DJIA 10481.48 +32.93 (+0.32%) S&P 500 1319.41 +13.24 (+1.01%) Nasdaq 2450.87 +41.23 (+1.71%) Russell 2000 424.15 +8.81 (+2.12%) 30-Year Bond 96 14/32 +8/32 5.49 Yield
FOOL PLATE SPECIAL
An Investment Opinion
by Warren Gump
Anemic Amgen?
Stock of volatile biotechnology company Amgen <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMGN)") else Response.Write("(Nasdaq: AMGN)") end if %> was down $5 3/8 to $63 5/8 this morning after the company reported earnings last night. This stock has been bouncing wildly this past week, with intraday trading ranges of over 10% each day. Despite today's drop, the stock is still up about 20% so far in 1999. Q1 earnings were up 31% to $0.46 per share, $0.02 better than First Call consensus estimate. Sales of Epogen and Neupogen, the company's primary drugs, were up a combined 21%. Amgen reiterated its previous statement that it expects earnings for the year to be $1.80-$1.85 per share, with product sales up in the mid- to high-teens. Donaldson, Lufkin, & Jenrette reiterated its "buy" rating on the stock, but Morgan Stanley Dean Witter lowered its rating to "neutral" from "outperform."
Concern at Morgan Stanley was reportedly related to an expected slowdown in Epogen sales later this year. Amgen had already indicated that that was likely to happen prior to yesterday's news release. The primary this slowdown in growth is primarily the result of a March 1998 shift in Medicare policy that eased restrictions on Epogen reimbursement. When these restrictions were lifted, sales growth of Epogen accelerated for a year because comparisons were against periods where these restrictions were in place. Now that we have anniversaried this regulatory shift, future results will have not have these unnaturally high growth rates. Despite this slowdown in sales growth, Amgen will still experience much more rapid growth than most of its pharmaceutical step-siblings.
I can't tell you where Amgen stock, or any other for that matter, is going to go in the future. With the revolutionary advances being made in biotechnology, however, I think it would be advisable to have some exposure to this sector over the next couple of decades. Not having a medical background myself, I can't intelligently interpret the medical research coming out of any of these companies. I simply have to rely on a company's management to make the right decisions. To ensure that the vision of management can be funded, I also want to find a company with strong financial resources and substantial research and development (R&D) programs. With a management team that has created the Goliath of the biotech industry, a balance sheet carrying over $1.3 billion in cash, and R&D spending running about 27% of sales, Amgen seems to fit the bill.
Telecommunications equipment company Lucent Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> dialed up a gain of $2 7/8 to $57 1/8 after Sprint <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PCS)") else Response.Write("(NYSE: PCS)") end if %> awarded the company a three-year contract to million to supply equipment and services for the next phase of Sprint PCS' nationwide wireless network development and expansion worth at least $780 million. The deal complements the $2.5 billion already announced for the first two phases of the rollout.
Online services giant America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> added $8 7/8 to $137 9/16 this morning as it was named one of the first five companies to compete with Network Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NSOL)") else Response.Write("(Nasdaq: NSOL)") end if %> in the formerly monopolistic Web domain name registrar business. Also named was a unit of France Telecom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FTE)") else Response.Write("(NYSE: FTE)") end if %>. AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> made the "B" list, a group of 28 organizations that will join the fray in two months. Network Solutions, recently battered in part because of uncertainty about its new market environment, picked up $11 1/8 to $71 1/8.
AT&T plans to offer local residential service in New York by the end of the year by leasing Bell Atlantic's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEL)") else Response.Write("(NYSE: BEL)") end if %> phone network, The Wall Street Journal reported. AT&T executives have said it will take the company through 2000 to outfit all its cable lines for two-way telephone service, which requires advanced technical upgrades. Shares of the telecommunications services company moved up $7/8 to $55 7/8.
Regional phone company BellSouth Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BLS)") else Response.Write("(NYSE: BLS)") end if %> advanced $1 1/8 to $42 1/2 this morning following news that it and AT&T successfully completed a series of joint tests to ensure that telephone calls will go through as usual during the changeover into Y2K.
German enterprise software giant SAP A.G. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SAP)") else Response.Write("(NYSE: SAP)") end if %> picked up $3 13/16 to $28 7/16 after reporting Q1 net income flat with last year's Q1 levels at 98 million euros on 22% revenue growth. While the industrywide problem many software companies are blaming for weak business -- slowed client spending because of Year 2000 necessities -- "still persists," said SAP America President and CEO Kevin McKay said, "we have noticed increased interest in SAP's R/3 and New Dimension products as our inter-enterprise operability becomes more prominent because of the Internet.''
