FOOL PLATE SPECIAL
An Investment Opinion by MF Templar

Craft Brewing Falling Flat

Despite its rapid growth, the craft-brewing industry has not been kind to investors. Leading light BOSTON BEER COMPANY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SAM)") else Response.Write("(NYSE: SAM)") end if %> was dropping $2 7/8 to $13 1/8 this morning after the firm reported a slowdown in volume in the fourth quarter. Boston's admission prompted downgrades from Alex. Brown, Dean Witter and Goldman Sachs, and had the stock hopping on four times normal volume. This was all despite the fact that the firm made its $0.11 EPS quarterly earnings target versus $0.08 EPS in the prior year after netting out a one-time gain on the sale of distribution rights. Dean Witter analyst Larry Adelman was pretty negative after the news, cutting his 1996 earnings estimate to $0.40 EPS from $0.47 EPS and slicing his 1997 estimate $0.10 EPS to $0.54 EPS. Boston Beer is a far cry from the $33-a-share high hit earlier this year and in fact it currently trades at its 52-week low.

Judging by the performance of the stocks, it is difficult to conceive that not too long ago the hype surrounding the craft-brewing business had it potentially unseating the dominance of ANHEUSER BUSCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BUD)") else Response.Write("(NYSE: BUD)") end if %>, Miller Brewing and ADOLPH COORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ACCOB)") else Response.Write("(NASDAQ: ACCOB)") end if %>. Boston Beer was offered to the public at $20 a little more than a year ago, giving the company a $408.5 million market capitalization for about $50 million in trailing sales. REDHOOK ALE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HOOK)") else Response.Write("(NASDAQ: HOOK)") end if %>, a $17 offering, is now $15 1/4. PETE'S BREWING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WIKD)") else Response.Write("(NASDAQ: WIKD)") end if %>, an $18 offering, now stands at a lofty $7 3/4. NOR'WESTER BREWING<% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ALES)") else Response.Write("(NASDAQ: ALES)") end if %>, which came public at $7 a share, currently bids $4. AMERICAN CRAFT BREWING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ABREF)") else Response.Write("(NASDAQ: ABREF)") end if %>, originally priced at $5 1/2, is not doing all that badly, perched at $5 1/8 currently. Once-hot MINNESOTA BREWING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MBRW)") else Response.Write("(NASDAQ: MBRW)") end if %> has seen better days, down at $3 5/8, having traded in the $6 range a year ago. Canadian-based BIG ROCK BREWERY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BEERF)") else Response.Write("(NASDAQ: BEERF)") end if %> has traded flat at $9 and change for quite some time, as well. Even once-hot brew-pub ROCK BOTTOM BREWERY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ROCK)") else Response.Write("(NASDAQ: ROCK)") end if %> has seen significant operating difficulties in the past 12 months, driving the stock down to the $11 1/2 range after trading in the mid- to high-$20s in 1995.

With Boston Brewing at $13 a stub, the stock now trades at $265.5 million with $185 million in trailing sales, $0.43 EPS in trailing earnings, about $35 million in cash and $1.875 million in long-term debt. This gives it a price/sales ratio of 1.43, an enterprise value/sales ratio of 1.25, a price/earnings ratio of 30 and an enterprise value/earnings ratio of 26.5. Despite the apparent lofty valuation, Boston is still cheap compared to peers like Redhook Ale, which sits at 4.4 times sales and 32 times trailing earnings with more than $15 million in net debt due to a fat convertible stock offering that is still outstanding. The valuations are all not obscene, however. Even though it trades at 29 times trailing earnings, Pete's Brewing has a market capitalization of $50 with trailing sales of $67.1 million for an enterprise value/sales ratio of 0.75. With the rest of fiscal 1996 profits estimated to fall below last year and fiscal 1997 earnings forecast at only $0.35 EPS, Pete's still trades at 22 times forward earnings -- not cheap by any absolute standard, although lower than the 37% three-year compound annual growth rate for sales. Lower earnings over the next two quarters and end-of-the-year tax-loss selling are not going to propel this one to great heights anytime soon, however. All in all, craft brewing to date has been a total bust for individual investors, although some values are beginning to become apparent.

UPS

CONRAIL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CRR)") else Response.Write("(NYSE: CRR)") end if %> surged $12 1/4 to $97 after NORFOLK SOUTHERN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NSC)") else Response.Write("(NYSE: NSC)") end if %> bid $100 cash for each share of the regional railroad, topping rival CSX CORP.'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSX)") else Response.Write("(NYSE: CSX)") end if %> combination cash-and-stock deal valued at $92 1/2. Norfolk Southern was off $3 1/4 to $91 1/4.

