CONFERENCE CALLS
07/23/96 (Tuesday)
First Data Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDC)") else Response.Write("(NYSE: FDC)") end if %>
1-800-779-9005 (code: 1996)
INVESTMENT OPINION
"When It Rains ..."
Shares of IOMEGA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IOMG)") else Response.Write("(NASDAQ: IOMG)") end if %> took another beating today after component manufacturer IMP INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IMPX)") else Response.Write("(NASDAQ: IMPX)") end if %> came in a penny light on its earnings last night. IMP, which manufacturers components for Iomega's popular Zip drive, reported making $0.09 EPS in its fiscal first quarter compared to $0.02 EPS a year ago -- one cent below expectations.
IMP supplies Iomega with the MP62C538 Programmable Read-Channel integrated circuit for the Zip drive -- one of the many semi-proprietary products that has allowed the company to break out of its foundry-driven business rut of the past half-decade. "Foundry" is a fancy word for a semiconductor chip manufacturing plant, and basically means that IMP contract manufacturers chips for so-called "fabless" semiconductor manufacturers or makes its own in-house commodity and semi-proprietary products.
With the implosion in the semiconductor market, it makes sense that IMP would be affected given that about 70% of its business is still being a foundry for other semiconductor manufacturers, most importantly Rockwell International. IMP is highly concentrated on four customers -- Rockwell, Iomega, Hewlett-Packard's tape drive unit and Level One Communications.
Investors are taking news that semiconductor manufacturer IMP will not report continued record results on the earnings and revenue side as a sign that Iomega's demand is slipping -- which is why Iomega is down $1 7/8 to $18. IMP sees its next quarter as flat or down slightly from the current quarter, even with all of its semi-proprietary business from Iomega and its line of Electrically Programmable Analog Circuit (EPAC) products.
Is it logical to take results at IMP as an indication of business at Iomega? Although Iomega is about 20% to 30% of IMP's business, this connection does not necessarily logically follow from the publicly available information. The crash in the semiconductor market due to inventory concerns and the subsequent extinction of some "trailing edge" technology and price concessions in more current products across the board has hit every semiconductor manufacturer. Many original equipment manufacturers (OEMs) like Iomega have reduced component inventories, gotten price concessions out of manufacturers and made purchases of component inventory more opportunistic. This is tough for the component manufacturers, but does not necessarily mean that the OEMs are in trouble at all -- in fact, it could simply imply that they are getting their components at lower prices, depending on how IMPs unit volume trends during the quarter.
INTEGRATED MEASUREMENT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IMSC)") else Response.Write("(NASDAQ: IMSC)") end if %> rebounded $2 to $15 this morning after a devastating drop yesterday when the stock was downgraded to "outperform" by Jensen Securities. The firm is part of the volatile semiconductor equipment group.
Oppenheimer & Co. upgraded shares of SMART MODULAR TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SMOD)") else Response.Write("(NASDAQ: SMOD)") end if %> to "buy", sending shares up $1/2 to $11. SMART takes memory chips manufactured by other companies and mounts them on boards called SIMM's, DIMM''s and the like, making them more similar to contract manufacturers than commodity semiconductor concerns.
UNIVERSAL FOREST PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: UFPI)") else Response.Write("(NASDAQ: UFPI)") end if %> rose $9/16 to $12 7/16 after posting second quarter earnings of $0.46 EPS, 24% above consensus estimates. The company sells pressure treated and "value-added" lumber products to the construction industry.
ZOLL MEDICAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZOLL)") else Response.Write("(NASDAQ: ZOLL)") end if %> knocked aside consensus estimates today, reporting $0.15 EPS, 15% higher than what was expected. This compares with last year's loss of four cents. Shares of the medical products manufacturer were up $1 1/4 to $16.
The reigning champion of the code division multiple access (CDMA) standard for wireless communications, QUALCOMM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: QCOM)") else Response.Write("(NASDAQ: QCOM)") end if %>, reported earnings of $0.02 EPS a share yesterday and sparked a rally of $2 5/8 to $43 7/8.
