DJIA 9333.85 +5.66 (+0.06%) S&P 500 1186.37 +2.35 (+0.20%) Nasdaq 2007.37 +6.81 (+0.34%) Value Line ndx 965.68 +0.11 (+0.01%) 30-Year Bond 105 18/32 -1/32 5.73% Yield
Lunchtime News | |
Related Items | |
|
FOOL PLATE SPECIAL
An Investment Opinion
by Alex Schay
Watching HBO & Co.
The largest pure-play vendor of software and networking solutions targeting the healthcare market, HBO & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HBOC)") else Response.Write("(Nasdaq: HBOC)") end if %>, gained $1 7/8 to $31 7/8 this morning, rebounding from a recent drop that came about as a result of its merger talks with drug wholesaler and software provider McKesson Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCK)") else Response.Write("(NYSE: MCK)") end if %>. On Tuesday HBO dropped 11% on news of the merger, which ended up causing problems with the proposed stock exchange ratio -- though the negotiations had already hit a snag on the issue of the duration of employment contracts for two of HBO's Presidents. In a somewhat schizoid move on Thursday, HBO dropped another 11% after it was revealed that the merger was off. The merger held out the promise of HBO entering the drug management software market for pharmacies and hospitals, as well as the potential to cross market its services to McKesson's customer base. The end result, however, is that HBO -- which has acquired more than 13 companies since 1993 -- will have to look somewhere else for its first drug management software acquisition.
It's not possible to have control over healthcare costs until there is control over healthcare information. That is the fundamental thesis driving development in the healthcare information systems industry. Of the $1.2 trillion that was spent last year on healthcare, it is estimated that $210 billion was spent on "administrative costs," that is, the costs of distributing care. However, it seems that the rallying cry of the digital revolution fell on deaf ears in some pockets of the healthcare industry. A fact reinforced once you have filled out your fifth form at the physician's office, essentially duplicating information in the lost tradition of medieval scribes. Unnecessary duplication and other inefficiencies, while the bane of the corporate world, have yet to be addressed in an integrated fashion in the healthcare industry. While this is hardly news (thus far this piece may have run virtually verbatim back in 1989), one important element of healthcare information technology (HIT) has changed dramatically, and that is payer/provider perceptions regarding the need for information technology.
The acknowledgement that competitive advantage plays a role in the healthcare equation (in addition to cost cutting) has resulted in some analysts estimating that the healthcare information market is headed for $50 billion by the year 2000 -- and that growth has attracted competition. In 1980, there were roughly a dozen vendors that marketed software and services for billing and claims collections. Today, there are over 100 such vendors in the U.S. HBO is certainly not cheap at 47 times forward earnings estimates, but it has built up its present valuation thanks to five years of very strong growth. With run-rate return on invested capital at 42%, the questions become: How long can HBO management continue to generate returns above the firm's cost of capital, and how much of that expectation is built into the current price?
PepsiCo Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PEP)") else Response.Write("(NYSE: PEP)") end if %> popped up $1 1/2 to $39 7/16 after reporting second quarter earnings from continuing operations of $0.33 a share, up from $0.27 last year and in line with estimates. The beverage and snack company said revenues grew 3% and volume growth was up 8% for snacks and 6% for beverages.
Enterprise network hardware, software, and services company Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %> gained $1 15/16 to $51 7/8 after reporting Q4 EPS of $0.73 (excluding charges) compared with $0.61 in the year-earlier period and analysts' mean estimate of $0.71. The company said it continues to gain market share, and with $1 billion spent in research and development in the fiscal year just ended, it continues to be "a force to be reckoned with."
Independent software company Sybase Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYBS)") else Response.Write("(Nasdaq: SYBS)") end if %> jumped $1 3/16 to $10 3/16 after reporting Q2 EPS of $0.01, an improvement from last year's loss of $0.23. Analysts had predicted a loss of $0.09. The company's management said Sybase is now "re-invigorated" and has returned to growth and profitability.
Enterprise storage systems and software maker EMC Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMC)") else Response.Write("(NYSE: EMC)") end if %> added $3 3/4 to $52 after reporting Q2 EPS of $0.36, up from $0.25 a year ago and beating analysts' mean estimate of $0.33. Total revenue grew 33% year-on-year, while revenue from its storage software products increased 140%.
