DJIA 8956.50 -13.70 (-0.15%) S&P 500 1096.22 -1.37 (-0.12%) Nasdaq 1787.71 -6.91 (-0.39%) Value Line Index 952.01 +0.77 (+0.08%) 30-Year Bond 104 21/32 +14/32 5.79 Yield
Lunchtime News | |
Related Items | |
|
FOOL PLATE SPECIAL
An Investment Opinion
by Alex Schay
Railroad Crossing Point
Estimates for railroad operator Union Pacific Corp.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UNP)") else Response.Write("(NYSE: UNP)") end if %> performance in its upcoming second quarter reflected quite a degree of uncertainty -- with IBES numbers for 9 analysts that range from a loss of $0.25 per share to a profit of $0.75 per share. Late yesterday, Union Pacific derailed investors by announcing that it expects to report a loss from continuing operations for the quarter. The company lost $1 15/16 to $47 11/16 this morning on the news, setting a new 52-week trading low in the process amid a slew of downgrades, including J.P. Morgan, which cut the company to "market perform," and Deutsche Morgan Grenfell, which cut the firm to "accumulate."
Union Pacific also reported that it will experience a loss (previously announced) from discontinued operations as the result of the pending initial public offering of shares of Overnite Transportation -- for which it is expected to receive about half of the $1.2 billion it paid for the firm in 1986. Union Pacific has been unable to work through its rail logjam, which has lasted for well over a year since the company engaged in a merger with Southern Pacific. This massive problem has significantly dragged down revenues and pushed up costs as customers have queued up to file damage claims against the railroad operator. University of North Texas economists have estimated that Union Pacific's massive tie-ups and "lost" railcars have cost U.S. companies over $2 billion. It has cost Union Pacific as well -- if yesterday's forecast comes to pass, it will be the third straight quarter of operating losses.
With Union Pacific currently trading at 7 times cash flow and 1.05 times depressed trailing sales, and with the industry averages at 12.9 times and 2 times those numbers respectively, value investors have been taking a closer look at the country's largest railroad. The promise of last September's merger has yet to be realized of course. Buying Southern Pacific's 14,000 miles of track gave Union Pacific a shortcut between Texas and California and a direct route from San Francisco to Los Angeles, as well as the business of numerous petrochemical companies along the Gulf Coast (which it has managed to infuriate over the last year). Interested investors should balance the length of time that it takes for the logjam to clear up versus the captive shipper situation in Union Pacific's markets. Even enraged plastic makers can't stay mad long enough to continue paying four times Union Pacific's per-ton mile price to have trucks ship their plastic pellets.
Biotechnology company ICOS Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICOS)") else Response.Write("(Nasdaq: ICOS)") end if %> surged $4 1/4 to $20 1/2 after Business Week's "Inside Wall Street" column reported that the company is developing an impotence drug that could have fewer side effects than Pfizer's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PFE)") else Response.Write("(NYSE: PFE)") end if %> popular new pill Viagra. ICOS began Phase II trials of the drug in January. The article points out that ICOS has high-profile backers, including Microsoft Chairman and CEO Bill Gates, who owns 13% of the company's shares, and Amgen co-founder George Rathmann, who is chairman and CEO of ICOS and holds a 5.3% stake.
Bank of America NT&SA subsidiary and electronic payment processing company BA Merchant Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BPI)") else Response.Write("(NYSE: BPI)") end if %> soared $2 13/16 to $17 3/16 after announcing it will be the principal merchant servicer for the combined operations of BankAmerica <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAC)") else Response.Write("(NYSE: BAC)") end if %> and NationsBank <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NB)") else Response.Write("(NYSE: NB)") end if %> after the banks merge.
Educational software company The Learning Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLC)") else Response.Write("(NYSE: TLC)") end if %> picked up $1 1/2 to $28 1/2 after announcing a strategic partnership with standardized test preparation company the Princeton Review to publish a line of test preparation and teen educational software targeting college-bound high school students.
Footwear maker and retailer Nine West Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NIN)") else Response.Write("(NYSE: NIN)") end if %> strode ahead $1 1/4 to $27 7/8 after reporting first quarter earnings of $0.20 a share, which was two cents better than the mean estimate listed by IBES.
Semiconductor optoelectronics, fiber optic transmission, and radio frequency electronics company Ortel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORTL)") else Response.Write("(Nasdaq: ORTL)") end if %> jumped $1 5/8 to $15 after reporting a fourth quarter loss of $0.09 a share, down from a profit of $0.18 a year ago but better than the mean estimate of a $0.11 loss by analysts polled by IBES.
