 1/2 after Barron's highlighted its $8 book value and $4 in cash per share over the weekend. The company manufactures water pollution-monitoring instruments and laboratory equipment.

The Wall Street Journal revealed this morning that Pharmacia & Upjohn <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PNU)") else Response.Write("(NYSE: PNU)") end if %> is looking to acquire eye- and skin-care products maker Allergan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AGN)") else Response.Write("(NYSE: AGN)") end if %> for $2.5 million. Allergan's share price was unchanged at $37 7/8 and the company says talks have ended and that there was no deal.

Iomega <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IOMG)") else Response.Write("(NASDAQ: IOMG)") end if %> was unchanged at $62 after announcing that it planned to have a 5 million share secondary offering. Iomega had a similar offering cancelled a few weeks back due to the volatility of the share price, according to the company.

It appears that MF Boring may have scooped Barron's on carbon-fiber giant Zoltek <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZOLT)") else Response.Write("(NASDAQ: ZOLT)") end if %>. An analysis by Boring ran in Fool's Gold over the weekend. . . before anyone could have read the negative Ableson column in Barron's. The stock traded $5 lower to $77 this morning.

You think someone may have known on Friday that Borland <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BORL)") else Response.Write("(NASDAQ: BORL)") end if %> was buying out client/server software concern Open Environment <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OPEN)") else Response.Write("(NASDAQ: OPEN)") end if %> in a 0.51-for-1.0 share exchange? Down $1/2 to $7 5/8, Open Environment rose from $5 1/2 to $7 1/4 on no news on Friday. Borland slumped $13/16 to $15 3/16 for its part.

Broadband Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BBTK)") else Response.Write("(NASDAQ: BBTK)") end if %> rose $3 5/16 to $31 3/4 this morning, after reporting that they are working on developing faster Internet access for consumers.

NOTE:

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

Transmitted: 05/07/96