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FOOL PLATE SPECIAL
An Investment Opinion
by Alex Schay
MovieFone a Thriller?
MovieFone Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MOFN)") else Response.Write("(Nasdaq: MOFN)") end if %>, the largest movie listing and ticketing service in the U.S. rang up $3 1/2 to $15 5/16 this morning after announcing that it expects usage of its MovieFone telephone service (777-FILM) and Web service (Movielink.com) to be up 30% for the year -- to 110 million user sessions, or 250 million moviegoers (which is 20% of all U.S. film fans). However, the real reason for the 29% gain this morning has to do with the fact that MovieFone signed expanded agreements with Loews Cineplex Entertainment <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LCP)") else Response.Write("(NYSE: LCP)") end if %>, United Artists Theatre Circuit, and AMC Entertainment <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: AEN)") else Response.Write("(AMEX: AEN)") end if %>, which will now enable the company to sell tickets for an additional 1,000 screens across the country (an increase of 40%).
With these new screens, MovieFone will be able to offer teleticketing for 60% of all the movie screens in the top five movie cities in the country. MovieFone's business model works something like this: Moviegoers call the movie number in an attempt to get information about flicks and to see if they can get tickets. They listen to a 20-second Feature Billboard advertisement at the beginning of each call. The company sells this time on a per-call basis to major motion picture studios (all of them have taken advantage of the service), which use it to advertise their movies, and to consumer products companies as well.
MovieFone's sources of revenue include: (1) advertising sales on MovieFone and MovieLink to motion picture studios and other advertisers; (2) sponsorships and other promotional services to local media and credit card companies; (3) service fees for movie tickets sold to the public by means of MovieFone's and MovieLink's teleticketing service; and (4) "other revenue," which primarily includes software license fees, hardware sales, and installation and service fees from Mars theater management system sales.
The only small problem thus far has been the fact that MovieFone isn't profitable. Ever burgeoning sales, general and administrative (SG&A) expenses represent 54% of total revenues so far this year. This new screen push might give the firm some necessary leverage in order to bring down operating expenses, since gross margins certainly aren't the offending party in this model (around 81% in the most recent quarter). Considering the company's slow growing asset base and minimal capital requirements, MovieFone might be worth a closer look as its reach continues to grow.
General Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> brightened $3 3/8 to $90 3/16 after Chairman Jack Welch told analysts at a closed meeting last night the company will meet Wall Street's earnings expectations. He also said the company will not spin off its NBC television network, though it may spin off some of NBC's Internet properties.
Online service provider America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> mailed in a gain of $3 1/8 to $92 3/8 after it said Latin American media company Cisneros Group will make a $100 million initial investment in a partnership to develop AOL's online service in Latin American markets. Brazil, Mexico and Argentina will be the first.
Consumer electronics retailer Best Buy <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBY)") else Response.Write("(NYSE: BBY)") end if %> hummed ahead $2 to $51 after it reported Q3 EPS of $0.52, beating the year-ago $0.29 figure and First Call's $0.50 per share estimate. CEO Richard Schulze said strong sales of entertainment software and cutting-edge technology products -- such as DVDs, digital cameras, and mobile phones -- drove the company's 106% year-over-year net earnings increase.
Web portal company Infoseek <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> ran ahead $6 1/32 to $47 7/32 after Merrill Lynch upgraded its near-term rating on the company to "accumulate" from "neutral." The Fool chatted with CEO Harry Motro this summer.
Web address registrar Network Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSOL)") else Response.Write("(Nasdaq: NSOL)") end if %> took on $8 15/16 to $115 15/16 after announcing an agreement with portal company Yahoo! Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> to expand its promotions for domain registration services across Yahoo!'s properties worldwide.
Aerospace and industrial products supplier Coltec Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COT)") else Response.Write("(NYSE: COT)") end if %> zoomed ahead $1 9/16 to $18 1/4 after Crane Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CR)") else Response.Write("(NYSE: CR)") end if %> offered to buy the company for $22.40 per share, a 34.2% premium over the company's closing price yesterday. The offer is also above the $20.13 per share offer from B.F. Goodrich Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GR)") else Response.Write("(NYSE: GR)") end if %> that Coltec accepted last month. Crane is suing both companies for an alleged breach of a 1995 contract between Coltec and Crane.
Aerospace accessories and components maker Triumph Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TGI)") else Response.Write("(NYSE: TGI)") end if %> flew ahead $1 5/8 to $27 after it said its Triumph Air Repair division won a contract for maintenance on KC-10 aerial refueling tankers from Boeing Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BA)") else Response.Write("(NYSE: BA)") end if %>. The contract, valued at $7.4 million annually, has an initial length of one year with options for eight more.
Call center automation systems designer InterVoice <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTV)") else Response.Write("(Nasdaq: INTV)") end if %>, an October Daily Double, rang up a gain of $2 21/32 to $33 7/32 after announcing Q3 EPS of $0.36, up from $0.02 for the same period last year and in line with market expectations. The company also set a 2-for-1 stock split payable Jan. 11.
Las Vegas-based natural gas provider Southwest Gas Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SWX)") else Response.Write("(NYSE: SWX)") end if %> rose $2 1/4 to $26 after agreeing to be acquired by fellow gas company ONEOK Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OKE)") else Response.Write("(NYSE: OKE)") end if %> for $28.50 per share, or $1.8 billion, including assumed debt. ONEOK, which lost $3/16 to $33 5/16 on the news, expects the deal to add to earnings in the first full year.
