INVESTMENT OPINION
Listen to the AT&T Conference Call
Who says all AT&T does in its conference calls is read its press release? Discussion of the highly-competitive long distance environment this morning after earnings were released is what is making Ma Bell give back $2 3/4 to $53 5/8 in heavy trading. The giant long distance provider reported earnings of $0.94 EPS versus $0.86 EPS a year ago, in line with consensus expectations.
Analysts this morning are worried about AT&T's ability to make earnings estimates for next quarter, however. In fact, if AT&T had not seen its effective tax rate drop to 33.8% from 37.6% last year due to all of its spin-off and restructuring moves, it would have missed its numbers and reported numbers that were even more anemic that the 9% growth numbers it did report.
Compounding this is the fact that AT&T has very little in the way of pricing power as more and more players enter the long distance market. Both volume and revenue growth in this segment have been under pressure for much of this year and that pressure appears likely to continue. So far this year they have not achieved the kind of volume and revenue growth that they delivered last year. Based on current trends, it also does not appear that they will return to last year's growth rates this year. Competitor MCI COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MCIC)") else Response.Write("(NASDAQ: MCIC)") end if %>, up $1/8 to $24 3/8, and recent spin-off LUCENT TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %>, up $1 3/8 to $37 1/4, are doing much better this morning.
Patience investors have finally seen INTERNATIONAL GAMING TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IGT)") else Response.Write("(NYSE: IGT)") end if %> turn around. Up $3/4 to $18 1/4, the company posted earnings of $0.27 EPS versus expectations of $0.23 EPS this morning. Dean Witter raised the stock to "buy" today with a 12-month price target of $24 to $25.
Diversified capital equipment manufacturer VARIAN CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VAR)") else Response.Write("(NYSE: VAR)") end if %> rose $1 3/8 to $45 5/8 this morning after beating consensus expectations of $1.03 EPS by four cents a share. Varian stressed to investors this morning that 1996 was on track to be a record year.
MILLENNIUM PHARMACEUTICAL's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MLNM)") else Response.Write("(NASDAQ: MLNM)") end if %> popped up $5 to $16 1/2 after the company announced an alliance with AMERICAN HOME PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AHP)") else Response.Write("(NYSE: AHP)") end if %> that includes a $90 million payment from AHP to develop genomic technologies and fund a seven-year research program.
CELERITEK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CLTK)") else Response.Write("(NASDAQ: CLTK)") end if %> reported earnings in line with consensus expectations this morning, and rose $1 3/8 to $11 7/8 in short order. Investors apparently expected the manufacturer of gallium arsenide semiconductors to disappoint this quarter.
APPLE COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AAPL)") else Response.Write("(NASDAQ: AAPL)") end if %> confounded naysayers yesterday evening when it reported a net loss of $0.64 EPS after backing out a one-time gain from the sale of its 5% stake in AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMER)") else Response.Write("(NASDAQ: AMER)") end if %>. Analysts had been looking for a loss of $1.12 EPS, making today's massive loss look good by comparison. Apple stock is currently up $3 7/8 to $20 3/4.
In spite of the fact that GLOBAL VILLAGE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GVIL)") else Response.Write("(NASDAQ: GVIL)") end if %> posted a wider than expected loss, the manufacturer of communications products rose $1 23/64 to $8 7/64 on news that Apple Computer results were better than expected. Global Village makes a lot of Macintosh networking equipment and modems.
Systems integrator CONTROL DATA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CDAT)") else Response.Write("(NASDAQ: CDAT)") end if %> surged $1 5/8 to $16 3/4 after reported earnings that were a penny above consensus expectations.
Shares of WALL DATA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WALL)") else Response.Write("(NASDAQ: WALL)") end if %> are up $2 3/4 to $20 this morning after the company reported $0.17 EPS for its fiscal second quarter, a full seven cents more than expected. Punk Zeigel upped Wall to an "aggressive buy" this morning after the news hit.
CDW COMPUTER CENTERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CDWC)") else Response.Write("(NASDAQ: CDWC)") end if %> absolutely blew through consensus estimates of $0.30 EPS today, reporting $0.39 EPS in its fiscal second quarter. CDW rose $4 3/4 to $45 3/4, pulling competitor MICRO WAREHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MWHS)") else Response.Write("(NASDAQ: MWHS)") end if %> up $2 1/2 to $19 as well.
