CONFERENCE CALLS
MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>
Announcement about new addition to Windows platform
1-800-456-5304 (passcode 9707) -- available until 7 pm PDT
APPLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %>
Discussing information appliances and future Newton-technology
products
1-800-642-1687 (passcode 47956)
FOOL PLATE SPECIAL
Semiconductor Renaissance
A short love note from INTEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> was enough to send semiconductor manufacturers spiraling higher yesterday. News that revenues for the third quarter would be about five percent ahead of the second quarter provoked an across-the-board rally in the chip-makers. Names like ATMEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATML)") else Response.Write("(Nasdaq: ATML)") end if %>, CIRRUS LOGIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CRUS)") else Response.Write("(Nasdaq: CRUS)") end if %>, LINEAR TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LLTC)") else Response.Write("(Nasdaq: LLTC)") end if %> and LATTICE SEMICONDUCTOR<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LSCC)") else Response.Write("(Nasdaq: LSCC)") end if %> all saw multi-point rallies on much-higher-than-normal volume. Intel's first positive earnings pre-announcement in four years was greeted as the sign that we have reached the bottom of the semiconductor "inventory correction." Traders moved in quickly to take advantage of the next big move in these stocks, positioning themselves ahead of a wave of positive pre-announcements.
Or so they would like to think. The more level-headed among us remember it was only last week that a little Schaumburg, Illinois outfit known as MOTOROLA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %> gave its third earnings warning in a row based on grim prospects for its Semiconductor Products Group, pinched by falling prices and slowing demand across all of its product groups. Motorola, some might recall, went below $50 for the first time since January, touching a 52-week low. Not to be the spoilsport, but the average semiconductor manufacturer has a lot more in common with Motor-Motor-Motorola than ol' Intel Inside.
Think it through for a minute. Intel's bread and butter is its proprietary Pentium (P5) and Pentium Pro (P6) central processing units (CPUs), which it sells bundled with its own motherboards and flash-memory products. The company has dominant market-share and mind-share in the most critical segment of the personal computer revolution. A five percent sequential increase in the seasonally-weak third quarter bodes well for end-user PC demand, but all of that excess memory capacity floating around cannot convert to pumping out Intel CPUs overnight. Switching to 16 meg DRAM, SRAM, video and audio chipsets and a host of other commodity and semi-proprietary products is a breeze. As Motorola is one of the world's ten largest players in memory chips as well as supplying all of the guts for its line of communications products, its fortunes are far more indicative of what the average semiconductor manufacturer is facing. The only reason to think otherwise is Motorola's heavy exposure to the PowerPC and the fact that APPLE COMPUTER'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> worries really affect it as well.
Contrarian or not, the chain of events here looks pretty clear. Semiconductor average selling prices (ASPs) are thirty to seventy percent lower than they were the same time last year in almost every product segment save high-end CPUs and specialty chips like field programmable gate arrays (FPGAs). Indications from bookings and billings reported by the semiconductor industry association show that the average manufacturer will have revenues that are slightly below last quarter and 40% below last year in the upcoming fiscal third quarter. A few more deleterious pre-announcements from big semiconductor names will probably squeeze their way out in the coming two weeks, potentially lopping off many of the gains we have seen here in the last few days. Certainly a number of franchises are being priced below their replacement value -- chief among them Motorola. However, the Street will focus tightly on the outlook for the next six to twelve months and the turn looks like it will come towards the end of this horizon. Then again, we could have just seen 1995's deferred summer slump extend into 1996's seasonal downturn, meaning things actually are okey-dokey and I am all wet. We'll see in the coming weeks.
UPS
LAIDLAW INC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LDW.B)") else Response.Write("(NYSE: LDW.B)") end if %> rose $3/4 to $11 1/8 after announcing a large deal with ALLIED WASTE<% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AWIN)") else Response.Write("(Nasdaq: AWIN)") end if %>. Allied will buy the solid waste management unit of Canada-based Laidlaw for a combination of $1.2 billion in cash and securities.
VALUE HEALTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VH)") else Response.Write("(NYSE: VH)") end if %> is up $1 1/2 to $17 7/8 on no apparent news, though the move may be related to the recent sale of its CareSys unit to Blue Cross/Blue Shield of Connecticut. And I originally thought it was Van Halen that was trading up in the afterglow of their appearance on MTV's Video Music Awards.
SRAM-maker PARADIGM TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRDM)") else Response.Write("(Nasdaq: PRDM)") end if %> opened up on large volume and is currently trading up $1 at $6 3/8. Looking at the Zacks estimates, there are two holds and one "strong sell," so in this less gloomy environment for semiconductor stocks, it's easy to see how things like this could pop.
