Investment Opinion
FOOL PLATE SPECIAL
Genus Reports Old News
Semiconductor equipment maker GENUS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GGNS)") else Response.Write("(NASDAQ: GGNS)") end if %> slumped $1 5/8 to $9 1/2 this morning after getting a $2 3/4 shot in the arm yesterday. The reason for the volatility is a routine press release issued yesterday which announced that Genus had received patent protection for its Buried Implanted Layer for Lateral Isolation, or its BILLI process. This process uses MeV-range high-energy ion implanters and can eliminate one to two masking steps from current MeV procedures and three to four masking steps from conventional well processes, according to the company. This procedure could produce up to $229 in annual savings per 200 millimeter wafer, as well as cutting back the cycle-time by up to 16%.
So why is the stock down after leaping on all of this news? Because this "news" was simply a restatement of exactly what Genus has been saying for the last 12 months. It was the ramp-up to develop the BILLI products that caused the stock to pull back from last summer's high of $17 and plunge into the $5 basement when it informed the Street that previously-anticipated earnings would not materialize over the next 12 months. Are those earnings coming down the pipeline now that Genus has gotten patent protection? If the company has maintained its historically tight relationship with the sell-side analysts that cover it, earnings ain't coming over the next three quarters. Current consensus estimates call for a mere $0.37 EPS, although the company is guiding analysts to expect $0.73 EPS next year.
The most interesting aspect in all of this is the surge Genus saw yesterday after it released information that was already known. A class of investors who mistakenly believed that this was new information leaped on the stock yesterday without having done anything resembling homework. These investors are getting absolutely fried as those who actually understand the fundamentals behind the company took the 30% leap as an opportunity to sell. Although Fools have nothing against people who want to quickly move in and out of stocks, we definitely eschew anything that involves investing in a company without a thorough understanding of the business. Genus seems to be an object lesson of what can happen if you hop aboard a stock, hoping for a nice pop after news.
TEMPLETON RUSSIA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRF)") else Response.Write("(NYSE: TRF)") end if %> continues to benefit from increasing excitement over the upcoming Russian elections. The closed-end fund is up $5/8 to $25 5/8.
"The Stock That Would Not Die" could be the title of a film detailing the exploits of PRESSTEK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PRST)") else Response.Write("(NASDAQ: PRST)") end if %>, back from the dead and up another $4 1/4 to $79 1/4 today. The combination of another Cabot "buy" recommendation and management's refutation of some bearish tales has allowed the digital printing concern to resume its ascent.
AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMER)") else Response.Write("(NASDAQ: AMER)") end if %> surged $1 7/8 to $44 1/4 this morning on two bits of news: Mary Meeker of Morgan Stanley upgraded the stock to a "strong buy" with a $55 to $60 price target and Bill Razouk resigned as Chief Operating Officer (COO), with Steve Case resuming his control of day-to-day operations.
When MICRION <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MICN)") else Response.Write("(NASDAQ: MICN)") end if %> reported yesterday that one of its customers had pushed out orders for some equipment, all eyes turned to READ-RITE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: RDRT)") else Response.Write("(NASDAQ: RDRT)") end if %>. Apparently, yesterday's reaction was today viewed as too extreme, since Micrion is down from $37 a month ago on rumors about this very news. It recovered $3/4 to $12 3/4 today.
Robertson, Stephens & Co. initiated coverage of CAMBRIDGE TECHNOLOGY PARTNERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CATP)") else Response.Write("(NASDAQ: CATP)") end if %> with a buy this morning, moving the shares up $2 1/4 to $24. Analyst Catherine Baker stressed Cambridge's ability to maintain premium pricing in a capacity-constrained market.
ITT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ITT)") else Response.Write("(NYSE: ITT)") end if %> popped up $3 to $65 today after Salomon Brothers analysts Bruce Turner initiated coverage with a "strong buy" and established a price target of $87 this year and $107 for next year.