Consumer and business services company Cendant Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CD)") else Response.Write("(NYSE: CD)") end if %> picked up $7/8 to $15 1/2 as its chairman, Walter Forbes, came under renewed pressure to resign in the wake of the company disclosing accounting fraud at its CUC International business.
Avionics components manufacturer DeCrane Aircraft Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DAHX)") else Response.Write("(Nasdaq: DAHX)") end if %> took off this morning, rising $4 15/16 to $22 9/16, after announcing it has agreed to be acquired by Donaldson, Lufkin & Jenrette's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DLJ)") else Response.Write("(NYSE: DLJ)") end if %> DLJ Merchant Banking Partners II for $23 a share in cash, a 30% premium to DeCrane's closing price yesterday.
Internet hardware and software company Netopia Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NTPA)") else Response.Write("(Nasdaq: NTPA)") end if %> shot up $13/16 to $9 3/8 after Business Week's "Inside Wall Street" column quoted a Warburg Dillon Reed analyst as saying the stock could reach $12 this year.
Beef and pork producer IBP Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBP)") else Response.Write("(NYSE: IBP)") end if %> moved up $1 15/16 to $19 7/8 after reporting Q2 EPS of $0.36, beating the First Call mean estimate of $0.26. Goldman Sachs raised its rating on the company to "market perform" from "market underperform."
Anadigics Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ANAD)") else Response.Write("(Nasdaq: ANAD)") end if %> climbed $1 5/16 to $19 1/16 after Prudential Securities upgraded its rating on the maker of gallium arsenide integrated circuits to "buy" from "hold."
Transaction processing systems maker PAR Technology Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PTC)") else Response.Write("(NYSE: PTC)") end if %> rose $1 3/16 to $7 11/16 a day after subsidiary ParTech Inc. announced a $2.4 million order from Chick-fil-A Inc.
Genetic research systems company Molecular Dynamics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MDYN)") else Response.Write("(Nasdaq: MDYN)") end if %> soared $2 1/8 to $12 after announcing that Genset S.A. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GENXY)") else Response.Write("(Nasdaq: GENXY)") end if %> has placed a multi-unit order for its MegaBACE 1000 DNA sequencing systems.
Earnings Movers
ChiRex Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CHRX)") else Response.Write("(Nasdaq: CHRX)") end if %> up $1 13/16 to $18 1/4; Q2 EPS: $0.19 (before charges) vs. $0.15 last year
Dialogic Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DLGC)") else Response.Write("(Nasdaq: DLGC)") end if %> up $5 to $35 7/8; Q2 EPS: $0.42 vs. $0.29 last year
Fore Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FORE)") else Response.Write("(Nasdaq: FORE)") end if %> up $5/16 to $25 5/16; Q1 EPS: $0.14 vs. $0.05 last year; Estimate: $0.13
Inso Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INSO)") else Response.Write("(Nasdaq: INSO)") end if %> up $1 15/16 to $18; Q2 EPS: $0.05 (before unusual items) vs. $0.03 last year
QLogic Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QLGC)") else Response.Write("(Nasdaq: QLGC)") end if %> up $12 1/2 to $50; Q1 EPS: $0.52 vs. $0.35 last year; Estimate: $0.43
Veritas Software <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VRTS)") else Response.Write("(Nasdaq: VRTS)") end if %> up $5 to $55; Q2 EPS: $0.21 (before charges) vs. $0.13 last year; Estimate: $0.15
VideoServer Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VSVR)") else Response.Write("(Nasdaq: VSVR)") end if %> up $1 1/4 to $13 7/8; Q2 EPS: $0.04 vs. $0.02 last year
Aircraft and electronics systems manufacturer Northrop Grumman Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOC)") else Response.Write("(NYSE: NOC)") end if %> was shot down $6 1/8 to $91 1/4 after the board of fellow defense contractor Lockheed Martin Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LMT)") else Response.Write("(NYSE: LMT)") end if %> decided late yesterday to call off the proposed $10.7 billion merger of the two companies. The decision came after talks with the government related to antitrust concerns posed by the merger broke down on Wednesday. Lockheed Martin moved up $2 3/4 to $106 11/16 this morning.
