FOOL PLATE SPECIAL

Applied Materials <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMAT)") else Response.Write("(NASDAQ: AMAT)") end if %> continued to frustrate investors today after posting earnings a penny above the expectations of a dollar for the second quarter. Shares of the stock fell $13/16 to $39 1/4. The world's largest manufacturer of front-end equipment for the manufacturer of semiconductors was downbeat in their conference call last night -- a marked contrast to last quarter's bullish message. The company guided down expectations for the fiscal third and fourth quarters, stating it saw earnings in the $1.00 per share range and revenues in the $1.05 billion range for both quarters. The company's order backlog only increased $130,000 in the second quarter, and although they expect a positive book-to-bill going forward, they look to exit the year with an order backlog at the current $1.9 billion level.

With expectations of revenues only growing 17% in the third quarter and 7% in the fourth quarter, with EPS gains of 26.5% and 19% respectively, could it be all that bad? The fact that the company would not comment at all on fiscal 1997 and that it revealed last night that only 10% of its current backlog is deliverable after the fiscal first quarter of 1997 makes for a lot of nervousness. Estimates of flat revenue growth for the first quarter of fiscal 1997 and negative comparisons in the second quarter are suddenly popping up all over the place this morning. Applied Materials in the end is a question of time frame -- if you are looking for a quick six-to-twelve month gain, you are probably better off in other companies. Despite some significant questions about whether or not Applied will have leadership of 300 mm wafer technology, Jim Morgan's estimates of $10 billion revenues by the year 2000 do not seem that extreme. At current margins, that would be $10 in EPS. . . or about 22% average annual growth from here. What investors need to remember, however, is that most of this growth will probably happen in 1999 and 2000, meaning that a flat to slightly down share price over the next year should be factored into any decision to buy or hold.

[If you want to listen to the post-earnings conference call yourself, call (800) 477-6077.]

UPGRADES & DOWNGRADES

CompuServe <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CSRV)") else Response.Write("(NASDAQ: CSRV)") end if %> rose $1 15/16 to $28 15/16 this morning after Merrill Lynch initiated coverage of the number two online service with a "near term accumulate" rating. Goldman Sachs also added shares of CompuServe to its recommended list this morning.

Lazard Freres cut sports-equipment retailer The Sports Authority <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TSA)") else Response.Write("(NYSE: TSA)") end if %> from "buy" to "hold", knocking the shares down $1 3/4 to $34 1/2.

Schroder Wertheim analyst Wayne Daniels cut Boston Market <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BOST)") else Response.Write("(NASDAQ: BOST)") end if %> from "buy" to "hold" today, dropping the shares $1 1/2 to $34 1/4. Must not have liked the new meatloaf.

Montgomery Securities boosted SONUS Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SNUS)") else Response.Write("(NASDAQ: SNUS)") end if %> $1 1/4 to $17 5/8 after raising its price target to $25 from $20.

Machine vision concern CyberOptics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CYBE)") else Response.Write("(NASDAQ: CYBE)") end if %> got killed this morning, down $2 1/4 to $15 7/8, because of comments it made during its annual shareholder meeting about uncertainty surrounding earnings in future quarters. Alex. Brown cut its rating on the stock.

EARNINGS SURPRISES

Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DELL)") else Response.Write("(NASDAQ: DELL)") end if %> blew away first quarter estimates of $0.77 EPS, reporting $0.84 EPS after the bell yesterday on 19.5% gross margins -- much higher than the fourth quarter's 18.1%. Shares were up $4 to $51.

Shares of retailer Woolworth <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: Z)") else Response.Write("(NYSE: Z)") end if %> rose $7/8 to $20 after the company posted a much-smaller-than-expected loss for its fiscal quarter.

Analogy Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ANLG)") else Response.Write("(NASDAQ: ANLG)") end if %> plunged $3 5/8 to $9 5/8 after the company reported lower-than-expected fourth quarter results. Analysts had been looking for $0.14 EPS for the year and the company only came up with $0.11 EPS.