A patent agreement between DSP GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DSPG)") else Response.Write("(NASDAQ: DSPG)") end if %> and ROCKWELL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ROK)") else Response.Write("(NYSE: ROK)") end if %> sent shares of DSP Group climbing $5/8 to $8 1/2. Rockwell will now license TrueSpeech technology from DSP Group.

ADFLEX SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AFLX)") else Response.Write("(NASDAQ: AFLX)") end if %> is rebounding $1 1/8 to $10 1/2 after getting squashed yesterday on terrible earnings. The high-end contract manufacturer is restructuring after losing HEWLETT-PACKARD'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %> and QUANTUM'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: QNTM)") else Response.Write("(NASDAQ: QNTM)") end if %> business.

Hitting estimates sometimes is good enough! STRUCTURAL DYNAMICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SDRC)") else Response.Write("(NASDAQ: SDRC)") end if %> surged $1 7/8 to $19 1/8 after the computer-aided design (CAD) software developer reported profits of $0.24 EPS, up 33% from $0.18 a year ago.

THORN APPLE VALLEY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TAVI)") else Response.Write("(NASDAQ: TAVI)") end if %> only lost $0.29 per share in its first quarter, much better than the $0.45 EPS loss expected for the packaged meat and poultry product producer, boosting the share price $1 1/8 to $15 1/4 this morning.

CS First Boston revved up shares of VANGUARD CELLULAR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VCELA)") else Response.Write("(NASDAQ: VCELA)") end if %> this morning, pumping the stock up $1 7/16 to $16 3/4 after upgrading the independent cellular provider to "strong buy" from "buy." Vanguard reported earnings of $0.07 EPS yesterday.

GLENAYRE TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GEMS)") else Response.Write("(NASDAQ: GEMS)") end if %> was trading $1 3/4 higher this morning at $21 3/8 after reporting earnings of $0.22 EPS -- three cents better than expectations. Glenayre reported it had received $24 million in narrowband PCS infrastructure orders this quarter.

Eat-ertainment provider PLANET HOLLYWOOD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHII)") else Response.Write("(NASDAQ: PHII)") end if %> climbed $1 1/4 to $23 5/8 this morning after the owner of Planet Hollywood and Hard Rock Cafe reported earnings of $0.18 EPS, more than 10% better than the $0.16 EPS analysts expected.

PHYCOR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHYC)") else Response.Write("(NASDAQ: PHYC)") end if %> is recovering $1 1/2 to $33 1/2 this morning after getting doused yesterday on good third quarter earnings. Speculation was that disappointing numbers from MEDAPHIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: MEDA)") else Response.Write("(NASDAQ: MEDA)") end if %> was putting the kibosh on Phycor.

Trendy retail is a hit or miss business, as WET SEAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: WTSLA)") else Response.Write("(NASDAQ: WTSLA)") end if %> was proving this morning, up $1 7/8 to $33. Wet Seal is currently "hot" with the crucial Generation-X demographic group, whereas names like URBAN OUTFITTERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: URBN)") else Response.Write("(NASDAQ: URBN)") end if %> have been "not" recently.

DOWNS

ITRON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ITRI)") else Response.Write("(NASDAQ: ITRI)") end if %> continued to plunge this morning, down $5 1/16 to $15 3/16 after missing revised analyst expectations of a loss of $0.15 EPS by four cents a share. The firm develops automatic meter-reading technology for utilities throughout the world.

Broadcast regulation in the United Kingdom had shares of BRITISH SKY BROADCASTING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSY)") else Response.Write("(NYSE: BSY)") end if %> down $3 1/2 to $61 3/8 this morning, after industry regulator Oftel blocked a range of promotional activities in collaboration with BRITISH TELECOMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %>.

OAK TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OAKT)") else Response.Write("(NASDAQ: OAKT)") end if %> was giving up $1 5/8 to $10 5/8 this morning, after the semiconductor manufacturer posted a loss of four cents per share. Revenues were down a whopping 66% versus last year for the CD-ROM controller manufacturer.

Admitting that earnings will be under pressure for the next few quarters, DIAMOND HOME SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DHMS)") else Response.Write("(NASDAQ: DHMS)") end if %> is dropping $2 7/8 to $23 1/8 today after reporting $0.28 EPS in its third quarter. Recently-public Diamond does home repairs under the "Sears" brand-name, a business AMRE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMM)") else Response.Write("(NYSE: AMM)") end if %> gave up a few quarters back.

ACTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ACTL)") else Response.Write("(NASDAQ: ACTL)") end if %> is tumbling $2 3/4 to $18 5/8 in spite of making its $0.18 EPS estimates this morning. This is possibly due to the fact that unit sales of its non-fusable, field programmable gate arrays (FPGAs) were down 10% sequentially, hinting that price cuts may soon come.

Blowing through estimates of $0.29 EPS by nine cents, DII GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DIIG)") else Response.Write("(NASDAQ: DIIG)") end if %> nevertheless dropped $2 1/8 to $19 7/8 after reporting that it sees fourth quarter profits only slightly higher and well below expectations of $0.55 EPS. DII is a semiconductor and contract manufacturer.

ODETICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ODETA)") else Response.Write("(NASDAQ: ODETA)") end if %> retreated $1 1/4 to $13 this morning after reporting earnings of $0.17 EPS after the bell yesterday, flat when measured against year-ago levels according to the press release. The firm develops and sells digital data-management products and communications equipment.

Is it really fair to have Prudential cutting its rating of brokerage competitor ALEX. BROWN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AB)") else Response.Write("(NYSE: AB)") end if %>? Alex. Brown reported earnings of $1.43 EPS yesterday, possibly prompting Prudential's cut from "buy" to "hold." Shares of Alex. Brown are off $3 1/4 to $59 3/4.

ELECTRONIC DATA SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EDS)") else Response.Write("(NYSE: EDS)") end if %> hung $2 lower this morning at $57 1/2 after the consulting and outsourcing firm reported that slack orders and lower government spending will pressure growth in the fourth quarter.

Consumer finance provider UNITED FINANCIAL COMPANIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UC)") else Response.Write("(NYSE: UC)") end if %> dropped $2 to $28 3/4 after the company's earnings met consensus estimates this morning. The firm does mortgages for conventional and manufactured homes, among other things.

CONFERENCE CALL REPLAYS

CORRECTION FOR CALL YESTERDAY:

MEDICIS PHARMACEUTICAL (MDRX)
***only available*** between 2:30-4:30 pm EDT today
1-800-633-8284 (reservation # 2091446) -- replay

TODAY'S CALLS:

ALLIED SIGNAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALD)") else Response.Write("(NYSE: ALD)") end if %>
after 11:00 a.m. EDT
1-800-633-8284 (access code: 1993247)

STRUCTURAL DYNAMICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: SDRC)") else Response.Write("(NASDAQ: SDRC)") end if %>
800-860-2442
Through Oct. 24

MURPHY OIL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MUR)") else Response.Write("(NYSE: MUR)") end if %>
after 3:00 p.m. EDT
1-800-633-8284 (reservation #1982043)

GENZYME TISSUE REPAIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GENZL)") else Response.Write("(NASDAQ: GENZL)") end if %>
after 6:00 p.m. EDT
(402) 220-6032 -- replay

COMPUTER HORIZONS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CHRZ)") else Response.Write("(NASDAQ: CHRZ)") end if %>
(800) 938-0934
After Noon EDT, through Oct. 27

AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>
Appointment of COO
(800) 216-1079 code 320002
After 4 PM EDT, through Oct. 25

ACE CASH EXPRESS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AACE)") else Response.Write("(NASDAQ: AACE)") end if %>
1-800/642-1687 Code 95753
After 4 PM EDT

ZYTEC CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ZTEC)") else Response.Write("(NASDAQ: ZTEC)") end if %>
1-800-839-5120
available at 1:00 p.m. EDT 10/23

LIVE CALL TOMORROW:

ICT GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ICTG)") else Response.Write("(NASDAQ: ICTG)") end if %>
11 am EDT -- LIVE -- call by 10:55 am
1-800-860-3035 (host: John Brennan, call title: ICTG)

FOOL PORTFOLIO STOCKS

   FOOL PORTFOLIO                     BORING PORTFOLIO
AOL  up $3/8 to $26 3/8        BGP  up $3/8 to $33 5/8
ATCT up $1 1/2 at $24 1/4      CSL  down $3/8 to $56 1/4
CHV  down $1/4 to $67 1/2      CSCO  down $3/8 to $60 7/8
COMS  up $5/8 to $63           GNT  down $5/8 to $39 1/2
GM  down $1/4 to $54 3/8       OXHP  up $2 1/2 to $43 3/4
IOMG  up $3/4 to $22 7/8       PMSI  unch. at $13 3/8
KLAC  down $1/8 to $23 1/4     SPY  down $1/8 to $70 1/2
LU  down $5/8 to $47 1/4       SLR  down $3/8 to $54 1/2
MMM  down $5/8 to $70 7/8      TXI  up $5/8 to $59 1/8
T  down $1 1/8 to $38 5/8
*QDEK*  unch. at $5 7/8