ULTRAFEM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: UFEM)") else Response.Write("(NASDAQ: UFEM)") end if %> rose $1 1/2 to $22 1/4 after the company reported that "all" major retailers in its lead market are going to sell its new feminine care product, Instead.
A better-than-expected performance at FORTE SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: FRTE)") else Response.Write("(NASDAQ: FRTE)") end if %> is responsible for the $2 1/4 to $41 rise in the stock today. The company reported earning a penny a share in its fiscal first quarter when everyone was expecting it to lose one cent.
Business drawing and diagramming software developer VISIO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VSIO)") else Response.Write("(NASDAQ: VSIO)") end if %> popped up $2 3/8 to $37 3/8 after posting earnings results of $0.19 per share, compared with $0.06 in the year-ago third quarter. Bear Stearns also raised its estimates for the firm.
People have been expecting MICROCOM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MNPI)") else Response.Write("(NASDAQ: MNPI)") end if %> to miss its numbers for weeks now. However, no one expected this -- earnings of $0.02 EPS versus consensus expectations of $0.20 EPS. Down $2 3/8 to $7 5/8, this news constitutes a major blow to the remote access modem concern.
NETFRAME <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NETF)") else Response.Write("(NASDAQ: NETF)") end if %> slumped $11/16 to $3 3/16 this morning after posting a much larger-than-expected loss in its fiscal second quarter. The company reported a loss of $0.36 EPS, ten cents steeper than what people were expecting.
So if PINNACLE SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PCLE)") else Response.Write("(NASDAQ: PCLE)") end if %> reported operating earnings that were two cents higher than consensus, why are they down $5 to $11 7/8 today? Hambrecht & Quist downgraded the stock to "hold" from "buy" today.
ORTHOLOGIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OLGC)") else Response.Write("(NASDAQ: OLGC)") end if %> reported earnings of $0.06 EPS this morning, in line with expectations. The stock slumped $2 7/8 to $11 1/4, however. Perhaps there was an update on the problems with the Food & Drug Administration in the quarterly conference call? Or the company issued new guidance because of the FDA's warning about selling their bone healing product for purposes for which it has not been cleared? Fool News is digging for the story.
NU KOTE HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NKOT)") else Response.Write("(NASDAQ: NKOT)") end if %> dropped $2 3/8 to $9 3/8 when it announced a upcoming shortfall in its fiscal fourth quarter profits. A recent acquisition has caused a greater-than-expected decline in revenues for its impact printing products.
TRIQUINT SEMICONDUCTOR (NASDAQ TQNT) dropped $2 7/8 to $ in spite of beating consensus estimates this morning by a penny, coming in at $0.21 EPS. Perhaps they said in the conference call that the outlook for the next few quarters was difficult to foretell given the current environment in the semiconductor industry?
CARDIOVASCULAR DYNAMICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CCVD)") else Response.Write("(NASDAQ: CCVD)") end if %> received a patent today for its combined angioplasty, drug delivery and blood perfusion system. So why is the stock down $1 3/8 to $15? We were actually hoping that one of our Foolish readers could tell us that, as there seems to be no negative news out on the wires.
Internet security giant SECURITY DYNAMICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SDTI)") else Response.Write("(NASDAQ: SDTI)") end if %> slumped $4 3/4 to $73 1/4 after beating consensus estimates by a penny. Fool News is trying to get access to a recording of this conference call to see what sort of guidance management gave to Wall Street.
ICU MEDICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ICUI)") else Response.Write("(NASDAQ: ICUI)") end if %> slumped $1 to $10 3/4 after the company missed consensus estimates of $0.17 EPS by three cents when it reported earnings this morning.
ESS TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ESST)") else Response.Write("(NASDAQ: ESST)") end if %> imploded today, dropping $3 3/4 to $10 3/4 after meeting analyst estimates of $0.28 for its second quarter. Morgan Stanley downgraded the firm from "strong buy" all the way down to "neutral."
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