FOOL PLATE SPECIAL
An Investment Opinion by Randy Befumo

LIPO-SUCTION

THE LIPOSOME CO. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LIPO)") else Response.Write("(Nasdaq: LIPO)") end if %> shed $16 15/16 today, deflating to $7 7/8 after a trial for one of the company's new drugs proved unsuccessful. A Phase III trial of a compound called Ventus, used to treat Acute Respiratory Distress Syndrome (ARDS), failed to demonstrate any significant difference between the effects of the drug and the effects of the placebo. Given that the placebo is an inactive compound administered to a group of patients as a "control" in a scientific experiment, this was not good news. Despite expectations, Ventus failed to either reduce the time an ARDS patient had to spend on a ventilator or reduce 28-day mortality -- the percentage of patients who die after 28 days. The only positive note was that Ventus did not appear to have any negative effects, as the company stated "no safety concerns... were identified."

The news that Ventus did not work had an absolutely devastating effect on the stock because much of the $1.12 EPS that The Liposome Co. was supposed to earn in fiscal 1998 was to come from Ventus. Liposome's existing family of products has generated strong revenue growth but have not proven significantly profitable. In the fiscal first quarter of 1997, The Liposome Co. grew revenues by 42.6% to $14.4 million. Unfortunately, the net loss prior to payment of the dividend on the company's preferred stock grew by 9.2%. The loss of $0.12 per share in the first quarter may initially look like an improvement over the loss of $0.16 per share n the first quarter of 1996, but if you back out the 1996 preferred stock dividend and correct for the 5.9 million additional shares issued over the course of the year, the loss per share actually increased.

The promise of lipid and liposome-based drugs has excited the imaginations of a number of biotechnology investors. Unlike water-soluble medications that disappear immediately, a fat-soluble medication would stay in a patient's fat cells and be released over time. This excitement combined with what appeared to be a viable product had Liposome shares more than doubling over the course of the last ten months. Another lipid competitor, SEQUUS PHARMACEUTICALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEQU)") else Response.Write("(Nasdaq: SEQU)") end if %> has also had a rough year after it had problems with rights to its main lipid-based antifungal in July of 1996, announced a revenue shortfall in late March 1997, and had a New Drug Application (NDA) denied by the Food & Drug Administration (FDA). The performance of both companies indicates that in the end the promise of a different technology is not enough -- investors who want to buy these companies need to have an excellent grasp of the science to avoid potentially significant pitfalls.

UPS

Commerce software developer and PC products direct-seller ELCOM INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ELCO)") else Response.Write("(Nasdaq: ELCO)") end if %> gained $1 5/8 to $6 5/8 after the company said it has retained an investment banker to explore strategic alternatives to build value. The company isn't happy that its profitability and sales growth from $58 million to $620 million over the past two years haven't been fully recognized by the market.

LIFE FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LFCO)") else Response.Write("(Nasdaq: LFCO)") end if %> gained $2 1/4 to $13 1/4 from its IPO price of $11. The company will use the proceeds from its 2.9 million share offering to acquire the assets and deposits of Life Savings Bank of California.

Oh no! Sell everything! DIAMETRICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DMED)") else Response.Write("(Nasdaq: DMED)") end if %> gained $1 7/16 to $8 3/8 on a "buy" recommendation from the Cabot Market Letter.

TEMPLATE SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TMPL)") else Response.Write("(Nasdaq: TMPL)") end if %> added $1 3/4 to $13 5/8 after the software development company said the acquisition of a German company will result in an "...immediate positive impact."

Wireless security systems company ITI TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ITII)") else Response.Write("(Nasdaq: ITII)") end if %> gained $2 1/2 to $22 1/8 on announcing a development agreement to supply the security arm of WESTERN RESOURCES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WR)") else Response.Write("(NYSE: WR)") end if %> with a custom wireless security system. The two companies also entered into a strategic alliance.

HARLEY DAVIDSON <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HD)") else Response.Write("(NYSE: HD)") end if %> aftermarket supplier CUSTOM CHROME <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSTM)") else Response.Write("(Nasdaq: CSTM)") end if %> is up $1 1/2 to $17 on the back of good performance by Harley Davidson as well as a newsletter recommendation.

METHODE ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: METHA)") else Response.Write("(Nasdaq: METHA)") end if %> rose $1 3/8 to $19 5/8 on reporting Q4 EPS of $0.31, beating estimates of $0.28, on a 9.5% increase in revenues over last year.

Dairy products, fruit drinks, and coffee distributor SUIZA FOODS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SZA)") else Response.Write("(NYSE: SZA)") end if %> gained $3 5/8 to $38 1/4 on announcing earlier this week a $400 million cash and stock acquisition of a dairy and plastics manufacturing group of companies in North Carolina, which it says will be additive to earnings this year.

