DJIA 8514.86 -18.79 (-0.22%) S&P 500 1081.95 +0.77 (+0.07%) Nasdaq 1791.84 -5.77 (-0.32%) Value Line ndx 849.25 -0.80 (-0.09%) 30-Year Bond 100 13/32 -19/32 5.47% Yield
Lunchtime News | |
Related Items | |
|
FOOL PLATE SPECIAL
An Investment Opinion
by Dale Wettlaufer
CyberGuard Tumbles
Firewall software company CyberGuard <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYBG)") else Response.Write("(Nasdaq: CYBG)") end if %> was demolished for a $4 7/16 loss to $1 3/4 after the company announced this morning that it will restate its third fiscal quarter results due to an overstatement of revenues. Oops. It might have to go back and re-state its first and second quarter results as well. Could Foolish investors have seen this coming? One of the first places to go to assess the quality of revenue recognition is to the accounts receivable line on the balance sheet. As of the end of the company's third fiscal quarter, days sales in receivables were 130, which indicates a very long receiavables cycle for CyberGuard and certainly should have been a yellow light for investors.
There are a couple things that would push the company's receivables out to a longer length of time than the normal 30-45 days sales outstanding (DSO) in accounts receivable. If a customer signs a two-year license on software and the company recognizes revenues on a percentage of contract fulfilled basis, then it will recognize revenues from the contract in eight equal quarterly installments. At the beginning of the contract, DSOs are going to be large on that particular account. Another way DSOs can get stretched out is if customers are having problems paying. Apparently, the company is having that problem with Asian customers, though one might not guess that from the balance sheet. As of the end of last quarter, 7.6% of accounts receivable were held in reserves for bad debt. That was flat year-over-year and actually down from the beginning of the calendar year. One would have thought the company was making progress.
The company this morning said that it's considering suing auditor KPMG, which resigned from the account on Friday. CyberGuard may have learned something from President Clinton's recent mea culpa -- admit the problem and then point a finger elsewhere. With the suspension of the company's CEO and CFO and the resignation of the company's chief of international sales, it sure looks more like the problem is internal and that the company could have recognized some sales to Asian customers that were dubious to begin with. Revenues are not revenues, according to accounting standards, when payment is uncertain. With the stock down from its all-time high of around $24, achieved in the ridiculous spring of 1996 "tech stock" bubble, the company's fortunes appeared to be lagging anyway. Looking at the cash flows of this particular company, which are negative, it doesn't look like today's crunch presents any sort of great bottom-fishing bargain.
Telecommunications equipment maker Ciena Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> surged $4 3/16 to $35 7/16 after USA Today reported that Tellabs <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %> is "almost certain" to renegotiate the terms of the two companies' proposed merger after Ciena shares dropped nearly 60% in value in two weeks. Ciena's stock lost 45% after announcing that AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> has opted not to use the company's dense wavelength division multiplexing (DWDM) systems. Ciena added that the development doesn't change its business outlook. Tellabs fell $4 13/16 to $57 5/8. To listen to a replay of Ciena's conference call Friday, dial (800) 753-9756.
Life sciences company Monsanto Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MTC)") else Response.Write("(NYSE: MTC)") end if %> rose $2 1/4 to $59 3/4 after saying that its experimental painkilling drug will get a faster-than-usual review at the Food and Drug Administration. On Friday, the company also announced that the corn the company genetically improved to protect itself against rootworm has shown "excellent" control of the insect in experimental field trials.
PC maker and direct seller Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> gained $1 3/16 to $118 11/16 after its vice chairman, Morton Topfer, said the company expects higher sales from China to offset any slowdown in the rest of Asia.
Photography giant Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> snapped up $1 3/16 to $85 15/16 after Barron's reported that its shares could hit $100 a share as the company cuts costs, concentrates on fast-growing product lines such as digital and medical imaging, and enters joint ventures and partnerships with companies such as Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> and America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>. Morgan Stanley raised its price target to $100 from $95 and increased its 1998 earnings estimate to $4.40 from $4.27 and 1999 estimate to $5.30 from $5.
Men's casual and dress apparel maker Haggar Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HGGR)") else Response.Write("(Nasdaq: HGGR)") end if %> added $15/16 to $11 7/16 after announcing plans to repurchase up to 2 million shares on the open market.
Specialty and memory modules assembler SMART Modular Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SMOD)") else Response.Write("(Nasdaq: SMOD)") end if %> gained $3/4 to $21 3/8 after announcing it has signed an agreement with Ericsson <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ERICY)") else Response.Write("(Nasdaq: ERICY)") end if %> granting the company a license to develop PC Card communication products that are fully compatible with Ericsson's proprietary GSM handset data and fax interface.
Biotechnology company SangStat <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SANG)") else Response.Write("(Nasdaq: SANG)") end if %> was lifted $1 1/16 to $23 7/8 after announcing that the Food and Drug Administration has cleared for marketing the company's CycloTech Cyclosporine Oral Solution Dispenser, a delivery system to be used by transplant recipients.
Specialty chemicals producer Albemarle Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALB)") else Response.Write("(NYSE: ALB)") end if %> jumped $1 3/8 to $18 13/16 after announcing it will buy back as many as 5 million shares in a self-tender offer starting today and ending Sept. 22. The company plans to purchase shares for between $17 and $19.50.