Dutch process automation firm Elsag Bailey Process Automation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EBY)") else Response.Write("(NYSE: EBY)") end if %> added $1 11/16 to $21 11/16 after announcing that controlling owner Finmeccanica S.p.A. plans to sell its interest in the company.
Biotechnology firm SIBIA Neurosciences <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SIBI)") else Response.Write("(Nasdaq: SIBI)") end if %> climbed $1 5/16 to $6 15/16 after announcing that studies on mice have shown that compounds discovered in collaboration with drug company Bristol-Myers Squibb <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMY)") else Response.Write("(NYSE: BMY)") end if %> reduce the formation of amyloid-beta protein, which is believed to be the main cause of Alzheimer's disease.
Creative Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CREAF)") else Response.Write("(Nasdaq: CREAF)") end if %> jumped $1 7/8 to $20 1/4 after Goldman Sachs raised its rating on the computer sound card maker to "recommend list'' from "trading buy'' with a 12-month price target of $40.
Music retailer National Record Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NRMI)") else Response.Write("(Nasdaq: NRMI)") end if %> added $1 3/8 to $12 5/16 after Business Week's "Inside Wall Street" column quoted an analyst at Equity Advisory as saying the company's shares were undervalued and would be worth $22 to $24 a share in a buyout
Earnings Movers
International Manufacturing Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IMSX)") else Response.Write("(Nasdaq: IMSX)") end if %> up $1 1/8 to $8 1/8; Q4 EPS: $0.15 vs. $0.07 last year; Estimate: $0.15
Quanex Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NX)") else Response.Write("(NYSE: NX)") end if %> up $2 to $31; Q2 EPS: $0.51 vs. $0.50 (before unusual items) last year; Estimate: $0.45
Mixed signal chip maker Integrated Circuit Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICST)") else Response.Write("(Nasdaq: ICST)") end if %> fell $1 13/16 to $14 5/16 after reporting that previously reported talks with an unnamed but "listed" suitor have been suspended. CEO Henry Boreen said the firm will "explore all available alternatives to maximize shareholder value."
Women's clothing manufacturer St. John Knits <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SJK)") else Response.Write("(NYSE: SJK)") end if %> was ripped $5 5/16 to $38 1/8 after saying it expects fiscal Q2 EPS of $0.57, which is less than the $0.61 expected by the Street. The firm's CEO blamed the shortfall on a shipments slowdown, inefficient labor, and higher variable overhead costs. Salomon Smith Barney lowered its rating on the stock to "neutral" from "buy."
REMEC Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: REMC)") else Response.Write("(Nasdaq: REMC)") end if %>, a maker of microwave modules used in wireless communications products, slid $5 7/8 to $15 after reporting Q1 EPS of $0.19 versus $0.11 a year ago, which was in line with the Street estimate.
Online retailer CyberShop International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYSP)") else Response.Write("(Nasdaq: CYSP)") end if %> gave back $1 1/4 to $12 1/2 this morning after rising 36% yesterday on news that it had signed marketing and advertising deals with Microsoft's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> Microsoft Plaza, @Home Network <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATHM)") else Response.Write("(Nasdaq: ATHM)") end if %>, and privately held PointCast Network.
Youth Services International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YSII)") else Response.Write("(Nasdaq: YSII)") end if %> lost another $9/32 to $7 1/2 after the reform schools operator warned investors yesterday that its fiscal Q2 earnings will be "substantially less" than expectations.
Semiconductor thin film material supplier ATMI Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATMI)") else Response.Write("(Nasdaq: ATMI)") end if %> was ripped $4 to $19 7/8 after Needham & Co. downgraded the company to "buy" from "strong buy."
Three-Five Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TFS)") else Response.Write("(NYSE: TFS)") end if %> fell $1 13/16 to $16 1/16 after the maker of liquid crystal display (LCD) components said delays for "several major programs" for one client will result in fiscal Q2 revenues and earnings below the analysts' expectations. The mean estimate for the quarter called for earnings of $0.15 per share.
Olympic Steel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ZEUS)") else Response.Write("(Nasdaq: ZEUS)") end if %> slipped $9/16 to $13 11/16 after the producer of flat-rolled carbon and stainless steel was downgraded to "neutral" from "attractive" by Bear Stearns. The company's fiscal 1998 earnings forecast was also cut to $1 per share from $1.10 per share.
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
Click here for continually updated Portfolio Numbers.
ANOTHER FOOLISH THING
See something moving a stock that we didn't cover?
E-mail the Fool News Team
and we will start working on the story.
Unfortunately, we cannot answer every e-mail
or respond to individual questions.
|
Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), Fool Two Alex Schay (TMF Nexus6), Fool, too Dale Wettlaufer (TMF Ralegh), Final Fool
Editing |