DJIA 11000.37 -25.78 (-0.23%) S&P 500 1364.00 +8.39 (+0.62%) Nasdaq 2606.54 +39.86 (+1.55%) Russell 2000 449.26 +2.45 (+0.55%) 30-Year Bond 91 28/32 +2/32 5.83 Yield
In a plum of a deal, computer networking firm Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> today said it took a 3 million-share stake in customer management and billing software company Portal Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRSF)") else Response.Write("(Nasdaq: PRSF)") end if %> for $39 million. At an average price of $13 per share, the 4% stake has already meant a nice chunk of change for Cisco: Portal had its initial public offering last week at $14 and now sits at $41 after today's move up of $9 3/8. That's more than $93 million in about a week, but who's counting. Portal becomes Cisco's provider of customer and billing services for its data Internet protocol offerings. Rule Maker Cisco, meanwhile, tacked on $6 7/8 to $118 3/4 after posting higher-than-expected fiscal Q3 profits of $0.38 per share, up from $0.30 a year ago and ahead of the analysts' mean estimate of $0.37. Revenues for the quarter jumped 44% to $3.15 billion from $2.18 billion. The company also announced that it will split its stock 2-for-1 effective June 21. It will be Cisco's eighth stock split since it went public in 1990.
Shares of TCA Cable TV <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCAT)") else Response.Write("(Nasdaq: TCAT)") end if %> moved ahead $7 31/32 to $60 1/32 after cable TV operator Cox Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COX)") else Response.Write("(NYSE: COX)") end if %> tapped the Tyler, Texas, company to help boost its presence in the South. The deal broadens Cox's reach in Texas and Louisiana and marked the company's entry into the Arkansas market. When combined with its recently announced acquisition of Media General's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MEG.A)") else Response.Write("(NYSE: MEG.A)") end if %> cable TV operations -- Media General serves more than 264,000 customers in northern Virginia -- Cox's subscriber list balloons to about 5 million, making it the nation's fourth-largest cable company. Cox will pay $63.89 per share -- $4 billion in cash and stock -- for TCA, a 23% premium to TCA's closing price yesterday. News of the deal pulled Cox's shares down $1 15/16 to $86 1/16. Cox also gets TCA subsidiaries TCA Communications, which provides high-speed cable modem Internet access, and VPI Communications, which markets advertising sales and production services. Cox, fighting to keep pace with AT&T and other leading cable providers, must boost its subscriber base to defray the costs of programming and digital service offerings like Web access.
QUICK TAKES: Internet portal operator Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> grabbed $8 3/4 to $107 on news that the deal for it to merge with USA Networks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USAI)") else Response.Write("(Nasdaq: USAI)") end if %> and Ticketmaster Online-CitySearch <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TMCS)") else Response.Write("(Nasdaq: TMCS)") end if %> has been called off. Instead, Lycos, USA Networks, and Ticketmaster Online-CitySearch inked a deal for Ticketmaster Online and CitySearch to provide content for Lycos' national network while ticket purchase links on Lycos will be directed to the Ticketmaster Online-CitySearch site. Shares of Ticketmaster Online-CitySearch moved up $3 7/16 to $36 1/16... Online reference services provider Infonautics Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INFO)") else Response.Write("(Nasdaq: INFO)") end if %> rose $7/16 to $6 15/16 after it reported a pact to market a cobranded version of its "Company Sleuth" service with Lycos.
Contact lenses and surgical instruments maker Cooper Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COO)") else Response.Write("(NYSE: COO)") end if %> gained $3 11/16 to $19 15/16 after it said to expect fiscal Q2 EPS higher than First Call's $0.34 mean estimate... E-commerce and community company iTurf Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TURF)") else Response.Write("(Nasdaq: TURF)") end if %> took on $4 7/16 to $36 1/16 after announcing a marketing agreement with America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> that will cost iTurf $8 million for two years. iTurf parent Delia's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLIA)") else Response.Write("(Nasdaq: DLIA)") end if %> gained $2 1/16 to $20 7/8 this morning... Broadband communications integrated circuits maker Broadcom Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BRCM)") else Response.Write("(Nasdaq: BRCM)") end if %> raced up $3 15/16 to $96 5/8 this morning. Last night, the company unveiled a new high-speed Ethernet chip expected to boost the power of corporate networks without pricey fiber optic cables... Kidney dialysis services provider Total Renal Care <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRL)") else Response.Write("(NYSE: TRL)") end if %> rolled up $1 1/8 to $15 5/8 after Donaldson, Lufkin & Jenrette upgraded the stock to "top pick" from "buy."
