CONFERENCE CALLS

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FOOL PLATE SPECIAL

Big bank mergers have not been de rigeur since late 1995, although NATIONSBANK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NB)") else Response.Write("(NYSE: NB)") end if %> decided to bring them back into the headlines with this morning's acquisition of BOATMENS BANCSHARES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BOAT)") else Response.Write("(NASDAQ: BOAT)") end if %>. Long rumored to be "in play," Boatmens geographic franchise in the central United States was perceived as a nice prize for any of the East Coast bank holding companies with nationwide ambitions. As one can tell from the name, Nationsbank fits that bill to a tee and announced this morning that it would pay 0.6525 of its own shares for each share of Boatmens, driving Boatmens up $10 13/16 to $53 3/4 in heavy trading.

The deal for Boatmens does not come cheaply. Nationsbank shares are down $6 3/4 to $85 5/8 after some number-crunching on the deal revealed they are paying an eye-popping 2.75 times book value, way above the 2.0 times book value most of the bank mergers in recent months have been done at. Nationsbank, which is doing the deal 60% in stock and 40% in cash and stock, is using its equity as its purchase method and concerns about some dilution of earnings are probably weighing on the shares as well. From Nationsbank's perspective, building the nationwide banking franchise seems to have no price limit.

Nationsbank believes that the savings form this deal will be about $335 million a year by 1999, all coming from shaving off combined expenses. The $335 million figure was calculated by assuming a 5% cut in combined expenses coming from operational consolidation, delivery system optimization, business line consolidation and vendor leverage. A pretty large amount, this number pales in comparison to the $3 billion in earnings that these combined companies will make this year based on current analyst estimates. In unrelated banking news, shares of MERCANTILE BANCORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MTL)") else Response.Write("(NYSE: MTL)") end if %> were up $1 1/2 to $48 3/4, possibly in sympathy with this deal.

UPS

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MAGNA INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MGA)") else Response.Write("(NYSE: MGA)") end if %> purchased auto seat component manufacturer DOUGLAS & LOOMIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DOUG)") else Response.Write("(NASDAQ: DOUG)") end if %> for $31 a share. Given Magna's focus on auto systems, assemblies and components this merger makes sense. Douglas & Loomis shares popped up $4 1/2 to $30 5/8.

For the first time since the devastating May 11th crash of one of its planes, VALUJET <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VJET)") else Response.Write("(NASDAQ: VJET)") end if %> has received tentative regulatory clearance to begin flying again. The news jolted the shares $1 1/8 to $12 1/8 this morning right at the open.

Some management changes announced yesterday at PHYSICANS HEALTH SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHSV)") else Response.Write("(NASDAQ: PHSV)") end if %> appear to be contributing to strong gains today as the stock climbs $2 1/2 to $20 1/4. The founding chief executive has been replaced by Robert Natt.

BusinessWeek's "Inside Wall Street" column is moving some stocks today, including CYGNUS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CYGN)") else Response.Write("(NASDAQ: CYGN)") end if %>, up $7/8 to $17 1/2. PaineWebber analyst Douglas Lind was quoted as saying the biotechnology outfit had "world-class partners."

SODAK GAMING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SODK)") else Response.Write("(NASDAQ: SODK)") end if %> has been bouncing around all week, and today is no exception. The shares jumped $3 1/8 to $50 1/8 as investors continued to get excited about the gaming technology company's contract with the Brazilian Soccer Federation.

A call for increased airport security has some familiar names pushing upward. INVISION TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INVN)") else Response.Write("(NASDAQ: INVN)") end if %> was up $1 7/8 to $22 1/2, benefiting from comments made last night by the President.

DOWNS

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There really do not seem to be a lot of buyers out there on this pre-holiday Friday, exacerbating early morning profit-taking. STRUCTURAL DYNAMICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SDRC)") else Response.Write("(NASDAQ: SDRC)") end if %> slipped $2 1/4 to $25 after a great week on positive news regarding a contract with Ford.

AMERISTAR CASINOS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ASCA)") else Response.Write("(NASDAQ: ASCA)") end if %> was slammed for $2 to $5 3/4 today after the company gave some guidance about the third and fourth quarter, saying it will earn $0.23 EPS to $0.27 EPS and $0.10 EPS to $0.18 EPS respectively.

Another profit warning has shares of pasta and pasta sauce manufacturer MONTEREY PASTA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PSTA)") else Response.Write("(NASDAQ: PSTA)") end if %> down $1 3/4 to $3 7/8. The company foresees continued third quarter losses due to lower-than-expected sales and higher-than-expected returns.

CHESAPEAKE ENERGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHK)") else Response.Write("(NYSE: CHK)") end if %> was knocked for $1 3/4 to $52 3/4 in a bout of profit-taking after higher-than-expected earnings for the oil and gas driller yesterday sent the shares spiraling upward.

ANOTHER FOOLISH THING: Arizona Stock Analysis

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Small, under-followed emerging growth companies in Arizona were a terrific place to invest over the past few years and MF Yon, the Editor of "Arizona Stock Analysis", believes this will continue in the future. His strategy of identifying winners before the Street catches on has been most profitable, with his average selection up an annualized 222.33% through August. Obviously, there can be no assurance that future selections will enjoy the same returns, but Yon believes there is considerable merit to picking up the winners before the Street's analysts pile on. Yon began sharing his views on-line last fall in the "Folly in Arizona" folder (part of the "Folly in 50 States" message boards) and his analysis has led to the publication of the "Arizona Stock Analysis", a monthly newsletter available by e-mail or fax. (Arizona, like Delaware, is a state where many companies are incorporated.) If this piques your interest, check it out at keyword: FoolMart or e-mail [email protected]. AOL 3.0 for Windows users can click here.

Randy Befumo (MF Templar), a Fool

Selena Maranjian (MF Selena) another Fool