HYPERION SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HYSW)") else Response.Write("(NASDAQ: HYSW)") end if %> recovered $1 1/8 to $12 7/8 today when the company finally managed to beat its estimates. Hyperion has been comatose since collapsing more than $7 back in April when it forecast poor earnings.
NIFTY FIFTY ALERT: XYLAN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: XYLN)") else Response.Write("(NASDAQ: XYLN)") end if %> rose $3 1/2 to $38 1/4 after the networking company announced that it was pooling local area network (LAN) technology with International Business Machines.
Supermarket giant VON'S COS. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VON)") else Response.Write("(NASDAQ: VON)") end if %> reported solid growth in the most recent quarter, reporting an earnings increase of 55%. Shares rose $1 7/8 to $36 7/8 as shareholders rejoiced that California was finally pulling out of its protracted slump.
UNITED TRANSNET <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UT)") else Response.Write("(NYSE: UT)") end if %> continued to slide today, falling $1 5/8 to $10 1/4 after yesterday's disappointing news about the company's upcoming third quarter earnings. When an initial public offering disappoints so soon after it comes public, it runs the risk of being completely abandoned by angry institutions who were in on the deal and believe that they were mislead.
One of the three main caller-ID players, CIDCO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CDCO)") else Response.Write("(NASDAQ: CDCO)") end if %>, dropped $6 11/16 to $19 1/8 today after the company forecast a second half that would come in below expectations. Competitor COLONIAL DATA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CDTX)") else Response.Write("(NASDAQ: CDTX)") end if %> felt the heat as well, slipping $1 to $9 5/8.
NETCOM ONLINE COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NETC)") else Response.Write("(NASDAQ: NETC)") end if %> stumbled $2 3/32 to $19 29/32 this morning after the company reported disappointing second quarter earnings that were much wider than expected. They did, however, add 88,000 subscribers for 22% growth.
When SCIENTIFIC GAMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SGIH)") else Response.Write("(NASDAQ: SGIH)") end if %> said "moderate growth in the next few
quarters," it probably did not expect the market's violent reaction. Shares fell $8 to $21 1/4 in spite of the fact that the company met its quarterly estimates.
GULF SOUTH MEDICAL SUPPLY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GSMS)") else Response.Write("(NASDAQ: GSMS)") end if %> got crunched for $9 to $19 1/2 after the firm reported earnings for the quarter of $0.20 EPS, in line with consensus estimates.
Continued losses at EXOGEN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: EXGN)") else Response.Write("(NASDAQ: EXGN)") end if %> drove the shares lower today, knocking $1 1/8 to $6 1/8 off when the company reported that its earnings were a negative $0.22 EPS.
As if disappointing earnings at ACTIVE VOICE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ACVC)") else Response.Write("(NASDAQ: ACVC)") end if %> were not enough, the company told the Street today that it expects gross margins to continue to decline as the company's product mix changes. Shares were down $1 to $11.
MYLEX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MYLX)") else Response.Write("(NASDAQ: MYLX)") end if %> fell two cents short of consensus estimates of $0.23 EPS this morning, causing the RAID storage technology concern to slump $1 to $13 3/8 in heavy trading this morning.
Recent initial public offering SAWTEK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SAWS)") else Response.Write("(NASDAQ: SAWS)") end if %>, which develops electronic signal processing equipment, dropped $2 3/4 to $28 after reporting its second quarter earnings. The firm makes CDMA and global systems for mobile communications (GSM) infrastructure equipment.
Fault tolerant computer manufacturer STRATUS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SRA)") else Response.Write("(NYSE: SRA)") end if %> apparently lacks a fault tolerant stock. Stratus was mashed for $5 1/2 to $19 3/8 after the firm missed its quarterly estimates by almost 50%, coming in with about $0.34 EPS before a charge.
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