FOOL PLATE SPECIAL
An Investment Opinion by MF
Templar
Nike Stuffed
Sneaker and sports apparel manufacturer NIKE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %> plunged $4 5/8 to $54 1/2 after the shares were downgraded by an analyst. Fay Landis of Smith Barney cut her rating on the stock to "neutral" from "attractive" after a visit to the company's production facilities in the Far East. While there, Landis discovered that Nike had apparently cut back its production target for the region by 20%, indicating weakening demand for the company's products. "The bloom may be off the rose," CNBC commentator Joe Kernan paraphrased.
Well off of its 52-week high this morning, the big worry is whether or not Nike will make its $3.44 per share earnings estimate for the next fiscal year. If production targets are really off by 20%, it may be harder than previously thought for Nike to increase earnings by 50% to $0.69 per share in its upcoming fourth quarter, let alone pump up earnings for next year by 21% to $3.44 per share. Nike does currently have $2.70 per share in trailing earnings, suggesting that the current forecast of $2.85 per share might be in the bag, as it only requires an increase of 30% in the next quarter.
With revenues of $8.73 billion, Nike is hardly a stripling in the rough and tumble world of sports apparel. With 297.4 million shares outstanding, the company has a market capitalization of roughly $15.76 billion. With the company holding $267.5 million in cash and $99 million in debt, the enterprise value is $15.93 billion, or 1.79 times trailing sales. Operating margins around 14% put Nike at what would appear to be fair value given the new information. The company trades at 18.5 times the $2.85 per share it will likely earn this fiscal year and is growing long term in the 15% to 20% range. Long-term buyers may want to adopt a wait and see attitude as the company still has quite some time before it reports earnings the week of August 4th.
UPS
Telecommunications equipment company OSICOM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FIBR)") else Response.Write("(Nasdaq: FIBR)") end if %> gained $15/16 to $11 after announcing a contract to supply remote access products to MCI <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %>, which will integrate them into a network it is building for the U.S. Postal Service.
ALEX. BROWN INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AB)") else Response.Write("(NYSE: AB)") end if %> bolted $10 7/8 higher to $64 after announcing a merger with BANKERS TRUST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BT)") else Response.Write("(NYSE: BT)") end if %> in deal that was hotly anticipated late last week. Other brokerages and underwriters moving on the news include DONALDSON LUFKIN & JENRETTE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLJ)") else Response.Write("(NYSE: DLJ)") end if %>, HAMBRECHT & QUIST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HMQ)") else Response.Write("(NYSE: HMQ)") end if %>, LEGG MASON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LM)") else Response.Write("(NYSE: LM)") end if %>, PAINE WEBBER GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PWJ)") else Response.Write("(NYSE: PWJ)") end if %>, LEHMAN BROTHERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEH)") else Response.Write("(NYSE: LEH)") end if %>, BEAR STEARNS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSC)") else Response.Write("(NYSE: BSC)") end if %>, ADVEST GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ADV)") else Response.Write("(NYSE: ADV)") end if %>, RAYMOND JAMES FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RJF)") else Response.Write("(NYSE: RJF)") end if %>.
More movers in the investment banking and brokerage world include SALOMON BROTHERS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SB)") else Response.Write("(NYSE: SB)") end if %>, PIPER JAFFRAY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PJC)") else Response.Write("(NYSE: PJC)") end if %>, MORGAN KEEGAN <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOR)") else Response.Write("(NYSE: MOR)") end if %>, and AG EDWARDS. EVEREN CAPITAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EVN)") else Response.Write("(NYSE: EVN)") end if %>, the former Kemper brokerage unit that holds an investment in private Richmond, Virginia-based Wheat First Butcher Singer, also gained ground, rising $1 7/8 to $23 1/2.
Computer telephony company VOXWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VOXW)") else Response.Write("(Nasdaq: VOXW)") end if %> rose $1 3/8 to $5 3/8 on announcing a licensing agreement with MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>, which will use the Voxware's voice compression codecs in its NetShow 2.0 product.
FOAMEX INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FMXI)") else Response.Write("(Nasdaq: FMXI)") end if %>, which makes polyurethane foam for bedding and automotive products, picked up $2 to $14 1/4 after pre-announcing Q1 earnings per share (EPS) of $0.29 to $0.33, within the range of analysts' estimates.
Customer service and transaction processing software company CSG SYSTEMS INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSGS)") else Response.Write("(Nasdaq: CSGS)") end if %> surged $1 7/8 to $17 after Alex. Brown raised its rating on the company to "strong buy" from "buy" this morning.
ENCAD INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENCD)") else Response.Write("(Nasdaq: ENCD)") end if %> rose $2 11/16 to $32 5/16 after the wide format color printer company said it will report Q1 EPS of $0.31, ahead of the mean estimate of $0.29 and 72% above last year's Q1 results.
Web search engine and organizer EXCITE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> moved $2 higher to $11 1/2 on a number of press releases this morning, as well as the prospect of gaining a larger user base through the rumored AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> -- COMPUSERVE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSRV)") else Response.Write("(Nasdaq: CSRV)") end if %> merger.
