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FOOL PLATE SPECIAL
An Investment Opinion
by Alex Schay
Rising Star -- Again
Shares of Globalstar Telecommunications Ltd. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GSTRF)") else Response.Write("(Nasdaq: GSTRF)") end if %> were up $1/4 to $19 1/8 this morning after the firm successfully launched four satellites from Baikonur, Kazakhstan late last night (10:54 p.m. Eastern Standard Time). With this launch, Globalstar has finally lifted the jinx that disintegrated 12 of its low earth orbit (LEO) satellites back in September of last year -- when the Ukrainian Zenit 2 launch vehicle carrying the satellites flamed out in the upper atmosphere five minutes after lift-off. This time around the firm launched the satellites on a Soyuz-Ikar rocket, bringing its total complement of orbiting satellites to twelve.
Globalstar plans to launch four satellites a month from here on out, until it reaches a grand total of 32 satellites in orbit by the end of July -- which also means "the jinx" has five more opportunities to re-assert itself. The firm wants to begin commercial service by September in the hopes of offering 800 million to 1 billion minutes per month of telecommunications connection capacity, available just about anywhere on earth. Meanwhile, competitor Iridium World Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: IRIDF)") else Response.Write("(Nasdaq: IRIDF)") end if %> already has its system in place and revealed its North American market service providers and rental providers at the beginning of this month. Iridium reported that it had 3,000 subscribers at the end of 1998 (with a November 1998 roll- out), and most forecasts for 1999 put the total between 500,000 and 600,000 subscribers.
It's vital for Globalstar to begin its service roll-out as quickly as possible, but the tight schedule allows no room for error with respect to either launch or in-orbit failures. If Iridium is any guide, a number of months are needed for testing and systems integration of the complete orbiting constellation, in conjunction with the ground segment, the handsets, and the billing system. Still, even with commercial roll-out at the beginning of year 2000, Globalstar looks like a fair value at the moment -- with a lot of the operational risk already built into the price. For a discounted cash flow analysis, check out these assumptions, made near the end of last year. As was noted back at that time, satellite telecommunications is the final frontier, and Globalstar is one of the major operators in this "space." Both companies are worth a closer look.
Sneaker maker K-Swiss <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KSWS)") else Response.Write("(Nasdaq: KSWS)") end if %> sprinted ahead $7 to $41 5/8 after reporting Q4 EPS of $0.65, nearly tripling last year's $0.22 and beating the $0.53 expected by the two analysts surveyed by Zacks. The company also split its stock two for one, increased its quarterly dividend, and received an upgrade to "trading buy" from "market outperform" from Goldman Sachs.
Telecommunications services company Intermedia Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICIX)") else Response.Write("(Nasdaq: ICIX)") end if %> advanced $1 1/16 to $18 5/8 after reporting a 134% jump in year-on-year revenues in Q4 to $193.4 million, thanks to growth in its Competitive Local services unit and its Enhanced Data and Internet services unit. The company also set plans to sell to the public a roughly 49% stake in its DIGEX Inc. web hosting subsidiary, which it acquired in 1997.
Cable TV networks operator USA Networks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USAI)") else Response.Write("(Nasdaq: USAI)") end if %> jumped $4 3/16 to $42 1/8 after agreeing to combine its Ticketmaster Online-Citysearch <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TMCS)") else Response.Write("(Nasdaq: TMCS)") end if %>, Home Shopping Network, and Internet Shopping Network/First Auction interests with Web portal Lycos <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCOS)") else Response.Write("(Nasdaq: LCOS)") end if %>. USA will end up owning 61.5% of the new entity, which will be called USA/Lycos Interactive Networks. The Wall Street Journal pegged the value of the deal at about $20 billion, based on Lycos' shareholders receiving 2.25 shares of the new company for each Lycos share held. Lycos fell $23 5/8 to $103 5/8. For more details, see this morning's Breakfast With the Fool.
Personal computing products direct marketer PC Connection <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PCCC)") else Response.Write("(Nasdaq: PCCC)") end if %> moved up $1 15/16 to $19 7/16 after posting Q4 EPS of $0.32 versus $0.27 a year ago, topping the Zacks mean estimate by $0.03. The company said Internet sales came in at $10.6 million during the period, up 68% sequentially and 205% year-over-year.
