<% ' AvantGo:MarketMidday %>DJIA 8733.70 -49.44 (-0.56%) S&P 500 1111.67 -7.00 (-0.63%) Nasdaq 1816.79 -6.78 (-0.37%) Value Line ndx 881.44 -2.00 (-0.23%) 30-Year Bond 103 15/32 +28/32 5.27% Yield<% ' AvantGo:End %>
Lunchtime News | |
Related Items | |
|
FOOL PLATE SPECIAL
An Investment Opinion
by Louis Corrigan
Polo Gets Whacked
<% ' AvantGo:FoolPlate %>Ralph and Tommy are like boys on a seesaw who don't like each other much. Yesterday, apparel maker Tommy Hilfiger <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TOM)") else Response.Write("(NYSE: TOM)") end if %> announced estimate-crunching earnings that sent its shares soaring $9 to $55 1/2. That push-off seems somewhat connected to today's rough landing for Polo Ralph Lauren's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RL)") else Response.Write("(NYSE: RL)") end if %>, which was down $4 1/4 to $19 5/8 at mid-day after this morning's announcement that second quarter results were weaker than expected and that FY99 as a whole will be weaker still.
Polo's famous "lifestyle" brand appears to be losing some of its lusty appeal. Overall revenues increased just 12% to $474.8 million thanks to a 14% jump in wholesale sales to $234 million, a strong 27% rise in product and international licenses to $62 million, but a mere 5% increase in total retail revenues to $176 million. Same-store sales at its retail stores actually fell an undisclosed amount due to reduced tourism and warm weather. Such lame growth left earnings at $0.50 a share, up from $0.45 last year but two cents shy of estimates. That crippled this thoroughbred's recent run for the roses after it had been left in the dust by economic uncertainty.
Ralph & Co. also guided analysts to expect FY99 earnings of $1.25 to $1.28 before cost-cutting charges. That's well below the $1.42 per share Wall Street had been projecting. The change comes as inventories have galloped ahead by 37.7% to $398 million year-over-year while accounts receivable are up 22.3% even as growth in the spring wholesale backlog stands merely "in excess of 10%." Numbers like that bridle investor enthusiasm since they indicate the normally tightly managed Polo needs some reining in as demand slows. Chairman Ralph seems to agree. By April, Polo expects to make cuts in selling, general and administrative expenses that will boost FY 2000 pre-tax earnings by $10 million to $15 million.
Financially, Ralph remains well-positioned, especially relative to Tommy. Though it did not include a balance sheet in today's release, Polo had $35.2 million in cash and no long-term debt at the end of June. Tommy, meanwhile, had $79.3 million in cash on September 30 but $649.2 million in debt, for a debt-to-equity ratio of 0.67. However, Tommy is riding high again for good reason after getting caught in the market downdraft with other retailers. Second quarter sales announced yesterday rose 38.5% to $465.3 million. Earnings per share did even better, up 56% to $1.20, which was a dime ahead of estimates. In contrast to Ralph, pro forma inventories inched up by just 10.5% while accounts receivable rose only 18%. Diversification into childrenswear and womenswear, including new licensing deals with Stride Rite <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SRR)") else Response.Write("(NYSE: SRR)") end if %> and Russell-Newman, are providing a revenue kick without related inventory commitments. Profit-taking after yesterday's rally had Tommy's shares off $2 to $53 3/4 at noon today, but this round of the seesaw power struggle goes to Tommy Boy.
Correction: In Monday's Fool Plate Special, we wrote that Morgan Stanley Dean Witter downgraded Ultratech Stepper <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UTEK)") else Response.Write("(Nasdaq: UTEK)") end if %>. MSWD did not issue that downgrade; instead, it downgraded Silicon Valley Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SVGI)") else Response.Write("(Nasdaq: SVGI)") end if %>. Sorry for the mistake.<% ' AvantGo:End %>
<% ' AvantGo:Ups %>Data access and storage appliances maker Network Appliance <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NTAP)") else Response.Write("(Nasdaq: NTAP)") end if %> grabbed $6 25/32 to $63 1/4 after it announced an agreement with Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> late yesterday through which the PC maker and direct seller will resell Network Appliance's networked file servers ("filers"). Merrill Lynch upgraded Network to "buy" from "accumulate" today. (For more on Network Appliance, check out this StockTalk interview with founder Dave Hitz.)
