FOOL PLATE SPECIAL
An Investment Opinion by Randy Befumo

Adobe Tumbles

ADOBE SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADBE)") else Response.Write("(Nasdaq: ADBE)") end if %> tumbled $4 3/16 to $36 1/16 on reporting disappointing results after the market close yesterday. This earnings disappointment for the San Jose, California-based developer of document management and electronic publishing software followed yesterday's disappointment over results for database and applications developer ORACLE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> that were only in line with expectations. Top this all off with the fact that influential Goldman Sachs software analyst Rick Sherlund was quoted by Reuter's as saying that "investors should not be anticipating an upside in the quarter to any great degree" for MICROSOFT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>, and you have a down day for three of the largest software companies on the planet.

Adobe Systems reported $0.57 EPS excluding a $3.2 million non-recurring charge for acquired in-process research and development. First Call had been expecting the company to score $0.59 EPS in its fiscal second quarter, causing disappointed quantitative investors to dump the shares. Disappointing as they might be, the quarter marked the third consecutive period of stronger earnings for the once-addled software giant. Adobe endured weak 1996 results as it digested the rather large acquisition of competitor FRAME Technology and its Macintosh business imploded, and also faced the indignity of the stock tumbling on the perception that Hewlett-Packard was moving away from Adobe's PostScript product.

The power of the company's desktop publishing franchise as well as the potential value of its equity stakes in a number of other software competitors including NETSCAPE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %>, AMERIQUEST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AQS)") else Response.Write("(NYSE: AQS)") end if %>, and VERITY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VRTY)") else Response.Write("(Nasdaq: VRTY)") end if %> became apparent again to investors when it reported earnings last quarter, leading investors to bid the stock up $4 1/8 to $39. Now, because of a few pennies a share they bid the stock down $4 3/16 to $36 1/16. Given the performance of Oracle Corp. yesterday, however, it is unclear whether Adobe investors would have been able to stomach results only in line with expectations. Certainly Microsoft's $1 11/16 dip to $128 1/2 this morning has more to with the diminishing prospects of an earnings surprise rather than any actual change in the company's core business. Whether or not this is the most profitable approach to adopt will be demonstrated over the next few months.

UPS

RF MONOLITHICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RFMI)") else Response.Write("(Nasdaq: RFMI)") end if %> rose $2 7/8 to $19 after the radio frequency components company reported Q3 earnings per share (EPS) of $0.20, up 82% over last year on a 42% increase in revenues, to $12.8 million.

DRAM-to-CPU interface company RAMBUS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMBS)") else Response.Write("(Nasdaq: RMBS)") end if %> gained another $5 3/8 to $49 1/8 after the company's CEO appeared on CNBC's Squawk Box this morning.

EL CHICO RESTAURANTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ELCH)") else Response.Write("(Nasdaq: ELCH)") end if %> jumped $1 1/4 to $9 after the company said it has retained an investment banker to evaluate two unsolicited acquisition proposals.

Uddergold Plus and Uddergold Teat Dip chemicals compound maker ALCIDE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ALCD)") else Response.Write("(Nasdaq: ALCD)") end if %> picked up $2 1/4 to $35 1/4 after appearing in Investor's Business Daily's "New America" column, which discussed the prospects for the company's poultry antiseptic.

IFR SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IFRS)") else Response.Write("(Nasdaq: IFRS)") end if %> gained $1 to $18 after the electronic test equipment manufacturer announced a $6.4 million Army contract. As of last quarter, the company's yearly revenue run-rate was $100 million.

Color print server company SPLASH TECHNOLOGY HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLH)") else Response.Write("(Nasdaq: SPLH)") end if %> added $2 1/2 to $29 1/2 on announcing the commencement of delivery of new products announced earlier this year.

VANSTAR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VST)") else Response.Write("(NYSE: VST)") end if %> gained $1 1/4 to $12 after the Wall Street Journal today reported that major corporate PC resellers say that "a slump that spilled over into April from the first quarter [had] disappeared by May."

DOWNS

Regional airline MIDWEST EXPRESS HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MEH)") else Response.Write("(NYSE: MEH)") end if %> slid $2 5/8 to $26 3/8 after the company said it will report Q2 EPS below expectations of $0.81 due in part to unexpected engine repairs. The company also said it has stepped up its share repurchase program.

Goldman Sachs downgraded its ratings on a number of airlines today, citing federal budget talks, where House Ways & Means Committee proposals are targeting higher taxes on airlines and taxes on frequent flier benefits. United Airline parent UAL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UAL)") else Response.Write("(NYSE: UAL)") end if %> lost $1 3/4 to $72 1/2, DELTA AIR LINES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DAL)") else Response.Write("(NYSE: DAL)") end if %> lost $2 1/2 to $86 3/4, and American Airlines parent AMR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AMR)") else Response.Write("(NYSE: AMR)") end if %> dropped $2 3/4 to $92 1/2.

WANDEL & GOLTERMANN TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WGTI)") else Response.Write("(Nasdaq: WGTI)") end if %> lost $2 1/8 to $9 1/4 after the network analysis equipment maker pre-announced Q3 EPS of $0.02 to $0.07, below estimates of $0.18, prompting a downgrade from regional broker Interstate Johnson Lane to "neutral" from "buy."

Remote control systems company AMX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMXX)") else Response.Write("(Nasdaq: AMXX)") end if %> slumped $1 5/8 to $6 1/8 after announcing yesterday that it expects to report a loss of $0.04 to $0.06 per share in its first quarter, below estimates of $0.08, despite revenue growth of 46%. That elicited a Piper Jaffray downgrade to "neutral" from "strong buy."

BEAUTICONTROL COSMETICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BUTI)") else Response.Write("(Nasdaq: BUTI)") end if %> lost $1 3/8 to $11 1/2 after the network marketing cosmetics company reported Q2 EPS of $0.17, showing little growth year-over-year and missing estimates of $0.24.

Graphics accelerator chips company S3 INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SIII)") else Response.Write("(Nasdaq: SIII)") end if %> fell $1 3/32 to $11 1/32 after UBS Securities lowered its rating on the company to "hold" from "buy," saying channel checks have revealed accelerating price erosion.

MONRO MUFFLER BRAKE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MNRO)") else Response.Write("(Nasdaq: MNRO)") end if %> lost $1 1/8 to $15 5/8 on warning yesterday that it sees Q1 revenue growth of up to 8% and EPS of $0.39 to $0.42, below the mean First Call estimate of $0.48.

Natural gas distributor NGC CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NGL)") else Response.Write("(NYSE: NGL)") end if %> fell $1 1/2 to $15 7/8 after Jefferies Group lowered its rating on the company to "hold" from "buy" and adjusted its 1997 EPS estimate downward to $0.80 from $0.95.

SIGNAL TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: STZ)") else Response.Write("(AMEX: STZ)") end if %> fell $1 1/8 to $6 5/8 after the electronics components manufacturer pre-announced second quarter revenues and earnings below expectations.

CONFERENCE CALLS

ADOBE SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADBE)") else Response.Write("(Nasdaq: ADBE)") end if %>
after 8:45 p.m. EDT for 3 days
(800) 633-8284 (reservation # 2805001)

06/19/97 (Thursday)
BRODERBUND SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BROD)") else Response.Write("(Nasdaq: BROD)") end if %>
(800) 642-1687 (ID#427430) -- replay available through 6/23

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Randy Befumo (TMF Templr), a Fool
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Dale Wettlaufer (TMF Ralegh), another Fool
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Brian Bauer (TMF Hoops), and yet another Fool
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