Electronic resistors, capacitors, and transistors maker Vishay Intertechnology <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VSH)") else Response.Write("(NYSE: VSH)") end if %> moved up $1 7/16 to $12 15/16 after reporting Q4 EPS of $0.21 (excluding charges), down from last year's $0.31 and in line with the Zacks mean estimate. The company said demand in its key telecommunications and mobile computers markets is improving and 1999 should be a better year than 1998. Merrill Lynch raised its near-term rating to "accumulate" from "neutral."
Pharmacy benefit management firm Express Scripts <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ESRX)") else Response.Write("(Nasdaq: ESRX)") end if %> gained $3 15/16 to $65 7/8 after agreeing to acquire drug maker SmithKline Beecham's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SBH)") else Response.Write("(NYSE: SBH)") end if %> Diversified Pharmaceutical Services subsidiary for $700 million in cash. The deal will create the country's third largest pharmacy benefit management firm, according to Express Scripts. SmithKline, which sold its clinical laboratory operations to Quest Diagnostics Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DGX)") else Response.Write("(NYSE: DGX)") end if %> for around $1.3 billion in cash and stock today, picked up $1 13/16 to $68.
Fluid flow control systems maker Parker-Hannifin Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PH)") else Response.Write("(NYSE: PH)") end if %> gushed ahead $1 3/8 to $35 9/16 after Morgan Stanley Dean Witter raised its rating to "outperform" from "neutral" and set a price target of $40 per share based on the strength of the U.S. economy and expectations of future industrial sector growth.
Ceramic and solid tantalum capacitors producer KEMET Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: KMET)") else Response.Write("(Nasdaq: KMET)") end if %> fluxed $1 1/4 higher to $11 1/4 after Merrill Lynch boosted its near-term rating to "accumulate" from "neutral."
Online services conglomerate America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> slumped $8 7/16 to $150 9/16 despite announcing a multi-year and multi-million dollar agreement making CNET <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNET)") else Response.Write("(Nasdaq: CNET)") end if %> the exclusive provider of computer hardware and software buying guides to AOL's online community. CNET also fell $22 1/4 to $102. Separately, AOL also announced that it has recently surpassed the 16 million worldwide member mark.
Financial news agency Reuters Group PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RTRSY)") else Response.Write("(Nasdaq: RTRSY)") end if %> was boxed $3 1/8 lower to $82 1/4 after saying it expects lower revenue growth in fiscal 1999 as its clients hold back spending amid an uncertain outlook for global markets and economies.
Internet domain name registrar Network Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSOL)") else Response.Write("(Nasdaq: NSOL)") end if %> lost $13 5/8 to $160 1/2 after falling 12% yesterday. This morning, the company announced a secondary offering of 4.58 million shares, most of which will be sold by privately held Science Applications International Corp. at a price of $170 per share.
Outpatient surgery and rehabilitative services provider HEALTHSOUTH Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HRC)") else Response.Write("(NYSE: HRC)") end if %> slid $7/8 to $14 after saying it will take a $310 million non-cash charge in Q4 to revalue assets obtained through past acquisitions. The company also announced a plan to buy back up to 70 million of its outstanding shares over the next three years.
Navarre Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NAVR)") else Response.Write("(Nasdaq: NAVR)") end if %> slipped $1 5/8 to $16 3/8 after saying it intends to file a registration statement with the SEC for the long-awaited initial public offering of shares of its online music delivery service Net Radio "within the next several weeks."
Digital and mixed signal chip maker TranSwitch Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TXCC)") else Response.Write("(Nasdaq: TXCC)") end if %> was spanked $2 5/8 to $36 5/8 after announcing a secondary offering of 1.7 million shares at a price of $37 per share, or 6% below the company's closing price of $39 1/4 yesterday.
Supermarkets and military bases food supplier Nash Finch <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NAFC)") else Response.Write("(Nasdaq: NAFC)") end if %> slipped $2 7/8 to $10 1/8 after pre-announcing a Q4 loss of $0.04 per share, excluding a $105.6 million charge for restructuring, impaired assets, and other charges. As part of a revitalization plan, the company said it will cut its fiscal Q1 dividend in half to $0.09 per share.
Staffing services provider SOS Staffing Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SOSS)") else Response.Write("(Nasdaq: SOSS)") end if %> fell overboard and sank $5/8 to $8 3/4 after reporting Q4 EPS of $0.13 (excluding restructuring charges and income tax credits), missing the First Call mean estimate of $0.20.
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Contributing Writers Brian Graney (TMF Panic), a Fool David Marino-Nachison (TMF Braden), a new Fool
Editing |