Semiconductor manufacturer Applied Science & Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ASTX)") else Response.Write("(NASDAQ: ASTX)") end if %> got whacked for $4 1/2 to $15 3/4 after telling analysts yesterday that the first half of fiscal 1997 would be lower than expected.

Pharmaceutical Marketing <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PMRX)") else Response.Write("(NASDAQ: PMRX)") end if %> dropped $1 1/4 to $10 3/4 after reporting a surprise loss in its third quarter. The company will take a number of charges and will focus on healthcare information services going forward.

If Elbit Computers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ELBTF)") else Response.Write("(NASDAQ: ELBTF)") end if %> is going to double earnings next year like analysts expect it to, it is off to a bad start. The company posted $0.12 EPS yesterday after market close, compared to $0.22 EPS the year before, sending shares down $1 7/8 to $16 1/4.

Mercer Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MERCS)") else Response.Write("(NASDAQ: MERCS)") end if %>, a diversified holding company, dropped $1 1/8 to $19 7/8 after reporting a dismal $0.43 EPS in earnings compared to $1.13 EPS a year ago.

ODDS & ENDS

Talk that PSINet <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PSIX)") else Response.Write("(NASDAQ: PSIX)") end if %> is now in play after it hired Merrill Lynch to help maximize shareholder value pushed the shares up $5/8 to $18. After the acquisition of UUNet two weeks ago, rumors are that Bell Atlantic might take a substantial stake in PSINet. Netcom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NETC)") else Response.Write("(NASDAQ: NETC)") end if %> benefited $2 5/8 to $39 1/2 from association.

The illustrious Carlton Lutz of the Cabot Market Letter was at it again this morning. Best known for recommending Presstek <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PRST)") else Response.Write("(NASDAQ: PRST)") end if %>, Lutz just recommended healthcare informatics concern Shared Medical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SMED)") else Response.Write("(NASDAQ: SMED)") end if %>, which rose $1 3/4 to $68.

Shared Medical was not alone. Lutz also made positive comments about MRV Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MRVC)") else Response.Write("(NASDAQ: MRVC)") end if %>, moving the stock up $9 1/2 to $50 1/4. MRV Communications is a company that manufactures connectivity equipment -- namely telecommunications and networking products.

And just when you thought it was safe, Lutz embraced another high-flier many have suggested is full of hype and froth -- Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NSCP)") else Response.Write("(NASDAQ: NSCP)") end if %>. The shares of the Internet software developer rose $4 1/4 to $70 3/4 after his recommendation.

Frozen food giant ConAgra <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAG)") else Response.Write("(NYSE: CAG)") end if %> rose $2 3/8 to $41 3/8 after announcing an ambitious restructuring program to cut costs.

Meridian Diagnostics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: KITS)") else Response.Write("(NASDAQ: KITS)") end if %> pepped up $1 11/16 to $11 1/2 after the company completed a secondary offering where insiders sold roughly two million shares.

The Southeastern Journal, one of the regional versions of the Wall Street Journal, propelled shares of Longhorn Steakhouse <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LOHO)") else Response.Write("(NASDAQ: LOHO)") end if %> up $1 to $28 3/4 when the paper's Heard on the Street column highlighted the company as a regional growth story.

CardioThoracic Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CTSI)") else Response.Write("(NASDAQ: CTSI)") end if %> was pumped up $2 1/4 to $24 1/8 after the Food & Drug Administration (FDA) told the company it was exempted from filing a pre-market application for its CTS Access Platform and Stabilizer.

FemRx <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: FMRX)") else Response.Write("(NASDAQ: FMRX)") end if %> received marketing approval from the FDA today for its Flow-Stat infusion system, rising $2 to $15.

Rumors that Canadian pharmaceutical concern QLT Phototherapeutics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: QLTIF)") else Response.Write("(NASDAQ: QLTIF)") end if %> might be the target of a buy-out boosted the shares $1 1/2 to $21 3/4.

A shake-up in the corporate boardroom left Photon Dynamics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHTN)") else Response.Write("(NASDAQ: PHTN)") end if %> $1 1/2 lower today to $11 1/2. The company named Howard Bailey CEO to replace Jim Ellick. Photon Dynamics makes test equipment for the flat panel display industry.

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