Investing For Growth
Investing For Growth
by Robert Sheard (MF DowMan)
LEXINGTON, Ky. (May 23): Despite Oracle's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:ORCL)") else Response.Write("(NASDAQ:ORCL)") end if %> championing of the newly christened Network Computer (NC) and the attendant excitement generated by the association with such network stalwarts as IBM Corp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:IBM)") else Response.Write("(NYSE:IBM)") end if %>, Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:SUNW)") else Response.Write("(NASDAQ:SUNW)") end if %>, Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:NSCP)") else Response.Write("(NASDAQ:NSCP)") end if %>, and Apple Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:AAPL)") else Response.Write("(NASDAQ:AAPL)") end if %>, the gauntlet has been thrown down by powerhouse Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:INTC)") else Response.Write("(NASDAQ:INTC)") end if %>.
Clearly drawing the line between the Oracle camp and the Wintel world (Microsoft and Intel), Intel's CEO Andy Grove said Intel won't be joining the rash of companies planning sub-$500 networking-only computers. Instead, "Our effort will be to help make the $2,000 computer absolutely irresistible," Grove told shareholders. En garde!
In other Oracle news, the company may get a slight boost from Jeffrey Vinik's resignation as manager of Fidelity's mammoth Magellan Fund. Robert Stansky, manager of Fidelity's Growth Company Fund, is replacing Vinik at the helm of the planet's largest mutual fund and currently holds Oracle as one of his fund's top ten holdings. Presumably, if he likes it with the Growth Company Fund, he'll like it with even more capital at Magellan.
Continuing yesterday's story on Computer Associates' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:CA)") else Response.Write("(NYSE:CA)") end if %> earnings and the market's very negative reaction to comments about future estimates by president Sanjay Kumar, a number of analysts adjusted their outlook on the stock today.
Bear Stearns started coverage of Computer Associates with a Buy recommendation, and Montgomery Securities analyst Doug Crook said he raised his share price target to $97 from $85 per share over the period running through the end of 1996. Crook said the higher share price target reflected his confidence following yesterday's meeting with company officials that the Computer Associates "story is working very well."
Crook (an unfortunate name for a securities analyst) said he was impressed with CA's fourth-quarter earnings report and downplayed the importance of cautionary comments Kumar made about the quarter ending in June. His estimate of $0.43 a share for the quarter stands. He said he set a new estimate for 1998 of $4.54 per share. For calendar year 1997, his estimate is $4.23. He also maintained his estimate for the fiscal year ending March 1997 of $3.70.
In a classic case of fence sitting, Morgan Stanley analyst Chuck Philips cut his rating on Computer Associates to Outperform from Strong Buy but he raised his earnings estimate for the fiscal year ending March 1997 to $3.60 from $3.55. Now let's go over this again. When he thought it was going to earn $3.55, the stock carried a Strong Buy. Now he thinks it's going to earn $3.60 a share, but it's only a Market Outperform?
His reason was his concern about the impact of a reorganization of the company's sales force that could have an impact on near-term revenues. So what was the effect of this concern on his next quarter estimate? Nothing. Left it at $0.41 a share. When you figure it out, you too will be able to converse fluently in analyst-speak.
And finally, a bit of news from Green Tree <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:GNT)") else Response.Write("(NYSE:GNT)") end if %>. The company's board declared a cash dividend of six and a quarter cents per share, payable June 28 to shareholders of record June 14.
IFG Fools, next week I'll be vacationing in Colonial Williamsburg. Bear with any glitches that occur in the reporting of statistics, reports, and the like. I'll return the weekend of June 1 and 2, so at that time, I'll catch any files up to date that get put on hold while I'm gone. Hope your week is a pleasant one. Fool on!
Transmitted: 5/23/96 | ||||||||
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