FOOL PLATE
SPECIAL
An Investment Opinion by
Randy Befumo
How to Guide Expectations
Only 19 days after BOSTON SCIENTIFIC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSX)") else Response.Write("(NYSE: BSX)") end if %> was pounded for a $13 3/8 loss to $47 1/8 because of an earnings warning, shares surged $6 1/8 to $48 5/8 after the actual earnings were reported. On April 11th Boston Scientific announced that it would not meet consensus earnings estimates of $0.47 per share because adverse foreign exchange rates had held down first quarter revenue growth. The medical device manufacturer forecast revenues of $399 million, stating that exchange rates had robbed it of roughly $9.9 million in sales.
Assuming that those revenues carried the same net profit margins as Boston Scientific earned in the prior quarter, this should have cost the company roughly $0.05 per share. However, generous analysts sliced their estimates for the quarter down to $0.39per share, giving Boston a slightly lower hurdle to jump. Today's results came in at $0.40 per share, 11.1% better than last year and a penny ahead of expectations. This buying frenzy sparked by an estimate-beating performance neglects to account for the strong hand the company has had in manipulating expectations.
By setting the expectations low, Boston has turned the tide on public opinion regarding the company. Estimates for the full fiscal year still stand at $1.95 per share, meaning that analysts anticipate the currency problems are a one-shot deal and the company will catch up in the next three quarters. While it is certainly possible that this will come to pass, investors might want to view forward estimates from the company with some degree of skepticism. Although it certainly can hedge its foreign exchange rates better using currency futures, the company trades at 25 times fairly rosy estimates in a quarter where decelerating revenues only grew at 24%.
UPS
Offshore oil and gas drilling platform construction company GULF ISLAND FABRICATION <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GIFI)") else Response.Write("(Nasdaq: GIFI)") end if %> gained $2 to $20 after reporting pro-forma Q1 earnings per share (EPS) of $0.57, beating the sole estimate of $0.37.
STERIS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STRL)") else Response.Write("(Nasdaq: STRL)") end if %> rose $2 to $30 1/2 after the medical equipment company reported Q4 EPS of $0.45 and revenues of $170 million, up 45% year-over-year on a pro-forma basis.
Telecommunications software and messaging systems maker COMVERSE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMVT)") else Response.Write("(Nasdaq: CMVT)") end if %> added $2 3/4 to $40 1/2 on reporting a 57% increase in Q1 revenues and EPS of $0.36, beating estimates of $0.33.
SINTER METALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SNM)") else Response.Write("(NYSE: SNM)") end if %> jumped $9 1/2 to $36 1/2 after the maker of gears, bearings, and sprockets for the automotive industry agreed to be acquired by U.K.-based industrial company GKN plc for $37 per share in cash.
DOUBLETREE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TREE)") else Response.Write("(Nasdaq: TREE)") end if %> gained $4 3/16 to $ 39 1/2 after the hotel franchisor and management company reported Q1 EPS of $0.38, burying estimates of $0.21.
UNION CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UCO)") else Response.Write("(NYSE: UCO)") end if %> collected a $1 3/8 gain to $20 1/4 after the accounts receivable outsourcing company reported Q3 revenues of $32 million and EPS of $0.43, up 19% year-over-year, and announced a $15 million stock buyback authorization.
Semiconductor company MICREL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCRL)") else Response.Write("(Nasdaq: MCRL)") end if %> gained $2 7/8 to $42 1/4 after reporting Q1 EPS of $0.32 on revenues of $22 million, up 59% over Q1 1996.
DATA DIMENSIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DDIM)") else Response.Write("(Nasdaq: DDIM)") end if %> moved up $2 to $22 1/4 after announcing that it has received orders of $10 million for its new Ardes 2K Year-2000 solution.
GREEN TREE FINANCIAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GNT)") else Response.Write("(NYSE: GNT)") end if %> gained $2 1/8 to $29 5/8 after Merrill Lynch upgraded the manufactured home lending company to "strong buy" from "outperform."
LM ERICSSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ERICY)") else Response.Write("(Nasdaq: ERICY)") end if %> gained $1 7/8 to $33 3/8 after Merrill Lynch named the Swedish wireless telecom maker its "Focus One" stock of the week.
DOWNS
Digital printing systems company XEIKON NV <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XEIKY)") else Response.Write("(Nasdaq: XEIKY)") end if %> lost $1 1/8 to $7 1/8 on reporting a 37% decrease in first quarter revenues and an operating loss of $0.08 per share, missing EPS estimates of $0.02.
