CONFERENCE CALLS
07/26/96 (Friday)
None
INVESTMENT OPINION
Exploding Bomb-Detection Stocks
This pipebomb explosion that occurred this weekend at the Atlanta Olympic Games as well as continued concerns about airport security in the wake of the explosion of TWA Flight 800 continues to propel shares of any company involved with airport security or airport security technology. Investors should be mindful of the risk involved in these companies before putting their hard-earned savings in them. Despite the fact that public outcry and media attention surrounding this rash of bombing incidents has heightened interest in these companies, this does not necessarily translate into bottom-line earnings in the near-term. We endeavor to give you a sense of the players and the risks involved in investing in these companies below.
The Players: (1) Aysis manufacture MAGAL SECURITY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MAGSF)") else Response.Write("(NASDAQ: MAGSF)") end if %> rose $2 3/4 to $13 7/8, in spite of comments last week by Delta Airlines that the device did not live up to the 1,200 bags per hour throughput criteria; (2) airport security personnel trainer ICTS HOLLAND PRODUCTION (NASDQ: ICTSF) surging $4 to $13 1/8; (3) manufacturer of the bomb-sniffing EGIS system THERMEDICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TMD)") else Response.Write("(AMEX: TMD)") end if %> down $3/8 to $28 3/8, despite a boost from the announcement its device is now Federal Aviation Administration (FAA) approved; (4) newcomer to the scene AMERICAN SCIENCE & ENGINEERING <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: ASE)") else Response.Write("(AMEX: ASE)") end if %>, which makes X-ray inspection products, popping $1 3/8 to $16 1/2; (5) little-known, former penny stock BARRINGER TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BARR)") else Response.Write("(NASDAQ: BARR)") end if %> having another good day, rising $4 5/8 to $12 3/4; (6) INVISION TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INVN)") else Response.Write("(NASDAQ: INVN)") end if %>, which makes the FAA-approved CAT scan-like CTX-5000 soaring $5 1/2 to $31.
The Risks: (A) LEGISLATIVE RISK: The airlines and the government still need to work out who will fund any increased security expenditures, a crucial legislative enterprise that will not happen overnight. (B) NON-TECHNOLOGICAL SOLUTIONS EXIST: The explosion of Pam Am Flight 103 over Lockerbie, Scotland resulted simply in an FAA-rule stipulating that no unaccompanied baggage can go on international flights -- a rule that has been incredibly effective over the past few years. A similar solution might be found to the TWA Flight 800 disaster after it is determined that there was a bomb and investigators get a sense of how that bomb was loaded onto the plane. (C) CONSUMER SATISFACTION: The drawback of the security detection equipment currently being sold is throughput -- a measure of how fast bags can be checked. Whether or not consumers will deal very well with sitting around four hours before a flight to get their bags checked is a serious consideration. (D) BAGGAGE IS NOT THE ONLY BOMB ROUTE: Bombs can get on a plane many ways -- catering, maintenance sub-contractors, low-level airport personnel who have been compromised, etc. Baggage checks are no panacea.
Ronald Perelman's privately-held FIRST NATIONWIDE HOLDINGS announced a merger this morning with CALIFORNIA FEDERAL BANCORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAL)") else Response.Write("(NYSE: CAL)") end if %>, a potential beneficiary of Glendale Federal's Supreme Court victory in the suit over "supervisory goodwill." The merger is valued at about $1.2 billion, or $23 1/2 in cash per share. Cal Fed rose $1 1/8 to $22 1/2 this morning.
Temporary services firm ROBERT HALF INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RHI)") else Response.Write("(NYSE: RHI)") end if %> blasted ahead $1 1/4 to $28 1/2 this morning after the company reported earnings of $0.23 EPS, two cents ahead of consensus expectations.
Comments by mutual fund manager Garrett Van Wagoner on Wall Street Week are responsible for the $2 7/16 to $11 7/16 surge in shares of thinly-traded COMPUTER TELEPHONE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CPTL)") else Response.Write("(NASDAQ: CPTL)") end if %>, a Waltham, Massachusetts-based marketer of discount long distance services.
Shares of MACROMEDIA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MACR)") else Response.Write("(NASDAQ: MACR)") end if %> rallied $1 1/4 to $17 3/8 this morning after reporting earnings of $0.18 EPS compared to $0.13 EPS, apparently assuaging institutional investor and portfolio manager fears that this quarter was going to be an absolute disaster because of the company's exposure to the Macintosh platform.
VOLT INFORMATION SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VOLT)") else Response.Write("(NASDAQ: VOLT)") end if %>, a technology-based temporary services concern, rose $3 to $41 this morning. Investors are getting more comfortable with the New York City-based company's prospects after it reported a positive earnings surprise last quarter after a string of prior disappointments.
NEWBRIDGE NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NN)") else Response.Write("(NYSE: NN)") end if %> continues to come under heavy selling pressure in the wake of last week's downgrade by a UBS Securities analyst. Shares of the Canadian telco and internetworking equipment manufacturer slumped $5 1/4 to $42 7/8 today.
Shares of FOUNDATION HEALTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FH)") else Response.Write("(NYSE: FH)") end if %> tumbled $2 3/8 to $25 3/8 in spite of making its fourth quarter estimates, potentially on comments about the high medical loss ratios at its GEM Insurance physician provider organization (PPO) and start-up health maintenance organization (HMO) in Utah.
TEKTRONIX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TEK)") else Response.Write("(NYSE: TEK)") end if %> dropped $2 to $37 7/8 after Goldman Sachs cut its rating on the scientific instrument manufacturer, most famous for its precision oscilloscopes.
The announcement that the chairman of WEATHERFORD ENTERRA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WII)") else Response.Write("(NYSE: WII)") end if %> was taking a leave of absence this morning impacted the shares, causing the company's stock to tumble $2 3/8 to $26 3/8.
INTEGRA LIFE SCIENCES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IART)") else Response.Write("(NASDAQ: IART)") end if %> slumped $2 3/8 to $5 3/8 this morning in spite of the fact that it did report earnings in line with consensus expectations. The company stated that the sales ramp up for its new product will not be as rapid as previously expected.
A Barron's profile this weekend on hedge-fund manager David Tice of the Prudent Bear lead to a $1 1/4 to 16 1/4$ drop in the shares of PHYSICIAN RELIANCE NETWORK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHYN)") else Response.Write("(NASDAQ: PHYN)") end if %> and a $2 to $23 1/2 slump in the value of FAMILY GOLF CENTERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FGCI)") else Response.Write("(NYSE: FGCI)") end if %>, two stocks he panned in the article.
VISX <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VISX)") else Response.Write("(NASDAQ: VISX)") end if %> suffered this morning from a negative article in the Wall Street Journal, suggesting that its fight with SUMMIT TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BEAM)") else Response.Write("(NASDAQ: BEAM)") end if %> has tarnished the image of the photo-refractive keratectomy (PRK) technology they both champion. VISX was down $3 to $22 1/8.
Changes at APPLE SOUTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: APSO)") else Response.Write("(NASDAQ: APSO)") end if %> may be spooking investors today as the stock trades down $1 1/8 to $22 1/2. The company reported earnings in line with expectations but is looking to close its Tomato Rumba's units and sell its Hardee's franchises.
None