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FOOL PLATE SPECIAL
Intuit's Banking Prospects
Shares of INTUIT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INTU)") else Response.Write("(NASDAQ: INTU)") end if %> have gotten absolutely walloped since the last time I wrote about them. We are talking seriously smashed here -- the stock has traded down from $49 and change the day the column was penned, to a mere $32 and change this morning, a total percentage drop of close to 35%. The carnage began when influential Morgan Stanley analyst Mary Meeker trimmed her fiscal 1997 estimates by $0.26 EPS to $0.79 EPS, reflecting her lower expectations of revenue growth for the developer's popular consumer software. Intuit's strategy of expanding sales of its software, which is bundled on machines purchased by its consumers, has thrown cold water on its once hot growth through the retail channel. Although the long term benefits of having brands like Quicken already installed on machines are important, in the short term, this is having a deleterious effect on earnings growth.
After Meeker trimmed her expectations of revenue growth for the quarter down to 30% to 25%, in part to reflect slow sales of consumer software across the board, IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> announced a partnership with Nationsbank to develop the Integrion Financial Network. This will form the network backbone for "Managing Your Money," software that Nationsbank and a few partners purchased last year, and are attempting to use as their proprietary banking software. The IBM network will have to compete with both Intuit's Financial Services Network and Checkfree's network -- both of which have already been built out. The battle for online banking dollars is just beginning and Intuit's strategy of getting Quicken on machines before they are boxed and shipped to consumers is a crucial aspect of their approach.
The stakes are fairly high for all of the companies involved as this market has the potential to be absolutely huge. Intuit has signed the deepest and broadest list of partners and is already delivering banking services for them -- many from America Online's recently launched "Banking Center." If you check out the Banking Center, almost all of the services with the exception of Bank of America (a Managing Your Money partner) and Security First Network Bank (an independent) are part of the Intuit team. As Intuit's Financial Services Network works seamlessly with both its own Quicken software and Microsoft's Money, they have the biggest installed base of personal finance software users to work with -- regardless of how many customers the Managing Your Money banks have coming to tellers and ATMs across the country.
Between the company's installed base of five million, and the six million people on America Online, it seems that Intuit has a good chance to convert a great deal of its pre-installed base to online banking. Estimates from the company imply that this gives them $90 a year in revenues per Quicken user, compared to only $26 a year if the user simply upgrades. With Quicken 6.0 set to hit stores, and installed on Internet-ready computers to be shipped nationwide, it appears that Intuit will end up with the lion's share of online banking customers, despite rumblings from IBM and others. Intuit already has people using the software, and is relentlessly improving it. The network is built and already being used. It seems just a matter of waiting the two or three years it is going to take to build critical mass in the business, when we likely see Intuit consistently bringing in revenues and earnings from the endeavor.
UPS
IOMEGA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: IOMG)") else Response.Write("(NASDAQ: IOMG)") end if %> popped $1 5/16 to $14 5/8 this morning on an announcement of a nonexclusive pact with MATSUSHITA COMMUNICATIONS (NIKKEI: MCI), the diversified computer technology group of Japan's Matsushita conglomerate. The pact is a significant step forward in Iomega's key OEM (original equipment manufacturer) strategy, as MCI makes drives for corporate laptop powerhouse Toshiba. Investors were heartened by the pact, as it is confirmation that Kim Edwards and company are executing on their stated prime objective for the quarter. Just before noon, 3 million shares had been traded, roughly equal to its 30-day average daily volume.
LERNOUT & HAUSPIE SPEECH PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LHSPF)") else Response.Write("(NASDAQ: LHSPF)") end if %> has risen $3 1/8 to $22 5/8 this morning on news that the company has licensed its word/speech-processing products to a British software firm. L&H's products aren't just another word-processor add-on -- the company claims that its products enable those with dyslexia and vision problems to veryify their input into a computer, via text read-back, and bypass some of the problems such people experience in working with PCs. If this product does work well, many children may advance faster in their learning. In addition, such members of the workforce may be better able to realize the efficiency creating abilities of working with a PC.
