The Motley Fool, 10/23/97: The Lunchtime News

FOOL PLATE SPECIAL
An Investment Opinion
by Dale Wettlaufer

Hong Kong Phooey

The strong U.S. dollar has struck again in Asia, pulling down Hong Kong's Hang Seng Index 10% last night, following a 6% fall the day before and an October decline of 25%. What does it mean for U.S. investors? Besides international money managers moving cash into the bond market that they've taken out of Hong Kong (nicely exchanged in a fixed ratio of one U.S. dollar to 7.75 Hong Kong dollars, courtesy of Hong Kong's central banks), it's way too early to tell what it means in the short term for our markets. While Fools may be looking for guidance, there's little immediate advice we can offer, being long-term investors. While you won't hear funereal tones in our discussion of the drop in the Hong Kong market, you're also not going to hear, "Don't worry, it doesn't matter, we're long-term investors."At the immediate time, U.S. banks and trading houses could suffer some damaging losses in the Hong Kong, Japan, London, and world markets. There's a heck of a lot investors don't see on the balance sheets of banking companies. Only internal auditors and managements know what sort of swaps and derivatives lurk off these balance sheets. Derivatives-induced problems and short-term shocks have a strange way of working themselves through the world financial system in ways that even many of the Wise have no way of predicting. There is a happy side to this situation, though, which we Fools can offer. Whatever happens in the short term, we've always argued that Fools shouldn't leverage themselves and shouldn't put money in the market that they can't afford to lose. As long-term investors, we would rather sit back and see what happens. Grab an S&P stock guide or peruse SEC filings from companies that you're interested in. Work out some valuations again on companies that you think are interesting but a bit pricey. Shake-ups like these can create buying opportunities for strong companies. If the U.S. market does react poorly to what happens -- whatever happens -- you will be better prepared as a long-term investor to deal with it. Short-term, we have no idea what's coming down the pike, even if it's a huge nothing. And we're not saying, Hey! buy the first downtick! What we are saying is that long-term investors should be ready for any eventuality, and can better use their downtime studying companies and long-term prospects than watching the breathless play-by-play on TV.

UPS

Little bumps elsewhere in the market can't drag investors away from a hot new oil services company initial public offering. DRIL-QUIP INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DRQ)") else Response.Write("(NYSE: DRQ)") end if %> gained $11 5/8 from its IPO price of $24 to trade at $35 5/8 this morning. The drilling equipment manufacturer offered 2.5 million shares and selling shareholders offered the same amount.

BROADWAY & SEYMOUR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BSIS)") else Response.Write("(Nasdaq: BSIS)") end if %> rose $1 3/4 to $11 3/4 on announcing a contract to supply Chase Manhattan with call center software for Chase's TriState Regional Bank.

In a magically delicious deal, EMERALD ISLE BANCORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EIRE)") else Response.Write("(Nasdaq: EIRE)") end if %> gained $6 1/8 to $31 5/8 after the Quincy, Massachusetts-based savings bank agreed to be acquired by $2 billion banking company Eastern Bank Corp. for $33 per share in cash. Emerald is the parent of Hibernia Savings Bank.

SOFTWARE ARTISTRY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SWRT)") else Response.Write("(Nasdaq: SWRT)") end if %> gained $2 1/16 to $16 3/16 after the enterprise support software company reported Q3 revenues of $11.8 million and EPS of $0.10 before charges.

Video game producer T*HQ INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THQI)") else Response.Write("(Nasdaq: THQI)") end if %> gained $15/16 to $15 7/16 after reporting Q3 revenues of $16.4 million and EPS of $0.20, beating the mean estimate of $0.16.

ELECTROGLAS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGLS)") else Response.Write("(Nasdaq: EGLS)") end if %> rose $1 5/16 to $22 5/16 after reporting third quarter earnings of $0.29 per share, well above the $0.23 per share that analysts were expecting.

DOWNS

Specialty vehicle products maker TRANSPRO INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TPR)") else Response.Write("(NYSE: TPR)") end if %> lost $2 1/8 to $9 3/8 after announcing last night that it expects fourth quarter earnings to be substantially below those of last year as a result of "soft demand, operating inefficiencies and price pressures in two of the company's core businesses."

ACUSON CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ACN)") else Response.Write("(NYSE: ACN)") end if %> fell $4 27/32 to $21 27/32 despite the healthcare products company's report of Q3 EPS of $0.15 after the bell yesterday, which beat estimates by $0.01 a share.

