INVESTMENT OPINION

FOOL PLATE SPECIAL: Motorola Gets Smashed

MOTOROLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> is causing all sorts of commotion today only days after Cowen & Co. analyst Albert Lin went out on limb and upgraded the shares to "buy", pushing his quarterly estimates up to a now seemingly-stratospheric $0.85 EPS. Lin's hopes were all pinned on contacts with cellular distributors that were telling him that Motorola had a hit with the new StarTAC (tm) wearable cellular phones.

Unfortunately for Lin, a company with $28 billion in trailing revenues is far beyond having one product make or break it. Motorola reported $0.54 EPS and got smashed for $8 5/8 to $57 7/8 this morning in heavy trading. In this morning's conference call, management scolded Lin for "ignoring the position of [all of] the company's business units." Missing from Lin's analysis was a pretty shocking picture of the Semiconductor Products Sector, which saw revenues drop 34% as measured against last year with significant decreases in margins and profitability.

Last quarter, I wrote that, "...in my eyes, Motorola has not really discounted the risk inherent in its next fiscal quarter" when it rose to $56 1/4 after beating consensus estimates. Consensus then was that new cellular products would kick in to assuage the downturn in the Semiconductor Products Sector, a consensus this Fool doubted. My opinion back in April was that, "...athough the company has cut costs, in the end the way to profits is to grow revenues -- something that seems more and more dubious for [the second] quarter."

Motorola is the wireless communications franchise and picking up shares in the low $50s makes sense if you believe that the company can maintain its 15% to 20% historical growth rate. If the company continues to get beaten up over the next few months as disgruntled fund managers lick their wounds, it should create an excellent opportunity for individual investors with a time horizon longer than the Street's six to twelve month horizon.

UPS

ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ASND)") else Response.Write("(NASDAQ: ASND)") end if %> gained $1 7/16 to $58 9/16 this morning after reporting second quarter earnings yesterday that exceeded Street expectations by more than 31%. The company's MAX product family continues to dominate the networks of Internet Service Providers (ISPs). Soon-to-be-acquired NETSTAR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NTSR)") else Response.Write("(NASDAQ: NTSR)") end if %> rose $3/4 to $20 1/2. Find out more details in the Foolish Conference Call Synopsis.

OUTDOOR SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OSIA)") else Response.Write("(NASDAQ: OSIA)") end if %> rose $10 to $46 1/4 today after it paid a cool $690 million for GANNETT CO.'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GCI)") else Response.Write("(NYSE: GCI)") end if %> billboard advertising division. Gannett will use the proceeds to pay down its debt, while Outdoor systems gets to significantly boost its market position.

PRIMADONNA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PRMA)") else Response.Write("(NASDAQ: PRMA)") end if %> popped up $1 3/8 to $21 3/8 today after Morgan Stanley initiated the casino-hotel operator with an "outperform" rating this morning.

After yesterday's inexplicable drop in BED, BATH AND BEYOND <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BBBY)") else Response.Write("(NASDAQ: BBBY)") end if %>, Lehman Brothers upgraded the retailer to "strong buy" from "buy" this morning, boosting the shares $1 1/8 to $20.

Pacific Growth Equities initiated coverage of MOLTEN METAL TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MLTN)") else Response.Write("(NASDAQ: MLTN)") end if %> with a "strong buy" recommendation, giving a 12-month price target of $50 and sending shares up $3/4 to $30. The hazardous waste disposal concern has received some skeptical attention from Barron's in the past few months.

DOWNS

It's like dominoes! CERION TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CEON)") else Response.Write("(NASDAQ: CEON)") end if %> plunged $4 to $5 after it said STORMEDIA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: STMD)") else Response.Write("(NASDAQ: STMD)") end if %> canceled all of its outstanding purchase orders. Stormedia took a beating two weeks ago when it said MAXTOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MXTR)") else Response.Write("(NASDAQ: MXTR)") end if %> was canceling its orders to the storage technology concern. Now the question is which of Cerion's suppliers are vulnerable.

CONMED <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CNMD)") else Response.Write("(NASDAQ: CNMD)") end if %> drooped $8 1/2 to $14 today after the medical device manufacturer pre-announced second quarter earnings of $0.27 EPS to $0.29 EPS on sales of $31.8 million, well below the $0.32 EPS for which analysts were looking.

Legacy software developer COMPUTER HORIZONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CHRZ)") else Response.Write("(NASDAQ: CHRZ)") end if %> was mashed for $5 3/4 to $23 1/4 before being halted for news pending this morning. The millennium 2000 software concern pre-announced second quarter results of $0.12 EPS to $0.15 EPS versus $0.15 EPS a year ago, far below analyst expectations of $0.21 EPS .

COMMUNITY CARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CCAI)") else Response.Write("(NASDAQ: CCAI)") end if %> reported this morning that it anticipates second quarter operating profits of $0.18 EPS to $0.19 EPS a share, in line with consensus estimates of $0.19 EPS. So why is the stock down $2 1/2 to $8 1/2? Community Care is taking some one-time charges for restructuring as it plans to close some of its physician practices and clinics.

TECH-SYM CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TSY)") else Response.Write("(NYSE: TSY)") end if %> was mashed for $1 5/8 to $27 5/8 after it warned of second quarter operating net of $0.29 EPS compared to $0.38 EPS a year ago.

GEOSCIENCE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GSCI)") else Response.Write("(NASDAQ: GSCI)") end if %> expects second quarter net to be at or near break-even on $26 million in revenues due to sluggish sales of its software products. The stock was equally sluggish, off $2 1/4 to $11 this morning.

AMERICAN BUILDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ABCO)") else Response.Write("(NASDAQ: ABCO)") end if %> was greased for $5 5/8 to $23 1/8 after the company missed second quarter earnings estimates of $0.61 EPS this morning. The metal building system manufacturer reported $0.56 EPS versus $0.61 EPS a year-ago.

AEROVOX INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ARVX)") else Response.Write("(NASDAQ: ARVX)") end if %> reported that it would incur a loss in the second quarter due to substantial additions to its reverses for warranty claims and bad inventories relating to its Mexican operations. The capacitor manufacturer dropped $1 to $7.

HEALTHDYNE TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HDTC)") else Response.Write("(NASDAQ: HDTC)") end if %> announced today that it will report earnings of $0.10 EPS on revenues of about $28 million compared to expectations of a $0.16 EPS profit. Lower-than-expected international revenues, a leak in the oxygen concentrator market and halting progress on asthma product shipments are responsible for the surprise. The stock was down $2 to $10 1/2 in morning trading.

Randy Befumo (MF Templar), a Fool

Prem Kumar (MF Prem) another Fool

Transmitted: 7/10/96