NEW DIMENSION SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DDDDF)") else Response.Write("(Nasdaq: DDDDF)") end if %> fell $1 1/8 to $12 3/4 after the Israeli software company reported Q1 revenues of $12.8 million and EPS of $0.15
Field programmable gate array chip-maker ACTEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ACTL)") else Response.Write("(Nasdaq: ACTL)") end if %> was powered down $1 1/8 to $15 7/8 on reporting Q1 EPS of $0.21, up 31% year-over-year and above estimates of $0.20.
CYBERCASH INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYCH)") else Response.Write("(Nasdaq: CYCH)") end if %> slid $1 1/2 to $13 3/4 on reporting a larger-than-expected Q1 loss of $0.86 per share.
Imaging products company and 3M spin-off IMATION CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IMN)") else Response.Write("(NYSE: IMN)") end if %> fell $1 3/8 to $23 1/2 after reporting a 4.9% decrease in Q1 revenues and EPS of $0.30. The company said the strong dollar hurt its ability to grow revenues.
CONFERENCE CALLS
PEPSICO INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PEP)") else Response.Write("(NYSE: PEP)") end if %>
(800) 577-6980 (code: 03160)
THE MONEY STORE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MONE)") else Response.Write("(Nasdaq: MONE)") end if %>
(800) 964-4236
RAINFOREST CAFE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAIN)") else Response.Write("(Nasdaq: RAIN)") end if %>
(402) 222-9939
HEWLETT PACKARD <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>
VERIFONE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VF)") else Response.Write("(NYSE: VF)") end if %>
Replay available from 4:15 PM EDT today through 8:00 PM EDT on 4/25, and
from 10:00 AM EDT on 4/28 through 8:00 PM EDT on 4/30
(800) 633-8284 (reservation # 2699996)
MATTSON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MTSN)") else Response.Write("(Nasdaq: MTSN)") end if %>
(402) 220-6969 -- replay available through 5/6
CANANDAIGUA WINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WINEA)") else Response.Write("(Nasdaq: WINEA)") end if %>
(800) 677-7940
MORROW SNOWBOARDS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MRRW)") else Response.Write("(Nasdaq: MRRW)") end if %>
(402) 220-4250 -- replay through 5/6
ACCEPTANCE INSURANCE COS. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AIF)") else Response.Write("(NYSE: AIF)") end if %>
(800) 633-8284 (reservation # 2684868) -- replay until 5PM ET on 4/30
COMPUTER ASSOCIATES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %>
(Re: New Addition to CA Open Applications Mgmt. Initiative)
(888) 243-0816 -- replay from 2:00 PM ET through 6:00 PM ET on 4/30
(703) 736-7255 -- replay (International callers)
COMPUSA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPU)") else Response.Write("(NYSE: CPU)") end if %>
(800) 642-1687 (ID # 381120) -- replay for 24 hours
(706) 645-9291 (ID # 381120) -- replay (International callers)
US WEST MEDIA GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UMG)") else Response.Write("(NYSE: UMG)") end if %>
Replay available through 8PM ET on 5/2
(800) 839-5620
(719) 448-2012 (International callers)
SEAGRAM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VO)") else Response.Write("(NYSE: VO)") end if %>
1:00 PM EDT
(800) 558-5253 (reservation # 529689) -- replay available through 9PM
ET on 5/2
05/01/97 (Thursday)
PERFORMANCE TECHNOLOGIES INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTIX)") else Response.Write("(Nasdaq: PTIX)") end if %>
10:00 AM EDT
1-800-360-6077 -- live call
05/01/97 (Thursday)
RED ROOF INNS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RRI)") else Response.Write("(NYSE: RRI)") end if %>
From 1:00 PM EDT through 5:00 PM on 5/2
(800) 633-8284 (reservation # 2614549) -- replay
THIS WEEK'S CONFERENCE CALL SYNOPSES
ATLAS AIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATLS)") else Response.Write("(Nasdaq: ATLS)") end if %> Q1
Conference
Call
ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> Q1
Conference
Call
SUN MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %> Q3
Conference
Call
APPLE COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> Q2
Conference
Call
C-CUBE MICROSYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CUBE)") else Response.Write("(Nasdaq: CUBE)") end if %> Q1
Conference
Call
INTEL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> Q1
Conference
Call
RAINFOREST CAFE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAIN)") else Response.Write("(Nasdaq: RAIN)") end if %>
Conference Call
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