Drug wholesaler Bergen Brunswig Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBC)") else Response.Write("(NYSE: BBC)") end if %> bottled $11/16 to $21 3/4 after the California Superior Court allowed the company's planned purchase of PharMerica Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DOSE)") else Response.Write("(Nasdaq: DOSE)") end if %> to proceed. Bergen and PharMerica were named as defendants in an April 14 lawsuit commenced by PMR Corp. asking for a restraining order stopping the deal from closing.
Wireless communications technologies firm Qualcomm <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QCOM)") else Response.Write("(Nasdaq: QCOM)") end if %>, which reported fiscal Q2 EPS of $0.82 before charges -- beating both last year's $0.25 mark and Wall Street's $0.59 estimate -- raced ahead $37 7/8 to $178 1/2. Several brokerages upgraded the stock after the news was released. Operating expenses -- which figure in research and development, selling and marketing, and general and administrative expenditures -- excluding one-time charges held firm at 22% of revenues.
Shares of online brokerage E*Trade <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGRP)") else Response.Write("(Nasdaq: EGRP)") end if %> were bid up $10 3/16 to $100 on news of a partnership to develop its E*Offering online investment bank site in cooperation with USWeb/CKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USWB)") else Response.Write("(Nasdaq: USWB)") end if %> with eyes on a June launch. E*Trade also announced the close of its purchase of financial media website operator ClearStation Inc. USWeb's stock took on $2 7/8 to $28 1/4 this morning. Yesterday, E*Trade reported a pro forma Q1 loss of $0.12 per share due, better than the projected $0.17 loss.
Network computing company Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %> rose $3 3/8 to $57 3/4 this morning. The company said COO Edward Zander will become president as well, while CEO and Chairman Scott McNealy will remain in his current posts.
Securities market maker Knight/Trimark Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NITE)") else Response.Write("(Nasdaq: NITE)") end if %> gained $14 3/4 to $101 1/2 after reporting Q1 EPS of $0.67, up from $0.20 last year and $0.33 in Q4. Wall Street's estimate was $0.39. The company also said it will split its shares 2-for-1 after the market's close on May 14.
Earnings Movers
Boston Scientific <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BSX)") else Response.Write("(NYSE: BSX)") end if %> up $4 3/8 to $41 1/16; Q1 EPS: $0.25 vs. $0.15 last year; estimate: $0.21
Broadcom Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BRCM)") else Response.Write("(Nasdaq: BRCM)") end if %> up $9 1/8 to $73 1/2; Q1 EPS: $0.19 vs. $0.09 last year; estimate: $0.15
Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> up $1 13/16 to $67 1/16; Q1 EPS: $0.30 vs. $0.34 last year; estimate: $0.29
Colgate-Palmolive <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CL)") else Response.Write("(NYSE: CL)") end if %> up $3 5/16 to $96 5/16; Q1 EPS: $0.65 vs. $0.60 last year; estimate: $0.64
DuPont Photomasks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DPMI)") else Response.Write("(Nasdaq: DPMI)") end if %> up $3 7/8 to $46 7/8; fiscal Q3 EPS: $0.28 vs. $0.50 last year; estimate: $0.22
Encad Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENCD)") else Response.Write("(Nasdaq: ENCD)") end if %> up $1/4 to $6 7/8; Q1 EPS: profit of $0.03 vs. loss of $0.06 last year; estimate: loss of $0.05
Ingersoll-Rand <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IR)") else Response.Write("(NYSE: IR)") end if %> up $5/16 to $65 1/16; Q1 EPS: $0.73 vs. $0.60 last year; estimate: $0.68
Kimberly-Clark <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KMB)") else Response.Write("(NYSE: KMB)") end if %> up $4 7/16 to $58 3/4; Q1 EPS: $0.72 (excluding gain) vs. $0.56 last year; estimate: $0.65
Musicland Stores <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MLG)") else Response.Write("(NYSE: MLG)") end if %> up $13/16 to $10 1/8; Q1 EPS: profit of $0.04 vs. loss of $0.11; estimate: loss of $0.04
Nautica Enterprises <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NAUT)") else Response.Write("(Nasdaq: NAUT)") end if %> up $5/16 to $13 5/16; fiscal Q4 EPS: $0.25 vs. $0.33 last year; estimate: $0.24
Qwest Communications International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QWST)") else Response.Write("(Nasdaq: QWST)") end if %> up $4 7/16 to $94 15/16; Q1 EPS: profit of $0.01 vs. loss of $0.06 last year (pro forma); estimate: breakeven
RealNetworks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RNWK)") else Response.Write("(Nasdaq: RNWK)") end if %> up $14 15/16 to $196; Q1 EPS: loss of $0.02 vs. loss of $0.07 last year; estimate: loss of $0.03
Xoom.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XMCM)") else Response.Write("(Nasdaq: XMCM)") end if %> up $4 3/4 to $75; Q1 EPS: loss of $0.24 vs. loss of $0.29 last year; estimate: loss of $0.26
Bookseller Borders Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGP)") else Response.Write("(NYSE: BGP)") end if %> was burned for a $2 7/16 loss to $14 5/8 after Philip Pfeffer resigned as CEO after a mere five months at the helm. His duties will be assumed by current chairman and former CEO Robert DiRomualdo. The company also said it sees fiscal Q1 earnings of $0.04 to $0.05 per share for its retail stores and a loss of $0.05 to $0.06 per share for its Borders.com unit, excluding a $0.04 per share loss tied to Pfeffer's departure. Borders also said its quarterly same-store sales are up 3.9% to date.
