CONFERENCE CALLS

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FOOL PLATE SPECIAL

MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %> certainly lives a charmed life. Despite the stomach-churning descent of the Boise-based manufacturer of dynamic random access memory (DRAM) since November of 1995, the stock does not lack for adherents. Whether it is Merrill Lynch's Tom Kurlak who is calling for a cyclical uptick for the semiconductor group, reasoning that dirty commodity names like Micron are where the investor wants to be, or industry wags like the Semiconductor Industry Association praising Micron chief executive officer (CEO) Steve Applegate as profoundly qualified, there are still plenty of positive things being said. The Wall Street Transcript recently gave Applegate its gold medal for management for the semiconductor area, passing over such leading lights as Andy Grove of Intel and Chris Galvin of Motorola.

The only problem with all of this positive press is that it appears to be completely divorced from reality. Positive calls on the memory chip manufacturer seem a bit premature given the challenges that face the company. Prices on 4 meg DRAM crashed to slightly below the cost of production, a number that has showed little sign of change over the past few months despite a "bottom" in the "inventory correction." With the majority of Micron's trailing sales in this part, the fact that the company carries a higher price/sales ratio than names like Texas Instruments, National Semiconductor and VLSI Logic is curious. The company currently rates 1.2 times sales, well above the 0.5 to 0.75 times sales at which the industry has historically bottomed out. The company only started production of 16 meg DRAM in volume within the past few weeks, while the massive Japanese and Korean memory houses have been pumping out the devices in volume from the first of the year. Samsung is already moving toward mass production of 64 meg devices by year's end, meaning that Micron will effectively be more than a generation behind.

Despite the fact that Steve Appleton's ingenious outmaneuvering of potato baron J. Simplot makes for good copy, it hardly sets him apart as a management genius in the industry. The 30-something Appleton has been on a steep learning curve, putting the brakes on Micron's proposed expansion in Utah and overcoming the Simplot-driven board to do this. Despite the company's proposed strategy to ride the last wave in memory, milking it like a cash-cow, there are a number of risks here. When the profitability in memory jumps two generations, as it appears to be doing right now, notching up to merely 16 meg does not guarantee profits or revenues. According to sources at Infrastructure, one upgrade process can change a 4 meg line to a 16 meg line with the addition of five steps and one minor toolset. This means all of the excess 4 meg DRAM capacity looking for a home will find it in 16 meg, virtually guaranteeing the same level of profitability.

Micron did $771 million in revenues last quarter, compared to $761 the year before and $996.5 in the prior quarter. The company, which reports earnings on September 21st, has yet to post a full quarter where memory has been at the cost of production. Given the magnitude of the decline and the fact that production of 50ns 16 meg DRAM only started in mid-August, $500 million in revenues for the quarter is absolutely not out of the question. This would represent a 50% sequential decline and a 50% year-over-year decline, as well, hardly the sign of a company looking to break out anytime soon. Let's be clear here -- 16 meg DRAM cannot become wildly profitable without a dramatic shift in capacity. All of the 4 meg fabrication plants can be upgraded to 16 meg in a heartbeat, meaning that a shift in capacity is not likely to happen. Investors in Micron are taking on substantial risk of obsolescence without much corresponding potential reward in profits. At some future point, 0.5 to 0.75 times lower sales than the company currently has are a real possibility that investors must consider.

UPS

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GENESIS HEALTH VENTURES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GHV)") else Response.Write("(NASDAQ: GHV)") end if %> popped up $1 5/8 to $24 as the nursing and personal-care facilities stock was named Merrill Lynch's "focus one" stock of the week. Genesis recently acquired GERIATRIC & MEDICAL COS. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GEMC)") else Response.Write("(NASDAQ: GEMC)") end if %>.

Trucking company ARNOLD INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AIND)") else Response.Write("(NASDAQ: AIND)") end if %> advanced $1 5/8 to $15 5/8 after Morgan Stanley initiated coverage of the company with a "strong buy" rating. Morgan forecast earnings of $1.05 EPS for fiscal 1996 with a 12-month target of $20.

SANO CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SANO)") else Response.Write("(NASDAQ: SANO)") end if %> shares jumped another $1 to $16 1/2 today, continuing to benefit from yesterday's $40 million deal with BRISTOL-MYERS SQUIBB <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMY)") else Response.Write("(NYSE: BMY)") end if %>. Sano will manufacture an anxiety-relieving skin patch called BuSpar.