Ahh, that hits the slot! ANCHOR GAMING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SLOT)") else Response.Write("(NASDAQ: SLOT)") end if %> is up $4 7/8 to $57 5/8 on news that it has entered into a marketing agreement with INTERNATIONAL GAME TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IGT)") else Response.Write("(NYSE: IGT)") end if %>. IGT is the largest manufacturer of computerized casino gaming products and proprietary gaming systems in the world. Anchor will benefit from IGT's global reach and IGT will benefit from Anchor's proprietary Wheel of Gold machines, which combine slots jackpots from a number of different casinos, luring more people into gaming dens in search of instant riches.
NELLCOR PURITAN BENNETT INCORPORATED <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: NELL)") else Response.Write("(NASDAQ: NELL)") end if %> has agreed to acquire AEQUITRON MEDICAL, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AQTN)") else Response.Write("(NASDAQ: AQTN)") end if %>, the stock of which traded up $1 3/8 to $10 1/8 on the news.
IMNET SYSTEMS (NASAQ: IMNT) named a new President yesterday and it looks like the maket likes the choice. Either that, or the new President's past association with HBO & CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HBOC)") else Response.Write("(NASDAQ: HBOC)") end if %> has cast a glow over the appointment -- Imnet is trading up $2 3/4 to $18 1/2.
Computer printer company ENCAD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ENCD)") else Response.Write("(NASDAQ: ENCD)") end if %> is trading up $3 1/2 to $32 after yesterday's guidance on this quarter's revenues. Two-thirds of the way through the quarter, guidance has pegged revenues at 137% of Q3 1995 revenue and 86% of Q2 1996 revenues.
Electronics and networking company TECHNITROL <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TNL)") else Response.Write("(AMEX: TNL)") end if %> bounced back from yesterday's little stumble and is trading up $1 3/4 to $26 3/4.
PLC SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: PLC)") else Response.Write("(AMEX: PLC)") end if %> is up $3 3/8 to $24 7/8 on news that its heart laser tests will no longer be randomized by FDA edict. The company will now know more about the case history and current condictions of its test subjects, allowing its engineers and doctors to learn more about the progress of PLC's systems.
REPUBLIC ENVIRONMENTAL SYSTEMS (NASAQ: IASI) is trading up $1/2 to $6 3/4. The company's Chief Operating Officer (COO) bought tens of thousands of shares last week -- investors also cannot ignore the company's association with H. Wayne Huizenga.
DOWNS
In a loss of over $900 million in market capitalization, ITT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ITT)") else Response.Write("(NYSE: ITT)") end if %> was slammed down $8 1/4 to $47 3/4. The company indicated that dissapointing results at its two Las Vegas casinos would adversely affect third quarter results. Consensus estimates for the quarter were for EPS of $0.80. ITT expects to come in at $0.56.
FORD MOTOR CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %> expects results of its operations in Brazil to be "substantially worse" for the 2nd quarter than originally anticipated. Ford attributed this to "market changes, lower market share, and a longer and more costly launch of the company's Fiesta small car. The stock was down $1 to $30 7/8
PRAEGITZER INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PGTZ)") else Response.Write("(NASDAQ: PGTZ)") end if %> announced disappointing earnings due to a product mix change and higher than anticipated selling, general and administration expenditures related to their $5 million acquistion of Trend Circuits last week. The stock was down $3 5/16 to $10.
McDonald & Co. was not kind to PIONEER STANDARD ELECTRONIC INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PIOS)") else Response.Write("(NASDAQ: PIOS)") end if %>, as it downgraded the stock from an "aggressive buy," giving it the infamous "hold" rating. The firm cited decreasing revenues and margins and higher selling, general and administrative expenditures as reasons for the downgrade. The stock was down $2 to $11 1/4.
Things are moving faster than a roulette wheel at PLAYERS INTERNATIONAL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PLAY)") else Response.Write("(NASDAQ: PLAY)") end if %>, which is down $5/8 to $7. The company announced that its vice chairman and co-founder David Fishman would be retiring and its chairman and co-founder Edward Fishman would no longer be in charge of day-to-day operations.
FOOL PROTFOLIO STOCKS
Randy Befumo (MF Templar),
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Selena Maranjian (MF Selena)
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