Paging company SkyTel Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SKYT)") else Response.Write("(Nasdaq: SKYT)") end if %> tumbled $2 5/8 to $14 5/16 after saying "significantly" lower-than-expected subscriber growth in Q1 will continue and dampen earnings growth this year. Still, the company managed to earn $0.05 per share in Q1 (excluding a gain), meeting the First Call mean estimate. Additionally, the firm said Warburg Dillon Read has been hired to help evaluate "strategic alternatives." Both Goldman Sachs and Credit Suisse First Boston cut their ratings on SkyTel this morning.
Electronic design automation (EDA) tools maker Cadence Design Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CDN)") else Response.Write("(NYSE: CDN)") end if %> was wrecked for $9 1/4 to $11 9/16 after reporting Q1 EPS of $0.31 (excluding charges and goodwill amortization), a penny ahead of the Zacks mean estimate. However, the company said it sees its revenues and earnings growth slowing through the rest of the year. That guidance brought a flurry of downgrades from at least six brokerage firms this morning. Merger mate Quickturn Design Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QKTN)") else Response.Write("(Nasdaq: QKTN)") end if %> slid $2 3/16 to $12 1/8.
Network connectivity products maker Osicom Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FIBR)") else Response.Write("(Nasdaq: FIBR)") end if %> fell $2 3/8 to $16 1/2 after saying it has not yet received any purchase orders from a Japanese client under a previously announced contract for a wireless personal data assistant (PDA) product. When the contract was announced last July, Osicom had projected $4 million in shipments per month over a two-year period starting in February 1999. The company said it is "actively pursuing" other Japanese customers for the PDA.
Digital and analog oscilloscopes maker LeCroy Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LCRY)") else Response.Write("(Nasdaq: LCRY)") end if %> was dumped $2 11/16 to $16 3/4 after posting fiscal Q3 EPS of $0.27 (excluding charges), down from last year's $0.33 but in line with the Zacks mean estimate. However, the company said higher research and development expenditures and investments in networking products in Q4 will result in breakeven results, missing analysts' EPS expectations of $0.45.
Telecom equipment company Advanced Fibre Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AFCI)") else Response.Write("(Nasdaq: AFCI)") end if %> slid $13/16 to $7 7/32 after saying a slowdown in international sales led to Q1 EPS of $0.04 compared to $0.15 last year, which was still in line with the Zacks mean estimate. NationsBanc Montgomery Securities lowered its rating to "hold" from "buy."
Aluminum producer Kaiser Aluminum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KLU)") else Response.Write("(NYSE: KLU)") end if %> dropped $9/16 to $6 5/16 after saying low primary metal prices and shipment levels and an unfavorable product mix resulted in a Q1 loss of $0.48 per share, which was worse than the loss of $0.27 per share expected by analysts surveyed by First Call. On the bright side, the company sees its financial results improving in Q2.
Electrical and industrial equipment manufacturer Raychem Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RYC)") else Response.Write("(NYSE: RYC)") end if %> fell $1 5/8 to $26 3/8 after Goldman Sachs lowered its rating on the company to "outperform" from "recommended list." Yesterday, the firm posted fiscal Q3 EPS of $0.43 versus $0.46 a year ago, which was in line with estimates.
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
Click here for continually updated Portfolio Numbers.
|
Contributing Writers Brian Graney (TMF Panic), a Fool David Marino-Nachison (TMF Braden), a new Fool
Editing |