WET SEAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WTSLA)") else Response.Write("(NASDAQ: WTSLA)") end if %>, expected to earn $0.13 per share in its second quarter, reported $0.25 EPS and was rewarded with a $3 to $32 3/4 rise. The company retails apparel for young women and currently has $78 million in cash.

Also blowing away estimates is NEWBRIDGE NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NN)") else Response.Write("(NYSE: NN)") end if %>, reporting $0.72 Canadian when only $0.46 Canadian was expected, and rising $5 to $55 for its trouble. The company will buy back up to 4 million shares, or roughly 5%.

Industrial concern DOVER CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DOV)") else Response.Write("(NYSE: DOV)") end if %> surged $2 3/4 to $46 1/8 once it was added to Goldman's "priority list" from the "recommended list." Dover manufactures everything from elevators to fluid-delivery systems to parking meters.

SEQUANA THERAPEUTICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SQNA)") else Response.Write("(NASDAQ: SQNA)") end if %> and the Memorial Sloan-Kettering Cancer Center have agreed to form a company to research cancer genetics, boosting shares of Sequana by $5/8 to $17 1/8.

Partnering up with MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MSFT)") else Response.Write("(NASDAQ: MSFT)") end if %> is always a nice way to create a short-term rally in a stock. SECURITY DYNAMICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SDTI)") else Response.Write("(NASDAQ: SDTI)") end if %> and Microsoft agreed this morning to cross-license a number of cryptography products, sending shares up $4 5/8 to $60 3/8.

DOWNS

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Shares of COMPUSERVE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CSRV)") else Response.Write("(NASDAQ: CSRV)") end if %> were disconnected to the tune of a $1 5/8 to $11 7/8 drop this morning as the online service reported a $0.19 EPS loss, wider than expected. The company forecast a second quarter loss and will cut 4% of its workforce.

ORACLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ORCL)") else Response.Write("(NASDAQ: ORCL)") end if %> shares were pushed down $1 1/2 to $37 1/2 when Goldman Sachs analyst Rick Sherlund moved the data processing software concern from Goldman's "priority list" to its "recommended list." Sherlund cited the large gains in the shares since April.

Specialty toymaker GADZOOKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GADZ)") else Response.Write("(NASDAQ: GADZ)") end if %> slumped $1 1/2 to $31 1/4 when J.C. Bradford downgraded the firm from "buy" to "neutral." The stock has risen 40% since analyst Eliot Laurence upgraded it six weeks ago.

TSX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TSXX)") else Response.Write("(NASDAQ: TSXX)") end if %> slumped $1 1/4 to $12 3/4 today, after the company missed first quarter estimates of $0.25 EPS by three cents. The firm manufactures cable television equipment and video generation machines.

Ultra-hip youth retailer URBAN OUTFITTERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: URBN)") else Response.Write("(NASDAQ: URBN)") end if %> continued to get pounded today, tumbling $1 3/8 to $20. The company announced yesterday it would only open two new Urban Outfitters units this year instead of four, prompting a sell-off.

Weight-loss specialist JENNY CRAIG <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JC)") else Response.Write("(NYSE: JC)") end if %> is certainly losing a lot today, off $5 1/4 to $11 7/8 on a downgrad by CS First Boston from "buy" to "hold."

ANOTHER FOOLISH THING: The Edible Eight

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If you want your fill of food stocks, head on over to MF Edible's food industry area (at keyword: sector). Check out articles on not-so supermarkets and the emerging "eater-tainment" niche. Read interviews with Rainforest Cafe President Martin O'Dowd and Alpine Lace CEO Carl Wolf, and stock reports on the likes of Rainforest Cafe, Brinker International, and Morton's Restaurant. See which stocks MF Edible is tracking in his "Edible Eight" portfolio, which has returned 19.2% in 1996 (through August 17th), as compared to the S&P 500's 7.7% and 6.8% for Fidelity's Select: Food mutual fund. Some stocks followed include Rainforest Cafe, Daka International, Rock Bottom Restaurants, Outback Steakhouse, Darden Restaurants, and Q-Zar. Remember -- it's keyword: Sector on AOL. AOL 3.0 for Windows users can just click here.

Randy Befumo (MF Templar), a Fool

Selena Maranjian (MF Selena) another Fool

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Randy Befumo (MF Templar), a Fool

Selena Maranjian (MF Selena) another Fool