Internet casino company GLC Limited <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GLXW)") else Response.Write("(Nasdaq: GLXW)") end if %> cashed in $11/16 to $9 1/4 after its subsidiary GalaxiWorld Limited said its GalaxiWorld casino was specifically designed to be compatible with Microsoft's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> WebTV terminal... Telecommunications networking services company e.spire Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESPI)") else Response.Write("(Nasdaq: ESPI)") end if %> pointed up $2 1/16 to $14 after it said it will provide telecommunications services to Circus Circus Enterprises' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CIR)") else Response.Write("(NYSE: CIR)") end if %> Las Vegas hotels as well as high-speed data links for an online reservations system... Online recruitment company CareerBuilder Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CBDR)") else Response.Write("(Nasdaq: CBDR)") end if %> signed up $3 to $16 in its first day of trading after selling 4.5 million shares at $13 each... Meatless food products company Worthington Foods <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WFDS)") else Response.Write("(Nasdaq: WFDS)") end if %> fattened $2 3/8 to $14 5/8 following an upgrade to "strong buy" from "buy" at U.S. Bancorp Piper Jaffray, which set a $22 per share 12-month price target.
Wire, cable, and refractory products company Alpine Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AGI)") else Response.Write("(NYSE: AGI)") end if %> zoomed ahead $2 5/8 to $16 3/8 after London's Cookson Group agreed to buy the company's 83.4% owned unit, Premier Refractories, for $115 million of stock and $295 million of debt assumption... Safe blood transfusions systems developer Cerus Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CERS)") else Response.Write("(Nasdaq: CERS)") end if %> absorbed $2 3/4 to $19 after winning FDA approval to start Phase III clinical trials for its proprietary system to inactivate viruses, bacteria, and other pathogens in fresh frozen plasma... Air bed maker Select Comfort Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AIRB)") else Response.Write("(Nasdaq: AIRB)") end if %> woke up $3 to $15 1/4 after it announced plans to buy back up to $10 million shares of company stock on the open market "effective immediately"... Online audio and video applications developer InterVU Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ITVU)") else Response.Write("(Nasdaq: ITVU)") end if %> moved ahead $7 5/16 to $43 13/16 after Prudential Securities started coverage of the company with a "strong buy" rating.
Integrated circuit manufacturer Atmel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATML)") else Response.Write("(Nasdaq: ATML)") end if %>, upgraded to "strong buy" from "accumulate" at Prudential Securities, moved up $1 11/16 to $20 7/16. The brokerage raised its 12-month price target to $35 per share from $26... Brilliant Digital Entertainment <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: BDE)") else Response.Write("(AMEX: BDE)") end if %> shone $1 3/4 to $6 3/4 after the maker of 3D interactive entertainment products said several unrelated investors, including entities affiliated with CEO and President Tim Helfet, bought 18% of the company's common stock for $4.3 million in a private transaction... Consumer electronics retailer InterTAN Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ITN)") else Response.Write("(NYSE: ITN)") end if %> shacked up $1 7/16 to $16 after it said April same-store sales were 22.9% above last year's levels... Telecommunications digital access equipment company Carrier Access Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CACS)") else Response.Write("(Nasdaq: CACS)") end if %> was carried up $5 3/8 to $36 after Warburg Dillon Read & Co. analyst Nikos Theodosopoulos boosted his rating on the stock to "strong buy" from "buy," setting a $50 per share 12-month price target.
Norwood, Massachusetts-based chipmaker Analog Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ADI)") else Response.Write("(NYSE: ADI)") end if %> rose $3 5/16 to $41 11/16 after unveiling a new integrated circuit for wireless communications services... Advertising agency Omnicom Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OMC)") else Response.Write("(NYSE: OMC)") end if %>, which Goldman, Sachs & Co. started with a "recommended list" rating, moved up $5 9/16 to $75 3/8 today... Computer service and application software firm SunGard Data Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SDS)") else Response.Write("(NYSE: SDS)") end if %>, which last night announced plans to buy privately held financial accounting, payroll, and human resources systems company Pentamation Enterprises, rose $1 7/16 to $31... Shares of universal remote control company Universal Electronics Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UEIC)") else Response.Write("(Nasdaq: UEIC)") end if %> clicked up $4 3/8 to $25 9/16 after Morgan Stanley Dean Witter set a new "strong buy" rating and a $33 share price target on the stock, calling it an "attractive" means to invest in the growth of interactive TV and digital cable.