PaineWebber juiced up oilfield services & equipment player WEST MARINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WMAR)") else Response.Write("(NASDAQ: WMAR)") end if %> this morning, raising its rating from "attractive" to "buy" and the stock price from $2 1/2 to $62.
DIANA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DNA)") else Response.Write("(NYSE: DNA)") end if %> just opened this morning, up $5/8 to $56 7/8 after reporting a larger loss than it had in the prior quarter and releasing a note that it is looking to hire an investment banker to "maximize shareholder value". Speculation is that the networking operations will be split from the food processing operations, as apparently management cannot find anyone to buy the money losing Atlanta Provisions subsidiary. Asensio & Co. reconfirmed their "strong sell" rating on the shares, boldly stating that the company could loss all of its "52 week gains" -- or $52!
Local area networker 3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: COMS)") else Response.Write("(NASDAQ: COMS)") end if %> was mashed for $4 3/4 to $45 7/8 after the company *met* First Call operating estimates. 3COM reported $0.46 EPS versus $0.31 EPS a year ago. Apparently, some were expecting that 3COM would beat consensus expectations.
PARK ELECTROCHEMICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PKE)") else Response.Write("(NYSE: PKE)") end if %> disappointed the Street today, reporting first quarter net of $0.26 EPS -- seven cents below expectations. The company sees the second quarter as "somewhat better" than the first, and the third quarter as the real improvement. Shares slipped $2 1/8 to $19.
EXIDE ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: XUPS)") else Response.Write("(NASDAQ: XUPS)") end if %> guided expectations for 1996 revenues and earnings down today, and promptly blew up for $4 to $9 3/4. The company sees revenues of $455 to $465 million and earnings of $0.30 EPS to $0.40 EPS for the fiscal year ending September 30th. After the announcement, Interstate Johnson slashed its rating on the stock.
Morgan Stanley shot down ARROW ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARW)") else Response.Write("(NYSE: ARW)") end if %> $3 5/8 to $42 1/4 this morning, after it slashed its rating to "neutral" from "outperform".
NYCOMED USA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NYD)") else Response.Write("(NYSE: NYD)") end if %> was whacked for $3 1/2 to $15 after downgrading its 1996 profit forecast, citing extreme competition in the X-ray contrast agent market.
A+ NETWORK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ACOM)") else Response.Write("(NASDAQ: ACOM)") end if %> dropped $3 3/16 to $12 1/2 this morning after METROCALL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MCLL)") else Response.Write("(NASDAQ: MCLL)") end if %> announced that it would purchase 2.14 million A+ shares for $21.10 each. Metrocall wants to amass 40% of A+. A+ Network, a paging services company, fits in with Metrocall's paging and wireless messaging operations.
SYNCOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SCOR)") else Response.Write("(NYSE: SCOR)") end if %> pulled back this morning, down $1 7/8 to $14 3/4, after Dow Jones ran a newswire article speculating that the week's rise was sparked by an article in July's Individual Investor. Somehow, we are not convinced that this is the only thing behind Syncor's rise, as the 49 other stocks profiled have not risen anywhere near as much.
Hot potato! ORTHOLOGIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OLGC)") else Response.Write("(NASDAQ: OLGC)") end if %> plunged $6 3/8 to $23 1/8 today after the National Association of Securities Dealers (NASD) announced they were probing trading in the company's shares after the chairman and chief executive officer (CEO) was sued by shareholders for dumping his own shares before releasing some bad news.
Juice company ODWALLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ODWA)") else Response.Write("(NASDAQ: ODWA)") end if %> fell $2 1/2 to $20 today after yesterday's earnings disappointment, when the company reported $0.11 EPS instead of the $0.10 EPS that analysts were expecting. Investors are urged to check out MF Raleigh's write-up of this company in "Stocks for Dad" for more information about what makes earnings volatile at this fresh juice concern.
TELXON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TLXN)") else Response.Write("(NASDAQ: TLXN)") end if %> pulled back $3/4 to $11 7/8 after yesterday's rise concurrent with an announcement that the company would work to provide future interoperability of its wireless local area networks with Symbol Technologies and Aironet.