Shuttle and mid-size touring buses manufacturer Metrotrans Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MTRN)") else Response.Write("(Nasdaq: MTRN)") end if %> rocketed up $3 5/16 to $11 9/16 after announcing that The Mayflower Corp. of London will buy all shares owned by non-executive directors Earl Meck and Randy Stanley for $15 a share. The deal will give Mayflower a 40% stake in the company.
Media programming services company Tele-Communications International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TINTA)") else Response.Write("(Nasdaq: TINTA)") end if %> climbed $1 1/2 to $22 1/2 after announcing that its board of directors approved the proposed acquisition by Liberty Media Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LBTYA)") else Response.Write("(Nasdaq: LBTYA)") end if %>, the programming arm of cable operator Tele-Communications Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %>, of all TINTA shares not owned by TCI Ventures Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCIVA)") else Response.Write("(Nasdaq: TCIVA)") end if %>. Liberty Media gained $1 3/16 to $37.
Analytic application software developer Hyperion Software Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HYSW)") else Response.Write("(Nasdaq: HYSW)") end if %> rose $1 5/8 to $30 after the company and Arbor Software Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ARSW)") else Response.Write("(Nasdaq: ARSW)") end if %> announced that shareholders of both companies have approved their proposed merger. The combined company will be called Hyperion Solutions Corp. and will trade on the Nasdaq National Market under the ticker "HYSL" starting tomorrow.
Biotech firm Centocor Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNTO)") else Response.Write("(Nasdaq: CNTO)") end if %> posted a $1 1/8 gain to $38 7/8 after announcing it has received FDA approval to sell its Remicade drug for Crohn's disease, a condition characterized by inflammation of the gastrointestinal tract.
Auto parts maker Lear Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LEA)") else Response.Write("(NYSE: LEA)") end if %> stalled $1 3/16 to $46 1/8 after saying the recent strikes at General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> will take a $0.21 per share chunk out of its fiscal Q3 earnings. However, the company did not provide a specific EPS forecast for the period. The First Call mean estimate had called for earnings of $0.55 per share.
Cable-based information services provider Source Media <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SRCM)") else Response.Write("(Nasdaq: SRCM)") end if %> slid $2 1/16 to $9 15/16 after a class action lawsuit was filed Friday, on behalf of shareholders, alleging Source Media concealed lost business and filed financial statements with "accounting irregularities which may have caused an extraordinary overstatement of the company's revenues, earnings, and assets."
Digital document embedded imaging systems supplier Peerless Systems Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRLS)") else Response.Write("(Nasdaq: PRLS)") end if %> slipped another $11/32 to $6 29/32 after saying on Friday that its quarterly results will probably be "below prior year results for the remainder of fiscal 1999 and into early fiscal 2000."
Fresh fruit and vegetable grower Dole Food Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DOL)") else Response.Write("(NYSE: DOL)") end if %> rotted $1 3/8 to $51 1/16 after being downgraded to "market perform" from "trading buy" by Goldman Sachs.
Computer aided design (CAD) software firm Autodesk <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADSK)") else Response.Write("(Nasdaq: ADSK)") end if %> fell $2 5/8 to $24 13/16 after the company told analysts on Friday that the Asian financial crisis will result in fiscal Q3 EPS about $0.05 to $0.08 below the First Call mean estimate of $0.50. Moreover, The company sees Q4 EPS between $0.55 and $0.59, compared to the $0.58 called for by First Call. Merger partner Discreet Logic <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DSLGF)") else Response.Write("(Nasdaq: DSLGF)") end if %> dropped $13/16 to $12 3/16.
Varian Associates <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VAR)") else Response.Write("(NYSE: VAR)") end if %> moved down $2 1/8 to $40 7/8 after announcing it will split into three separate publicly traded firms specializing in health care systems, semiconductor equipment, and industrial and scientific instruments. The company expects the reorganization will increase shareholder value "by more fairly recognizing the inherent worth" of the firm's different businesses.
Industrial piping systems and maintenance services firm The Shaw Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SGR)") else Response.Write("(NYSE: SGR)") end if %> was flushed $5 1/16 to $10 5/16 after saying a postponed power project, delayed contracts in Venezuela, problems in its U.K. business, and late deliveries will result in fiscal Q4 EPS between $0.40 and $0.50, missing the First Call mean estimate of $0.52. Additionally, Shaw said its fiscal 1999 results will be "significantly" impacted by its Venezuelan operations.
Electrical wire, cable, and cord maker Belden <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BWC)") else Response.Write("(NYSE: BWC)") end if %> was zapped $6 to $18 5/8 after saying high customer inventories and lower demand for its products will result in fiscal 1998 second half earnings "slightly" below last year's results and full-year earnings (including charges) 15% to 20% shy of those for fiscal 1997.
Electronic design automation tools maker Quickturn Design Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QKTN)") else Response.Write("(Nasdaq: QKTN)") end if %> turned down $3/8 to $10 7/8 after rejecting a $12.125 per share cash bid from semiconductor design software firm Mentor Graphics Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MENT)") else Response.Write("(Nasdaq: MENT)") end if %>, calling the offer "opportunistic" and "inadequate."
Calgon Carbon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCC)") else Response.Write("(NYSE: CCC)") end if %>, which makes liquid and gas separation and purification systems, was knocked down $2 11/16 to $6 1/2 after saying it is taking itself off of the selling block and will reorganize the company to cut costs and boost profitability. The firm also said it will repurchase up to 2 million of its shares.
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 |