Information and data services company FIRST DATA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDC)") else Response.Write("(NYSE: FDC)") end if %> lost $6 to $30 1/8 after reporting 3Q EPS of $0.42, which prompted Prudential to downgrade the company from a "buy" to "hold" and BT Alex. Brown to cut the company from "buy" to "market perform."

STRATUS COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SRA)") else Response.Write("(NYSE: SRA)") end if %> fell $6 13/16 to $40 after releasing 3Q EPS of $0.77. BT Alex. Brown downgraded the company to "outperform" from "buy" and Lehman cut the firm to "neutral" from "outperform" this morning.

Reacting to the market's drop in Hong Kong, number three U.K. bank BARCLAYS PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BCS)") else Response.Write("(NYSE: BCS)") end if %> lost $6 1/4 to $100 while HSBC Holdings, which acts as part of Hong Kong's central banking structure, lost approximately 8% in London trading. U.S. banks were only slightly fazed by the action in Hong Kong. CITICORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> fell only $4 1/4 to $139 3/4, although about 20% of its corporate banking revenues are generated in Asia, especially from financial services-related clients and proprietary trading.

Prison management company CORRECTIONS CORP. OF AMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CXC)") else Response.Write("(NYSE: CXC)") end if %> crashed $10 9/16 to $31 after reporting third quarter earnings of $0.16 per share, well below the $0.19 per share that analysts were expecting. Corrections blamed rising costs for the disappointment.

The news at Corrections Corp. also dragged down competitor WACKENHUT CORRECTIONS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHC)") else Response.Write("(NYSE: WHC)") end if %>, which fell $2 11/16 to $29 1/4 even though the company reported 3Q EPS of $0.14 -- matching expectations. CORRECTIONAL SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCQ)") else Response.Write("(Nasdaq: CSCQ)") end if %> slumped $5/8 to $13 3/8; CORNELL CORRECTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: CRN)") else Response.Write("(AMEX: CRN)") end if %> fell $1 to $18 7/8; and Corrections Corp. spin-off CCA PRISON REALTY TRUST <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PZN)") else Response.Write("(NYSE: PZN)") end if %> was off $2 3/8 to $32 3/4.

Disk drive head maker READ-RITE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RDRT)") else Response.Write("(Nasdaq: RDRT)") end if %> reported that it had profit before a write-down of $0.58 per share in its fourth quarter, which was shy of analyst estimates by $0.09 per share.

Liquid crystal display and telecommunications equipment maker GLENAYRE TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GEMS)") else Response.Write("(Nasdaq: GEMS)") end if %> fell $7/8 to $15 7/16 after it reported that it expects to take a charge of $100 million to $120 million in its fourth quarter for its acquisition of Open Development Corp.

Software maintenance outsourcing company PERITUS SOFTWARE SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTUS)") else Response.Write("(Nasdaq: PTUS)") end if %> lost $4 1/2 to $24 after it agreed to acquire Millenium Dynamics for $30 million in cash and up to 2.2 million Peritus shares.

CONFERENCE CALLS

SAFEGUARD SCIENTIFICS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SFE)") else Response.Write("(NYSE: SFE)") end if %>
(800) 642-1687 (code: 634564) -- replay

COMPUTER ASSOCIATES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CA)") else Response.Write("(NYSE: CA)") end if %>
(888) 243-0816 (code: 5276) -- replay through 10/23 @ 5:00 pm

MINNESOTA MINING AND MANUFACTURING <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMM)") else Response.Write("(NYSE: MMM)") end if %>
(888) 209-3817 -- replay through 10/23

INTERMET INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INMT)") else Response.Write("(Nasdaq: INMT)") end if %>
(800) 475-6701 (code: 360026) -- replay through 10/23
(320) 365-3844 (code: 360026) -- replay for international callers

READ-RITE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RDRT)") else Response.Write("(Nasdaq: RDRT)") end if %>
(800) 633-8284 (reservation # 3156600) -- replay through 10/23
(303) 248-1201 (reservation # 3156600) -- replay for international callers

COMPUTER HORIZONS CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHRZ)") else Response.Write("(Nasdaq: CHRZ)") end if %>
(800) 938-0928 -- replay through 10/24 at noon EST

MURPHY OIL CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MUR)") else Response.Write("(NYSE: MUR)") end if %>
(800) 633-8284 (code: 3190642) -- replay through 10/24 @ 1:00 pm EDT

ALLIEDSIGNAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALD)") else Response.Write("(NYSE: ALD)") end if %>
(800) 633-8284 (access code: 3232046) -- replay through 10/24 @ 5:00 pm ET

TRIBUNE COMPANY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRB)") else Response.Write("(NYSE: TRB)") end if %>
(800) 633-8284 (code: 3218583) -- replay through 10/24

RTW INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RTWI)") else Response.Write("(Nasdaq: RTWI)") end if %>
(800) 475-6701 (code: 359246) -- replay through 10/24

ARBOR SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ARSW)") else Response.Write("(Nasdaq: ARSW)") end if %>
(800) 633-8284 (code: 3217382) -- replay through 10/25

RAPTOR SYSTEMS, INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAPT)") else Response.Write("(Nasdaq: RAPT)") end if %>
(402) 220-4216 -- replay through 10/27

FORTE SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FRTE)") else Response.Write("(Nasdaq: FRTE)") end if %>
(402) 280-9000 -- replay through 10/27

SEAGRAM COMPANY and HSN, INC.
Regarding combination of television assets
(800) 558-5253 (password: 330 9589) -- replay through 10/28
(416) 626-4151 (password: 330 9589) -- replay for international callers

10/23/97 (Thursday)
GENZYME <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GENZ)") else Response.Write("(Nasdaq: GENZ)") end if %> and GENZYME TRANSGENICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GZTC)") else Response.Write("(Nasdaq: GZTC)") end if %>
(800) 633-8284 (code: 3265950) -- replay through 10/30
(303) 248-1201 (code: 3265950) -- replay number for international callers

10/23/97 (Thursday)
ICT GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICTG)") else Response.Write("(Nasdaq: ICTG)") end if %>
(800) 275-2442 -- replay through 10/24 @11:00 am EDT

10/23/97 (Thursday)
AVID TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AVID)") else Response.Write("(Nasdaq: AVID)") end if %>
(402) 220-0105 -- replay through 10/29

10/23/97 (Thursday)
NOVATEL INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NGPSF)") else Response.Write("(Nasdaq: NGPSF)") end if %>
5:00 p.m. EDT
(800) 997-8544 -- live
(416) 620-9808 -- live for international callers

10/23/97 (Thursday)
PC DOCS GROUP INTL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DOCSF)") else Response.Write("(Nasdaq: DOCSF)") end if %>
(416) 695-5800 (code: 723627) -- replay

10/23/97 (Thursday)
MICROWARE SYSTEMS CORP <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MWAR)") else Response.Write("(Nasdaq: MWAR)") end if %>
(800) 633-8284 (code: 3118988) -- replay through 10/24

THIS WEEK'S CONFERENCE CALL SYNOPSES

TIDEWATER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDW)") else Response.Write("(NYSE: TDW)") end if %> Call
IOMEGA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %> Call

FOOL PORTFOLIO STOCKS

FOOL PORTFOLIO                  BORING PORTFOLIO

AMZN down $1 1/2 at $52 3/4   ATLS dn $1 9/16 at $25 3/8
AOL down $7/16 at $89 15/16   BGP down $1/16 at $25 1/4
CHV down $1 3/4 at $84 11/16  CSCO dn $1 1/4 at $82 11/16
COMS dn $1 1/16 at $47 11/16  CSL down $1/16 at $45
DJT down $3/16 at $9 3/4      GNT down $3/16 at $47 13/16
GM down $1 1/8 at $70 1/4     ORCL down $15/16 at $34 1/8
INVX down $5/8 at $28 3/4     OXHP down $1 9/16 at $71 11/16
IOM down $5/8 at $28 15/16    PMSI down $3/8 at $13 1/4
KLAC dn $3 1/2 at $58 11/16   TDW down $3/8 at $67 5/8
LU down $2 1/8 at $83 15/16
MMM down $1 5/16 at $99 1/16
T down $5/8 at $48 13/16

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Every day, News writers Dale Wettlaufer and Randy Befumo engage in an impromptu discussion about the stories they find most compelling from the day's news, adding color, fresh commentary and the occasional wisecrack for your listening enjoyment. Check it all out in the Motley Fool's Lunch Report on RealAudio Produced by partner AudioNet.

Randy Befumo (TMF Templr), Fool One
Dale Wettlaufer (TMF Ralegh), Fool Two
Alex Schay (TMF Nexus6), Fool Three
Contributing Writers

Brian Bauer (TMF Hoops), Fool Four
Editing