TAMBRANDS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TMB)") else Response.Write("(NYSE: TMB)") end if %> moved up $2 1/2 to $44 3/8 on an upgrade from a not-too-attractive rating of "market underperformer" to "market performer." Tambrands, a consumer products company, is dumping some of its facilities, has named a new chief operating officer (COO), kicked its chairman out of his chair and into a director's seat, and plans to upgrade some of its production and distribution facilities, in addition to cutting 17% of its workforce. (Whew!)
HERCULES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HPC)") else Response.Write("(NYSE: HPC)") end if %> rose $2 to $54 1/4 on Prudential's initiation of coverage with a "buy," joining the consensus rating of "buy." The specialty chemical maker has earned approximately $316 million (pre-tax non-recurring gains backed out) on $2.17 billion in revenues for the past twelve months.
Investors are looking for another rad quarter from VANS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VANS)") else Response.Write("(Nasdaq: VANS)") end if %>, the financially re-born skate/snowboard/extreme footwear and clothing company -- Q1 FY 1997 earnings will be released tomorrow. VANS is trading up $1 1/8 to $19 7/8.
OPTICAL SENSORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OPSI)") else Response.Write("(Nasdaq: OPSI)") end if %> is now beginning to book commercial sales of its SensiCath Sensor. OPSI is trading up $1 at $9 3/8.
Wide-format printer company ENCAD <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENCD)") else Response.Write("(Nasdaq: ENCD)") end if %> jumped $3 5/8 to $40 1/8 on news of the dismissal of a lawsuit filed against the company last year. Encad also reported last week that third quarter sales were running far ahead of Q3 1995 levels.
DOWNS
RHODES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RHD)") else Response.Write("(NYSE: RHD)") end if %> investors weren't too thrilled with the terms of the furniture retailer's merger with discount giant HEILIG-MEYERS CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HMY)") else Response.Write("(NYSE: HMY)") end if %> which was announced today. The stock ran up to $10 5/8 before the close yesterday in anticipation of the merger, but when it was revealed that the stock-swap merger values each Rhodes share at .5 of a Heilig-Meyer stub, the stock was rocked for $3 to $7 5/8, or about half of the $15 Heilig-Meyer shares are trading at today.
OPTICAL COATING LAB <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OCLI)") else Response.Write("(Nasdaq: OCLI)") end if %>, which makes thin-film coated components used in computer monitors, gave guidance that fourth quarter earnings will be significantly below the $0.12 a share the company earned a year ago and a long way from consensus estimates of $0.21 per share, and was stripped for $2 5/8 to $11 5/8.
An analyst at Merrill Lynch has cut his medium-term rating on NETSCAPE COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> from "accumulate" to "neutral," citing greater competition with MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> in the browser and server software markets, sending the stock down $3 1/2 to $42 1/2. A Web browser census released today by Zona Research Inc. reported that Netscape's Navigator still dominates the market, accounting for 59% of the browsers downloaded, purchased, received or used in the past 90 days, with Microsoft's Internet Explorer accounting for 18% of this total.
Bed and bath textile giant FIELDCREST CANNON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FLD)") else Response.Write("(NYSE: FLD)") end if %> expects to report a third quarter loss of $0.25 a share, which bears no resemblance to consensus estimates of a profit of $0.50. Shares were wrung-out for $1 3/4 to $16 1/2. The company cited lower margins and sales, as well as expenses associated with the closing of two towel plants as reasons for the shortfall.
An analyst at Robert Baird isn't making any friends in the temporary staffing industry. MANPOWER INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAN)") else Response.Write("(NYSE: MAN)") end if %> watched its stock plummet yesterday on word of a downgrade by the brokerage and the same thing is happening to OLSTEN CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OLS)") else Response.Write("(NYSE: OLS)") end if %> today on a similar downgrade. The stock is down $3 5/8 to $23.
Goldman Sachs didn't have a hankering for steak today, as it downgraded the stock of LONE STAR STEAKHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: STAR)") else Response.Write("(NASDAQ: STAR)") end if %> and OUTBACK STEAKHOUSE INC.<% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OSSI)") else Response.Write("(NASDAQ: OSSI)") end if %> from "market outperform" to "market perform." Lonestar was burned for $1 5/16 to $31 3/4, while Outback got chewed for $3/4 to $26.
FOOL PORTFOLIO STOCKS
Dale Wettlaufer (MF Raleigh),
a Fool
Christopher McKay (MF Murdoch),
another Fool
Selena Maranjian (MF Selena)
another Fool