DJIA 8538.54 +75.69 (+0.89%) S&P 500 1082.22 +13.24 (+1.24%) Nasdaq 1823.56 +30.86 (+1.72%) Value Line ndx 866.79 +13.69 (+1.60%) 30-Year Bond 107 8/32 -7/32 5.62% Yield
Lunchtime News | |
Related Items | |
|
FOOL PLATE SPECIAL
An Investment Opinion
by Dale Wettlaufer
The Trap-sody of the Generalist
In yesterday's Fool on the Hill column, I wrote about Apple Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AAPL)") else Response.Write("(Nasdaq: AAPL)") end if %> hitting a new 52-week high. The company recently announced that it has taken orders for 150,000 units of the new iMac, its latest entry-level PC priced at $1,299. Before commenting on it, there are two things that I should clear up. First, I said the company will "start selling" product on its website as of October. My bad, and I should have known better, as I've known for a while that the company is selling stuff on its website. I remember what a big deal CEO Steve Jobs made of it when the company made the announcement. I misread the latest press release that talked about the company starting to sell iMacs in the Apple online store in October.
The other issue that bugged a couple people was my saying that the Rhapsody operating system was dead. I realize that I know little about operating systems, but if you ask people in Silicon Valley, many would draw a distinction between Rhapsody and Mac OS X. Mac OS X is based mostly on the existing Mac OS and it's not natively cross-platform. According to TechWeb, "Although Apple positioned Rhapsody as a server-side OS a few months ago, it is now geared only to developers to get started on writing applications for the Mach microkernel, which will be the plumbing of Mac OS X." To computer gearheads, the kernel might be the most important thing going, but for a general observer of the PC industry, the dual-processor, client-side nature of Rhapsody seemed to be pretty important. So it's a big improvement to the already-existing Mac OS, but it's far from what Rhapsody was supposed to be.
Understanding the value drivers of a company with a sub-10% market share of all new PC operating systems isn't the easiest thing for a generalist -- but this generalist is gamely making an attempt to do that. It's one thing to understand the financials, but it's another thing to understand kernels and APIs and how those will affect the value of the business. Those who know these things well through their work or through a personal interest are in the best position to make a value judgment long before the generalists, which is why we wholeheartedly support the Peter Lynch maxim of investing in what you know.
In sum, what we said yesterday about Apple is that it looked pretty cheap going into last week, still looked reasonable yesterday, and appears to be doing all the right things. Beyond that, I should probably stay away from a vexing set of information and circumstances, which is one reason I'm neither long nor short Apple and probably never will be. One way to cut out underperformance is to stay away from stuff you don't fully grasp. That goes for investing as well as for writing columns. Sorry for the misunderstanding on some basic facts with Apple.
Chicago-based oil, natural gas, and chemicals company Amoco Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AN)") else Response.Write("(NYSE: AN)") end if %> spurted up another $1 1/8 to $48 following its agreement to merge with British Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BP)") else Response.Write("(NYSE: BP)") end if %> in a stock swap valued at about $48 billion, or $50 per Amoco share. Bear Stearns raised its rating on Amoco to "buy" from "attractive" and its rating on BP to "attractive" from "neutral." BP gained $5/16 to $77 11/16.
Internet browser, portal and software company Netscape Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSCP)") else Response.Write("(Nasdaq: NSCP)") end if %> added $1 3/16 to $30 11/16 after announcing a strategic worldwide "pay for performance" agreement to make Citibank <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> the anchor tenant of Netscape Netcenter's new personal finance channel. The usual Internet suspects rebounded as well from yesterday's fall: Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> picked up $3 3/4 to $95 1/8, Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> climbed $1 7/8 to $46 1/2, Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %> advanced $2 11/16 to $66 1/4, America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> gained $2 9/16 to $109 11/16, and Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %> rose $5 3/8 to $129 3/8.
GeoCities <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GCTY)") else Response.Write("(Nasdaq: GCTY)") end if %> surged another $8 3/4 to $45 1/2 after more than doubling yesterday in its first day of trading. The personalized homepage website operator's initial offering of 4.75 million shares, representing a 15% stake in the company, was priced at $17 a share.