PLY GEM INDUSTRIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PGI)") else Response.Write("(NYSE: PGI)") end if %> moved $1 13/16 higher to $18 1/16 after the manufacturer of windows and construction products agreed to be acquired by private investment group Hicks, Muse, Tate & Furst for $18.75 per share in cash.

Semiconductor and telecommunications products company MOTOROLA INC. (NYSE MOT) gained $3 1/8 to $74 1/2 after Smith Barney raised its 18-month price target on the shares to $120 from $94, or 35 times the mean 1998 First Call EPS estimate.

SHANGHAI PETROCHEMICAL LTD. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SHI)") else Response.Write("(NYSE: SHI)") end if %> added $1 3/8 to $22 3/4 on announcing earlier this week the acquisition of a controlling interest in Zhejiang Acrylic Fibre Plant, with capacity of 30,000 tons annually of acrylic fiber.

DOWNS

HEARTPORT INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HPRT)") else Response.Write("(Nasdaq: HPRT)") end if %> lost $2 to $18 after Smith Barney cut its rating on the maker of minimally invasive surgical tools to "neutral" from "outperform," citing conversations with physicians who say procedures using the company's products are too expensive and complicated compared with alternative procedures.

Transaction software company BEA SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BEAS)") else Response.Write("(Nasdaq: BEAS)") end if %> dropped $1 1/2 to $15 1/8 after announcing that it is filing to sell six million shares, expanding fully diluted shares by at least 10%, to repay acquisition-related debt and for working capital.

HAGGAR CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HGGR)") else Response.Write("(Nasdaq: HGGR)") end if %> fell $1 1/4 to $12 1/8 after institutional broker Oppenheimer cut its Q3 EPS estimate to a loss of $0.21 per share from a gain of $0.15. None of the other three analysts covering the company have a loss projected for the quarter and none have lowered estimates in the last 30 days.

Semiconductor and electronics distributor ARROW ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARW)") else Response.Write("(NYSE: ARW)") end if %> slumped $3 1/4 to $54 1/8 on a Morgan Stanley downgrade to "neutral" from "outperform."

CONFERENCE CALLS

ECHLIN INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ECH)") else Response.Write("(NYSE: ECH)") end if %>
(800) 683-1535 (password: McCurdy) -- replay through 6/27

CABLETRON SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CS)") else Response.Write("(NYSE: CS)") end if %>
(402) 220-5185 -- replay available through 6/30

06/26/97 (Thursday)
COGNOS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COGNF)") else Response.Write("(Nasdaq: COGNF)") end if %>
(800) 997-6910 -- replay available from 1:15 p.m. EDT to midnight 6/30

THIS WEEK'S CONFERENCE CALL SYNOPSES

JABIL CIRCUIT <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JBIL)") else Response.Write("(Nasdaq: JBIL)") end if %> Q3 Call
ST. JOHN KNITS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SJK)") else Response.Write("(NYSE: SJK)") end if %> Q2 Call
MICRON ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MUEI)") else Response.Write("(Nasdaq: MUEI)") end if %> Q3 Call
MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %> Q3 Call
BRODERBUND <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BROD)") else Response.Write("(Nasdaq: BROD)") end if %> Q3 Call
COMPAQ <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %> / TANDEM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDM)") else Response.Write("(NYSE: TDM)") end if %> Merger

FOOL PORTFOLIO                  BORING PORTFOLIO
ATCT up $1/4 at $5 1/2         ATLS down $1/8 at $32 1/2
AOL up $3/8 at $58 1/2         BGP up $9/16 at $24 1/8
CHV up $1/8 at $74 3/8         CSL up $1/8 at $36 3/4
COMS down $1 1/8 at $48 5/8    CSCO up $7/16 at $71 1/8
DJT up $7/16 at $10 9/16       GNT down $1/4 at $36 5/8
GM up $3/16 at $56 15/16       ORCL up $1 1/2 at $51 5/8
IOM up $1/16 at $21 3/16       OXHP up $1 1/16 at $74 7/16
KLAC up $1/16 at $50 11/16     PMSI down $1/16 at $11
LU up $1 3/8 at $73 9/16       TDW dn $1 1/16 at $42 13/16
MMM unch. at $101
T down $1/16 at $36 7/8

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Randy Befumo (TMF Templr), a Fool
Fool Plate Special

Dale Wettlaufer (TMF Ralegh), another Fool
Ups & Downs

Brian Bauer (TMF Hoops), and yet another Fool
Editing