Shaving products and batteries maker Gillette Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: G)") else Response.Write("(NYSE: G)") end if %> was nicked $2 13/16 to $57 9/16 after Merrill Lynch lowered its near-term rating to "accumulate" from "buy."
Power tools maker Black & Decker Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BDK)") else Response.Write("(NYSE: BDK)") end if %> was nailed with a $1 15/16 loss to $63 1/16 after Prudential Securities downgraded the firm to "hold" from "buy" following its fiscal Q2 earnings report. On Thursday, the company reported EPS of $0.57, up from $0.47 a year ago and in line with analysts' expectations.
Programmable logic chip maker Xilinx Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XLNX)") else Response.Write("(Nasdaq: XLNX)") end if %> was zapped for $4 5/16 to $37 1/16 after reporting fiscal Q1 EPS of $0.35 versus $0.41 last year, missing the First Call mean estimate of $0.41. Excluding a $2.6 million start-up loss associated with an investment in a wafer fabrication facility, earnings were sequentially flat at $0.39 per share. The company received downgrades from no less than four Wall Street firms.
Wireless telecommunications equipment and software maker Glenayre Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GEMS)") else Response.Write("(Nasdaq: GEMS)") end if %> slid $2 1/8 to $10 after reporting that manufacturing problems and disappointing orders from Asian clients resulted in breakeven fiscal Q2 results compared to the $0.24 per share earned a year ago. The Street had been expecting earnings of $0.15 per share in the quarter. The company added that it sees "decreased earnings potential" in the second half of the year.
Oil exploration and production company Triton Energy Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OIL)") else Response.Write("(NYSE: OIL)") end if %> was drilled for $8 5/16 to $22 3/16 after the company ended speculation that it would put itself up for sale. Instead, it announced a deal with Atlantic Richfield Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ARC)") else Response.Write("(NYSE: ARC)") end if %> to develop Triton's gas reserves in Malaysia and Thailand. The company also said its CEO has resigned and that it will take a $160 million charge over the next two quarters to restructure and write-off certain exploration costs.
Enterprise resource planning software developer DataWorks Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DWRX)") else Response.Write("(Nasdaq: DWRX)") end if %> was knocked down $3 5/8 to $9 1/16 after saying its fiscal Q2 earnings will be between $0.05 and $0.08. The Street had been expecting earnings of $0.21 per share in the quarter. The company said it has seen "significant" competition for its Avante products, which has resulted in price cuts.
Telecommunications network constructor and operator Able Telecom Holdings Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ABTE)") else Response.Write("(Nasdaq: ABTE)") end if %> fell $1 1/2 to $10 1/8 as its mud-slinging battle with investment firm Asensio & Co. continued. In today's round, Asensio cited Able federal filings and alleged that the company would have reported a fiscal Q1 loss if not for a "highly improbable" operating improvement at its recently acquired COMSAT unit. Officials at Able were unavailable for comment.
Metal-oxide chip maker Atmel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATML)") else Response.Write("(Nasdaq: ATML)") end if %> slid $7/8 to $13 3/4 after reporting breakeven fiscal Q2 results, missing the Street's estimate of earnings of $0.03 per share in the quarter. The results excluded a $70 million restructuring charge to write down assets and cut the firm's workforce by 10%. The company said visibility in the near term is "limited," although it expects growth to resume in Q4.
Automated call center technologies company Periphonics Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PERI)") else Response.Write("(Nasdaq: PERI)") end if %> was cut $2 1/4 to $8 after reporting fiscal Q4 EPS of $0.08 versus $0.30 last year, missing the Street's estimate of $0.20. The company blamed the lower-than-expected results on lower margins and increased investment in its sales staff and R&D.
Medical diagnostic systems maker Cytyc Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYTC)") else Response.Write("(Nasdaq: CYTC)") end if %> lost $1 11/16 to $18 after reporting a fiscal Q2 loss of $0.44 per share, worse than the $0.39 per share loss a year ago and below the Street's forecast of a $0.34 per share loss.
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 |