PARKER & PARSLEY PETROLEUM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PDP)") else Response.Write("(NYSE: PDP)") end if %> gained $2 3/8 to $32 1/4 after the oil and gas producer announced a merger with MESA INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MXP)") else Response.Write("(NYSE: MXP)") end if %>, a former T. Boone Pickens holding that is now under the control of the more low-key Richard Rainwater. The merger will form the third-largest independent oil and gas exploration company in the U.S.
Used-car superstore CIRCUIT CITY CARMAX GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KMX)") else Response.Write("(NYSE: KMX)") end if %> rose $1 7/8 to $16 7/8 after announcing on Friday a 27% increase in Q4 same-store sales and a smaller than expected loss of $0.01 per share.
DQE INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DQE)") else Response.Write("(NYSE: DQE)") end if %>, parent company of Duquesne Light, gained $2 3/8 to $29 1/2 after agreeing to merge with ALLEGHENY POWER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AYP)") else Response.Write("(NYSE: AYP)") end if %> in a deal valuing DQE at 1.12 shares of Allegheny. The two companies supply electricity in Pennsylvania, West Virginia, and Ohio.
Specialty healthcare company INTEGRATED HEALTH SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IHS)") else Response.Write("(NYSE: IHS)") end if %> moved up $1 5/8 to $29 3/8 after the company cancelled its plans to combine with infusion therapy provider CORAM HEALTHCARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CRH)") else Response.Write("(NYSE: CRH)") end if %>. Merrill Lynch applauded the announcement with a near-term rating upgrade to "accumulate" from "neutral."
ORGANOGENISIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: ORG)") else Response.Write("(AMEX: ORG)") end if %> gained $2 3/4 to $21 after the company announced marketing approval for its Apligraf Human Skin Equivalent from the Canadian government.
DOWNS
Software development tools company RATIONAL SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RATL)") else Response.Write("(Nasdaq: RATL)") end if %> was taken down $10 to $13 3/8 upon announcing its intention to acquire software development automation company PURE ATRIA SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PASW)") else Response.Write("(Nasdaq: PASW)") end if %>, exchanging 0.9 Rational shares for each Pure Atria share.
HEI INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HEII)") else Response.Write("(Nasdaq: HEII)") end if %> plunged $3 5/16 to $4 1/2 after the disk drive component maker said its largest customer abruptly cancelled orders to move its production in-house and offshore.
BIOS software company PHOENIX TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTEC)") else Response.Write("(Nasdaq: PTEC)") end if %> slid $3 1/4 to $12 3/8 after the company pre-announced on Friday Q2 EPS of $0.11 to $0.14, down from Q2 results of $0.15 per share last year.
METATOOLS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MTLS)") else Response.Write("(Nasdaq: MTLS)") end if %> lost $1 1/8 to $7 after the graphics software company pre-announced Q1 revenues of $6.1 to $6.2 million, down from $8.9 million recorded last quarter. Earnings of break-even to $0.01 per share will miss estimates of $0.06.
Number-two online services provider COMPUSERVE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSRV)") else Response.Write("(Nasdaq: CSRV)") end if %> dropped $1 5/8 to $12 after the Wall Street Journal claimed in this morning's edition that AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> is negotiating to acquire the company for $11 to $14 per share. America Online is down $2 7/8 at $45 1/2.
Remote access software company CITRIX SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CTXS)") else Response.Write("(Nasdaq: CTXS)") end if %> lost $1 7/16 to $13 1/8 after Computer Reseller News Online said that MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> is definitely going ahead with a "Windows Terminal" product to compete in the network computer space.
THIS WEEK'S CONFERENCE CALL SYNOPSES
CUTTER & BUCK <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBUK)") else Response.Write("(Nasdaq: CBUK)") end if %> Q3
Conference
Call
WILLIAMS-SONOMA <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WSGC)") else Response.Write("(Nasdaq: WSGC)") end if %> Q4
Conference
Call
ST. JOHN KNITS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SJK)") else Response.Write("(NYSE: SJK)") end if %> Q1
Conference
Call
FOOL PORTFOLIO STOCKS
ANOTHER FOOLISH
THING
What should you ask him? Anything you want to know
about how to Foolishly land a job you'll like or hire people you'll like.
Nick Corcodilos is our resident job search expert, and he's eager to let
you in on interviewing secrets, necessary job-hunting skills, and mistakes
that kill (like relying on your resume). Learn how to win the job by doing
the job! Click on the "Index" button at the bottom of any Fool screen and
select "Ask the Headhunter." From there you can read his articles on how
to get hired and how to hire. And it's interactive! You can ask him questions
in his message folder and then read his responses to you and others. And
if you just can't get enough, 'cuz he's got some great stuff -- you can even
order his book, praised by management Tom Peters and many others. Why not
earn your Foolish investing seed money at a job you like? Ask the
Headhunter.
Ask the Headhunter
Randy Befumo
(MF Templar), a Fool
Fool Plate Special
Dale Wettlaufer
(MF Raleigh), another Fool
Ups & Downs
Brian Bauer
(MF Hoops), and yet another Fool
Editing