Computer network equipment powerhouse Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> edged up $1 1/8 to $66 11/16 this morning after it reported fiscal first quarter earnings of $0.34 per share (excluding $127 million in write-offs of purchased in-process R&D), a penny more than expected and an improvement over last year's $0.26. For a closer examination of Cisco's earnings, take a peek at this morning's Breakfast With the Fool.
The era of good feelings surrounding Zip drive maker Iomega Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IOM)") else Response.Write("(Nasdaq: IOM)") end if %> continued today as the company's stock rose yet another $1 to $9 this morning. News that competitor SyQuest Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYQT)") else Response.Write("(Nasdaq: SYQT)") end if %> was closing up shop has really helped Iomega shares, which ended last week at $5 7/16 and were trading in the $3 range a month ago.
Wireless communications products maker Qualcomm <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QCOM)") else Response.Write("(Nasdaq: QCOM)") end if %> rose $1 5/8 to $56 5/8 after it announced plans to team with software giant Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MSFT)") else Response.Write("(NYSE: MSFT)") end if %> to create a new company that will focus on wireless communications, information technology, and computing. The company will be officially introduced at a Nov. 10 press conference. Microsoft, which also announced the acquisition of privately held online advertising firm LinkExchange Inc., saw its stock move ahead slightly this morning, advancing $1 1/16 to $106 9/16. Terms of the deal were not disclosed.
Online development services firm USWeb Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USWB)") else Response.Write("(Nasdaq: USWB)") end if %> clicked on gains of $1 5/8 to $18 9/16 after it announced that Robert Shaw, a former top executive at Oracle <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %>, will replace co-founder Joe Firmage as CEO. As with many founders who relinquish the reins to the day-to-day operations, Firmage will stay on as chairman and also take on the broadly titled role of "chief strategist."
Women's apparel retailer Talbots Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLB)") else Response.Write("(NYSE: TLB)") end if %> sewed up a gain of $1 11/16 to $26 3/8 after it said October same-store sales were up 26.3%, though comp sales for September through October increased a mere 3.5%. The company now expects to report Q3 EPS of between $0.38 and $0.40. First Call's consensus estimate among 13 analysts was $0.36 per share.
Among other retailers advancing on October comparable-store sales news, home improvement retailer Lowe's Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %> saw its sales number improve 5% and its stock improve $1 1/4 to $36; discount chain Kmart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KM)") else Response.Write("(NYSE: KM)") end if %> picked up $3/4 to $15 5/16 on a 4.2% comp-sales gain; accessorizer Claire's Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CLE)") else Response.Write("(NYSE: CLE)") end if %> was up $15/16 to $18 3/4 on a 12% figure; and home-entertainment software merchant Musicland Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MLG)") else Response.Write("(NYSE: MLG)") end if %>, with a 6.5% same-store sales boost, hummed ahead $9/16 to $15 1/16.
Local telecommunications services provider Hyperion Telecommunications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HYPT)") else Response.Write("(Nasdaq: HYPT)") end if %> jumped $11/16 to $12 3/4 after it announced an agreement to buy the remaining interests in fiber-optic networks for business telephone services in Jacksonville, Fla., and Richmond, Va., from joint venture partner MediaOne Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UMG)") else Response.Write("(NYSE: UMG)") end if %>. Terms were not reported. Hyperion also called in a fiscal Q2 loss of $0.55 per share, better than both last year's loss of $0.57 and Wall Street's projected loss of $0.61.
Electronic banking services provider TeleBanc Financial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TBFC)") else Response.Write("(Nasdaq: TBFC)") end if %> clicked ahead $3 to $21 1/8 after it reported Q3 EPS of $0.01 (before a one-time charge), beating First Call's projected $0.03 loss but underperforming last year's $0.11 profit. BancBoston Robertson Stephens upgraded recent Daily Double subject TeleBanc to "strong buy" from "buy."
Vacation resort operator Sunterra Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OWN)") else Response.Write("(NYSE: OWN)") end if %> rose $1 1/8 to $10 11/16 after it reported Q3 EPS of $0.38, up from $0.27 last year and a penny above Street projections. Operating margins improved to 27.5% from 22%.
Hot Topic <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HOTT)") else Response.Write("(Nasdaq: HOTT)") end if %>, a mall-based retailer of T-shirts and gift items for teeny-boppers, wrapped up gains of $3 1/8 to $23 1/2 after it reported a 9.5% increase in Q3 same-store sales and a 53% gain in total sales to $28.7 million. The company plans to report quarterly results Nov. 18, and analysts are expecting EPS of $0.32, up from $0.23 last year.