MidAmerican Energy Holdings Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MEC)") else Response.Write("(NYSE: MEC)") end if %> surged $5 1/2 to $25 1/2 after announcing it has agreed to be acquired by CalEnergy Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CE)") else Response.Write("(NYSE: CE)") end if %> for $27.15 per share in cash. The deal values MidAmerican at about $4 billion, including $1.4 billion of debt and preferred stock.
Paine Webber Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PWJ)") else Response.Write("(NYSE: PWJ)") end if %> moved up another $3 1/8 to $51 1/2 after The Wall Street Journal reported that Germany's third largest bank, Dresdner Bank, has made a "preliminary overture" to acquire the brokerage firm for up to $10 billion. Buying Paine Webber would give the Frankfurt-based bank instant presence in the U.S., although Paine Webber isn't exactly a powerhouse in the investment banking realm -- it ranks 11th among U.S. underwriters.
Internet portal company Infoseek Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> gained $1 1/16 to $24 11/16 after late yesterday announcing it will acquire privately held Internet shopping and local events guides builder Quando Inc. for about $17 million in Infoseek stock. Quando-developed technologies are now used in event guides on IBM's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> Intranet and America Online's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> Digital City site.
Casual apparel retailer Abercrombie & Fitch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANF)") else Response.Write("(NYSE: ANF)") end if %> rose $1 5/8 to $51 1/2 after reporting second quarter earnings of $0.20 per share, up from $0.04 per share in the year-earlier period. Analysts had expected EPS of $0.12. Comparable store sales in the quarter increased 45%.
Jones Intercable <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JOIN)") else Response.Write("(Nasdaq: JOIN)") end if %> jumped $3 1/8 to $29 1/2 after The Wall Street Journal reported that Comcast Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CMCSK)") else Response.Write("(Nasdaq: CMCSK)") end if %> is expected to announce it will immediately buy a controlling stake in the Denver-based cable company instead of in stages as was originally planned. In May, Comcast announced plans to buy 30% of the company for $500 million from Canada's BCI Telecom Holding Inc. The deal gave Comcast the option of acquiring additional shares next year that would take its stake up to 37% but give it 75% of the voting power.
Process manufacturing optimization software developer Aspen Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AZPN)") else Response.Write("(Nasdaq: AZPN)") end if %> cranked up $2 7/8 to $28 5/8 after reporting fourth quarter earnings of $0.33 a share (before charges), a penny less than last year but $0.03 ahead of estimates. The company also announced some management changes, which involve a new CFO.
Electronic design automation tools maker Quickturn Design Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QKTN)") else Response.Write("(Nasdaq: QKTN)") end if %> quickly shot up $3 1/2 to $11 1/2 after Mentor Graphics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MENT)") else Response.Write("(Nasdaq: MENT)") end if %> announced a cash tender offer for all of the company's shares at $12.125 per share -- a 51.6% premium over Quickturn's $8 closing price yesterday.
Medical devices maker and developer Boston Scientific <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSX)") else Response.Write("(NYSE: BSX)") end if %> gained $2 1/16 to $74 3/8 after announcing it has received FDA approval to market its NIR ON Ranger and the NIR ON Ranger with SOX coronary stent systems for the treatment of coronary artery disease. Coronary stents prop open arteries to facilitate blood flow to the heart.
Computer Learning Centers <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CLCX)") else Response.Write("(Nasdaq: CLCX)") end if %> jumped $2 1/2 to $19 3/8 after Legg Mason Wood Walker upgraded its rating on the computer training schools company to "buy" from "outperform."
Interactive entertainment software company MicroProse Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MPRS)") else Response.Write("(Nasdaq: MPRS)") end if %> surged $1 1/8 to $5 11/16 after announcing it has agreed to be acquired by toy maker Hasbro Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: HAS)") else Response.Write("(AMEX: HAS)") end if %> for $6 a share in cash plus the assumption of debt and redeemable preferred stock. MicroProse also reported a Q1 net loss of $1.36 a share compared with a loss of $1.48 a year ago.