Earnings Movers
Air Transportation Holding Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AIRT)") else Response.Write("(Nasdaq: AIRT)") end if %> up $1 1/8 to $5 3/4; fiscal Q3 EPS $0.01 vs. $0.32 last year; no estimate
Engle Homes <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENGL)") else Response.Write("(Nasdaq: ENGL)") end if %> up $1 1/4 to $13 7/16; fiscal Q2 EPS: $0.60 vs. $0.34 last year; estimate: $0.47
Federated Department Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FD)") else Response.Write("(NYSE: FD)") end if %> up $3 5/16 to $54 5/16; Q1 EPS: $0.40 vs. $0.27 last year; estimate: $0.31
IGEN International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IGEN)") else Response.Write("(Nasdaq: IGEN)") end if %> up $4 7/16 to $31; fiscal Q4 EPS loss of $0.28 vs. loss of $0.22 last year; estimate: loss of $0.27
MECON Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MECN)") else Response.Write("(Nasdaq: MECN)") end if %> up $1 to $8; fiscal Q4 EPS (before charges) $0.13 vs. $0.09 last year; estimate: $0.12
Pomeroy Computer Resources <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMRY)") else Response.Write("(Nasdaq: PMRY)") end if %> up $1 3/8 to $13 1/8; Q1 EPS: $0.43 vs. $0.37 last year; estimate: $0.43
Sterling Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SSW)") else Response.Write("(NYSE: SSW)") end if %> up $2 13/16 to $24 1/16; fiscal Q2 EPS: $0.40 (before charges) vs. $0.28; estimate: $0.38
Rural acute care hospitals operator Health Management Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HMA)") else Response.Write("(NYSE: HMA)") end if %> slipped $1 3/8 to $14 1/2, possibly on fears that Medicare may further trim its reimbursements for outpatient care in future years. A hospital lobbyist told Bloomberg News yesterday that Medicare is planning to ask for an additional $850 million in outpatient reimbursement cutbacks on top of the $7.2 billion in cuts to be enacted over five years under the Balanced Budget Act of 1997. While it remains to be seen whether Congress will sign on to the additional cuts, some for-profit hospital investors backed away from the operators, like HMA, with the most Medicare exposure. While HMA, Columbia/HCA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COL)") else Response.Write("(NYSE: COL)") end if %>, and Tenet Healthcare <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: THC)") else Response.Write("(NYSE: THC)") end if %> derive a comparable 30% to 39% of their annual revenues from outpatient services, Columbia ended the day unchanged at $25 3/4 and Tenet finished down only $3/4 to $25 3/4 due to their relatively lower Medicare exposure -- 30% of revenues for Columbia and 38% for Tenet compared to 49% for HMA.
Specialty finance company Rock Financial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RCCK)") else Response.Write("(Nasdaq: RCCK)") end if %> was rocked for $3 to $19 after saying its Q2 earnings will be "substantially below" the $0.18 per share reported in Q1 and, consequently, shy of the $0.20 expected by analysts surveyed by First Call. The company said the shortfall is due to a slide in conventional and sub-prime lending products, weaker conventional loan margins, and investments in its RockLoans.com mortgage website. The company added that earnings through the rest of the year may also come in below analysts' expectations of $1.12 as it invests in a marketing campaign for RockLoans.com and moves into a Web/call center and headquarters facility. The company expects to spend $5.5 million on the move to its new digs, which will increase Rock Financial's operating expenses by $125,000 to $150,000 a month.
QUICK CUTS: British communications services provider Cable & Wireless <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CWP)") else Response.Write("(NYSE: CWP)") end if %> slipped $1 3/16 to $40 7/16 on news that software giant Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> is in talks to acquire up to 30% of the company's cable TV unit, according to The Wall Street Journal. That deal would give Microsoft equity stakes in all three of the top cable operators in the U.K.... Financial news website operator TheStreet.com Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TSCM)") else Response.Write("(Nasdaq: TSCM)") end if %> gave back $6 1/4 to $53 3/4 after rising 216% yesterday following its initial public offering of 5.5 million shares at a price of $19 per share... Biotechnology firm Centocor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNTO)") else Response.Write("(Nasdaq: CNTO)") end if %> shed $4 7/8 to $41 5/8 after CNBC reported that possible merger talks with healthcare and pharmaceutical products company Johnson & Johnson <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JNJ)") else Response.Write("(NYSE: JNJ)") end if %> have broken off.
Casual apparel retailer Abercrombie & Fitch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANF)") else Response.Write("(NYSE: ANF)") end if %> dropped $4 3/16 to $89 5/16 despite reporting fiscal Q1 EPS of $0.23, topping analysts' expectations of $0.17. Same-store sales rose 22% during the quarter, on the back of a 48% increase last year. The company also announced a 2-for-1 stock split... Russian telecommunications services firm Rostelecom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ROS)") else Response.Write("(NYSE: ROS)") end if %> lost $1 to $5 1/8 after Russian President Boris Yeltsin dismissed Prime Minister Yevgeny Primakov after just eight months on the job, citing Primakov's inability to jump-start the struggling Russian economy. Wireless telecommunications company Vimpel Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VIP)") else Response.Write("(NYSE: VIP)") end if %> also dropped $3 3/16 to $20 3/8... Wireless broadband telecommunications network firm WinStar Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCII)") else Response.Write("(Nasdaq: WCII)") end if %> slumped $2 1/4 to $52 7/8 following a Scott & Stringfellow downgrade to "long-term buy" from "strong buy."