Wireless telecom equipment company Nokia's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOK.A)") else Response.Write("(NYSE: NOK.A)") end if %> American depositary receipts picked up $1 7/8 to $108 1/2 after it announced a $140 million network order from another Finnish company. Prudential Securities upgraded the stock to "accumulate" from "hold" this morning.
Database software provider Oracle Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> added $1 7/16 to $38 9/16 after Warburg Dillon Read initiated coverage of the company with a "buy" rating and a $49 per share price target.
Pentium chipmaker Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> rose $3 1/16 to $114 5/8 this morning after designating five companies -- Micro Express, ION Computer Systems, Manchester Equipment <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MANC)") else Response.Write("(Nasdaq: MANC)") end if %>, Applied Information Services, and Ace Computers -- as "Authorized Solution Providers," marking them as preferred sources of Intel products and services.
Cancer drug developer Cytoclonal Pharmaceutics <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYPH)") else Response.Write("(Nasdaq: CYPH)") end if %> rose $1 1/2 to $7 3/16 after it said it won an exclusive license for rights to a fungus that produces telomerase, known as the "immortality enzyme" for its ability to protect chromosomes from damage.
Healthcare information and market research company Pharmaceutical Marketing Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMRX)") else Response.Write("(Nasdaq: PMRX)") end if %> improved $1 15/16 to $13 13/16 after agreeing to sell its business and core company, Scott-Levin, to Quintiles Transnational <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QTRN)") else Response.Write("(Nasdaq: QTRN)") end if %>. Under the terms of the $197 million deal, Pharmaceutical Marketing shareholders may either exchange all their stock for Quintiles shares at closing or exchange half of their shares at closing and defer receipt of the other half for 75 days.
Bank holding company Provident Bankshares <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PBKS)") else Response.Write("(Nasdaq: PBKS)") end if %> advanced $1 7/16 to $25 1/2 following reports it will join the Standard & Poor's SmallCap 600 Index after the close of trading today. Telecommunications network installer Dycom Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DY)") else Response.Write("(NYSE: DY)") end if %>, which will also join the index, won $5/8 to $49 1/8.
Banana, pineapple, and melon grower Fresh Del Monte Produce <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDP)") else Response.Write("(NYSE: FDP)") end if %> was smashed $2 13/16 to $17 5/16 after saying damage in Central America from Hurricane Mitch failed to boost banana prices as expected during the fourth quarter, which will result in a shortfall "comparable" to the loss of $0.10 per share posted during the same period last year. The First Call mean estimate had called for earnings of $0.01 per share for the quarter.
Earth movers and heavy construction equipment manufacturer Caterpillar <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAT)") else Response.Write("(NYSE: CAT)") end if %> dropped $1 3/4 to $44 1/2 after saying continuing high sales discounts, an unfavorable product mix, and other negative developments will lead to Q4 earnings "moderately less" then the $0.92 per share posted in Q3, which is below the First Call mean estimate of $1.06 per share.
Polyester plastics and industrial chemicals maker Eastman Chemical Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMN)") else Response.Write("(NYSE: EMN)") end if %> spilled $7 3/8 to $49 1/2 after saying the global economic slowdown will result in Q4 EPS between $0.10 and $0.15, well below the First Call mean estimate of $0.82. The company added that it expects the weak operating environment for the chemicals industry will persist into the first quarter of 1999.
Pump products and engineered equipment manufacturer IDEX Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IEX)") else Response.Write("(NYSE: IEX)") end if %> slid $3 to $27 1/4 after warning that lower sales volume will produce Q4 earnings 15% to 20% below the $0.46 per share earned in Q3. The Q4 forecast includes a roughly $0.03 per share charge to close a facility in McKees Rocks, Pennsylvania. Analysts surveyed by First Call had expected the company to report earnings of $0.47 per share for the quarter.
Environmental and infrastructure engineering and construction firm Harding Lawson Associates Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HRDG)") else Response.Write("(Nasdaq: HRDG)") end if %> fell $1 1/4 to $6 1/8 after pre-announcing fiscal Q2 EPS between $0.01 and $0.03, down from the $0.17 earned a year ago. The company said lower revenues on a "same-store" basis will result in fiscal 1999 EPS "similar" to the $0.49 posted in fiscal 1998.
Canadian auto parts and systems maker Magna International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MGA)") else Response.Write("(NYSE: MGA)") end if %> skidded $1 3/8 to $62 11/16 after J.P. Morgan lowered its rating to "market perform" from "buy."
Integrated oil and gas company Chevron Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHV)") else Response.Write("(NYSE: CHV)") end if %> gave back $2 1/16 to $83 5/8 this morning after rising 4% since Dec. 8 on rumors that rival Royal Dutch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RD)") else Response.Write("(NYSE: RD)") end if %> would make a bid to acquire the company. Yesterday, the chances of a pending merger announcement from the two firms became slimmer after Royal Dutch unveiled a $4.5 billion Q4 charge to restructure and save $2.5 billion annually by 2001. However, Royal Dutch executives reportedly said they are not ruling out a possible merger with another company down the road.
A few "big pharma" drug companies lost ground this morning as The Wall Street Journal's "Heard on the Street" column speculated that the companies' near-term growth may slow as some drugs lose their patents in coming years and the debate about healthcare reform is awakened on Capitol Hill. Merck & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRK)") else Response.Write("(NYSE: MRK)") end if %> fell $2 1/16 to $143 1/2, Eli Lilly <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> dropped $1 3/16 to $86 1/2, and Bristol-Myers Squibb <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMY)") else Response.Write("(NYSE: BMY)") end if %> slid $2 11/16 to $118 3/8.
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Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), another Fool David Marino-Nachison (TMF Braden), a new Fool
Editing |