Music and video retailer Trans World Entertainment Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TWMC)") else Response.Write("(Nasdaq: TWMC)") end if %> added $3 9/16 to $35 1/16 after announcing Q2 EPS of $0.12, an improvement over last year's loss of $0.04 a share and better than analysts' mean estimate of a profit of $0.09. The company also announced a 3-for-2 stock split.
Application software developer Adobe Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADBE)") else Response.Write("(Nasdaq: ADBE)") end if %> cracked $5 1/2 to $25 5/16 after saying it expects breakeven fiscal Q3 earnings or a loss (including a one-time restructuring charge) due in part to "adverse" economic conditions in Japan. The First Call mean estimate called for earnings of $0.52 per share. The company said it will fire 240 to 300 employees in order to cut costs.
Transaction processing services and software company CheckFree Holdings Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CKFR)") else Response.Write("(Nasdaq: CKFR)") end if %> tumbled $10 1/2 to $13 1/4 after saying it expects a fiscal Q1 loss of $0.04 to $0.06 per share, which is below the $0.03 per share loss forecast by the Street. Further, the company said lower-than-expected subscriber growth will result in fiscal 1999 EPS between $0.12 and $0.16, well below the First Call mean estimate of $0.32. The warning prompted BT Alex. Brown, Legg Mason, and Salomon Smith Barney to cut their ratings on the company.
Specialty adhesives, paints, and waxes maker H.B. Fuller Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FULL)") else Response.Write("(Nasdaq: FULL)") end if %> got stuck with a $3 7/8 loss to $50 1/8 after saying the recent General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> strike and the Asian financial crisis will result in fiscal Q3 EPS "moderately below" last year's $0.78. The First Call mean estimate called for EPS of $0.83 in the period. The company also said it will close 25% of its adhesive facilities over the next six quarters, resulting in pre-tax restructuring charges between $40 to $45 million.
Finlay Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FNLY)") else Response.Write("(Nasdaq: FNLY)") end if %>, which operates fine jewelry departments in department stores, was tarnished $8 11/16 to $10 11/16 after saying its fiscal Q2 EPS will be $0.11 to $0.14 below the First Call mean estimate due to lower European sales, higher expenses from a new distribution center and medical benefit plan, and potential promotional changes by some customers. The company said earnings will continue to be impacted by these factors "for the balance of the year."
Luggage maker Samsonite Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SAMC)") else Response.Write("(Nasdaq: SAMC)") end if %> was tossed for a $27/32 loss to $6 after saying in a federal filing that a computer conversion problem at its wholesale business disrupted its U.S. distribution system during the first 20 days of July. As a result, the company expects its fiscal Q2 financial results will be "significantly below" the Street's expectations.
Electronic components distributor and contract manufacturer Reptron Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: REPT)") else Response.Write("(Nasdaq: REPT)") end if %> fell $1 1/2 to $6 3/8 after reporting a fiscal Q2 loss of $0.24 per share compared to earnings of $0.38 per share last year, missing the Street's estimates for $0.07 per share loss. The company blamed the loss on softness in the electronics component industry.
Blood substitute developer Northfield Laboratories <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NFLD)") else Response.Write("(Nasdaq: NFLD)") end if %> slid $2 5/16 to $14 3/16 after the FDA requested that the company expand the number of patients used in its Phase III trials of its PolyHeme blood substitute due to what the company calls "public perceptions of safety." Northfield said expanding the study will delay the completion of the trials "into the late spring of 1999."
Prepaid telecommunications services firm SmarTalk TeleServices <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMTK)") else Response.Write("(Nasdaq: SMTK)") end if %> dropped another $11/32 to $6 13/16 after falling 57% yesterday following an announcement that it is delaying its fiscal Q2 financial report to resolve "potentially significant" accounting issues.
Online advertising and software firm NetGravity <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NETG)") else Response.Write("(Nasdaq: NETG)") end if %> gave back $1 11/16 to $17 1/4 after rising 16% yesterday on news that it had signed a co-marketing, service, and technology strategic relationship with IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>.
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 |