Government services contractor VSE Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VSEC)") else Response.Write("(Nasdaq: VSEC)") end if %> fell $1 3/4 to $9 after posting Q1 EPS of $0.10 compared to $0.08 a year ago. However, revenues fell in the period to $40.9 million from $41.7 million last year... Critical Path <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CPTH)") else Response.Write("(Nasdaq: CPTH)") end if %>, which provides e-mail hosting services to Internet service providers, Web portals, and corporations, lost another $4 7/8 to $71 1/2 after dropping 7% yesterday on announcing an offering of 4 million shares of common stock, 1 million of which are offered by shareholders... Biopharmaceutical firm Immunex Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IMNX)") else Response.Write("(Nasdaq: IMNX)") end if %> slipped $2 7/8 to $139 7/16 after saying it will change the label for its Enbrel rheumatoid arthritis drug to include a warning for doctors after six patients taking the drug died of serious infections. Yesterday, the company's shares jumped 33% on expectations of another label change that could possibly make Enbrel available to more rheumatoid arthritis patients.
FOOL
ON THE HILL
An Investment Opinion
by
Louis Corrigan
Claire's a Clear Gen Y Winner
Did you know when The Spice Girls' popularity began to wane and merchandise covered with butterflies started flying off the shelves? I didn't, but the folks at teen retailer Claire's Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CLE)") else Response.Write("(NYSE: CLE)") end if %> did. They were prepared for it. Such merchandising smarts, and the sourcing relationships and distribution system needed to respond quickly to such changing tastes, have helped Claire's deftly negotiate a notoriously faddish part of the fashion industry where Jennifer Aniston necklaces become must-haves one month and obsolete trinkets the next.
What's ironic is that the catalog firm Delia's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLIA)") else Response.Write("(Nasdaq: DLIA)") end if %>, with its newly public iTurf <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TURF)") else Response.Write("(Nasdaq: TURF)") end if %> online subsidiary, has seduced investors into believing that it's the leading marketer to Gen Y, the baby boomer's baby boom. Yet, the understated Claire's has five times the sales of Delia's, making it one of the companies actually delivering the goods to this bulging market niche, and in highly profitable fashion. Indeed, Claire's has a long history of turning costume jewelry, hair bands, and other accessories only a pubescent girl could love into a high return on equity business. (That's why it was my top pick in the teen retailing sector in the Fool's 1999 Industry Focus.) And after a surprisingly strong fourth quarter that helped the stock recover from a brief funk, Claire's should report terrific Q1 results tomorrow.
The company operates 2,082 stores, mainly in the U.S. It did, however, acquire the 53-store Zurich-based Bijoux One chain of fashion accessory stores last November as a base to expand its European operations beyond the U.K., where it runs the Bow Bangles chain. The company crams 7,000 items priced at $2 to $20 into compact mall-based stores called Claire's Boutiques or Claire's Accessories (average size 960 square feet), or its slightly larger stores operating as The Icing or Claire's Etc. (average size 1,375 square feet). Two years ago, the company furthered its controlled expansion into apparel by acquiring Mr. Rags, a U.S. chain selling "skater/urban fashion" apparel and accessories, mainly to male teens.
Part of what I like about Claire's is that management, led by octogenarian Chair/CEO Rowland Schaefer and his daughters Marla and Bonnie (both Vice Chair), takes a cautious approach with new initiatives, experimenting but insisting on economic returns. The stock dipped last fall following news that spending on its newly launched Just Nikki:) catalog wasn't translating into expected sales, forcing Q3 earnings to come in below expectations. By January, the company had decided to shut down the operations, recording a pre-tax loss of $4.8 million, or six cents per share, to write-down the investment. The catalog just didn't produce the required return on investment.
Such discipline has produced exceedingly cool numbers. For FY99, ended this past January, sales rose 23.3% to $662 million (excluding $14.7 million in sales generated by the shuttered catalog). Income from continuing operations increased 20.2% to $72 million (or, excluding the one-time loss, around $75 million, up 25.3%). EPS excluding the one-time charge increased 28.1% to $1.46 per share. Sales over the last four years have grown at a compound annual rate of 20.1% while earnings per share have increased at a 30.7% annual pace. Return on equity has increased steadily over this period to 26.1% last year as net margins rose to nearly 11.3% last year (excluding the one-time loss). That's despite the fact that lower-margin apparel and non-jewelry accessories have risen in the sales mix, as this table shows.
FY99 FY98 FY97
Jewelry 43.5% 45.1% 50.1%
Accessories 47.5% 47.8% 43.9%
Apparel 9.0% 7.1% 6.0%
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
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Contributing Writers Brian Graney (TMF Panic), a Fool David Marino-Nachison (TMF Braden), a new Fool
Editing |