Men's casual and dress wear maker Haggar Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HGGR)") else Response.Write("(Nasdaq: HGGR)") end if %> zipped up a $1 11/32 gain to $14 1/2 after reporting fiscal Q4 EPS of $0.53, up from $0.45 last year and a dime above Street projections. Q4 gross margin was 31.1%, compared with 30.3% for the same period last year.
Ultrasound contrast agents and drug delivery systems developer SONUS Pharmaceuticals <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SNUS)") else Response.Write("(Nasdaq: SNUS)") end if %> gained $15/16, or 15.8%, to $6 7/8 after the Food and Drug Administration said the company's amended new drug application (NDA) for its EchoGen agent is now complete. The agency has six months to review the NDA from Oct. 19, its effective date. EchoGen won marketing approval from the European Community in July.
Nutritional science firm Natural Alternatives International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NAII)") else Response.Write("(Nasdaq: NAII)") end if %> added $15/16 to $10 7/8 after reporting fiscal Q1 EPS of $0.25, a penny above market projections but well above last year's $0.11. Despite the upbeat earnings news, Adams, Harkness & Hill downgraded the company to "attractive" from "buy."<% ' AvantGo:End %>
<% ' AvantGo:Downs %>Shipping and logistics services provider FDX Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDX)") else Response.Write("(NYSE: FDX)") end if %> slid $2 9/16 to $51 11/16 as union leaders at the firm's Federal Express unit plan to start mailing strike ballots to rank-and-file members today though no strike is imminent, The Wall Street Journal reported, citing "people familiar with the situation." The mail-in vote, which would authorize union officials to call a strike at the express delivery company, is expected to take a month.
British enterprise application software developer and Year 2000 problem-solver Micro Focus Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MIFGY)") else Response.Write("(Nasdaq: MIFGY)") end if %> was knocked down $7 9/16 to $11 7/16 after pre-announcing breakeven Q3 EPS, excluding a one-time charge associated with the firm's recently completed merger with Intersolv Inc. The sole analyst surveyed by Zacks had expected earnings of $0.31 per share in the quarter. The company blamed the shortfall on lower demand for its Year 2000 remediation services in North America.
Antiviral pharmaceutical developer ViroPharma Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VPHM)") else Response.Write("(Nasdaq: VPHM)") end if %> tumbled $8 5/16 to $10 3/4 after saying preliminary results from a study for its pleconaril treatment for viral meningitis did not result in "a statistically significant" reduction in the time headache symptoms develop in children, which the company was using as a primary determinant of the drug's possible effectiveness. However, the drug did result in a statistically significant reduction in the composite symptoms of the disease.
Network processors maker MMC Networks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MMCN)") else Response.Write("(Nasdaq: MMCN)") end if %> dropped $2 17/32 to $9 1/4 after announcing the resignation of president and CEO Prabhat Dubey, citing personal reasons. Founding CEO and chairman Amos Wilnai will assume Dubey's role until a permanent replacement is found.
Automotive safety systems designer Breed Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BDT)") else Response.Write("(NYSE: BDT)") end if %> skidded $2 3/4 to $7 3/16 after pre-announcing a fiscal Q1 loss of $0.75 to $0.80 per share due to lower-than-expected European sales, unrealized anticipated cost savings, and the negative effects of this summer's strike at General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>. Analysts had expected the company to earn $0.19 per share in the quarter.
Department store retailer Saks Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SKS)") else Response.Write("(NYSE: SKS)") end if %> sank $1 13/16 to $24 1/2 after reporting a 1% decrease in October same-store sales compared to the same month a year ago. However, the company said total sales during the month increased 6% year over year to $488.3 million.
Discount clothing retailer Ross Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ROST)") else Response.Write("(Nasdaq: ROST)") end if %> was marked down $2 7/16 to $33 1/8 after reporting a 1% year-over-year increase in October same-store sales, paling in comparison to the 12% upswing posted last year. For Q3, same-store sales rose by 3% versus a 12% rise during the same period a year ago.
Apartment housing repair and maintenance products distributor Wilmar Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WLMR)") else Response.Write("(Nasdaq: WLMR)") end if %> fell $4 1/2 to $17 1/2 after reporting Q3 EPS of $0.27 versus $0.18 a year ago, which was in line with the Street's mean estimate. BT Alex. Brown lowered its rating this morning anyway to "buy" from "strong buy."<% ' AvantGo:End %>
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
Click here for continually updated Portfolio Numbers.
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), another Fool David Marino-Nachison (TMF Braden), a new Fool
Editing |