FOOL PLATE SPECIAL
An Investment Opinion by Randy Befumo

VISX Blurry on Q2 Outlook

Visibility at VISX, INC. (Nasdaq: VISX) got a little more blurry today after the manufacturer of eximer lasers informed investors it would not make its second quarter numbers. VISX tumbled $5 3/8 to $22 7/8 after it said sales throughout 1997 would be flat when compared to the company's fiscal first quarter. VISX showed signs of life for the first time in more than a year two weeks ago when the company reached a number of favorable patent agreements with competitors. The stock's $5 rise to $29 1/2 on May 30th was completely wiped out today when it became clear to investors that sales and earnings would not meet high expectations. VISX excimer lasers are used to perform photorefractive keratectomy (PRK), a procedure that uses a laser to permanently change the curvature of the cornea.

After the Food and Drug Administration (FDA) approved VISX's excimer lasers for use in the U.S. on March 28, 1996, there was an initial explosion in the share price. Excimer lasers promise to correct poor eyesight in a way that does not require the patient to wear glasses. With the FDA giving the okay, many investors believed that growth in the use of excimer lasers would explode over the next few years as more and more people took advantage of the potential of this procedure. Doctors who had been waiting for the approval purchased a slew of systems, setting an unsustainable pace of growth when the expected patient load did not materialize as quickly as anticipated. With procedure growth lagging the growth in sales of systems, VISX stated today that it expects doctors and other customers to moderate their purchases to the point where system sales fall more into line with the growth in patients.

Although with today's fallback VISX has not fared all that well over the past year, competitors LASERSIGHT (Nasdaq: LASE) and SUMMIT TECHNOLOGY (Nasdaq: BEAM) have been even more dismal performers. With both companies coming to patent settlements with VISX over the past year or so, the relative performance makes sense as VISX makes money no matter which of the three companies sell the excimer laser. While VISX has spun the growth slowdown positively by stressing that doctors may have over-ordered systems in the first few months after the regulatory approval, the fact that procedure growth has moderated may indicate that potential patients are still squeamish about getting a laser in the eye. Investors may want to perform their own assessment of market demand for PRK rather than relying on VISX's convenient explanation.

UPS

INTERNATIONAL FAMILY ENTERTAINMENT (NYSE: FAM) rose $2 1/8 to $34 after the Family Channel owner and broadcaster of the 700 Club announced that the company will be sold to a NEWS CORP. (NYSE: NWS) unit for $35 in cash per common share.

Marlboro maker PHILIP MORRIS COMPANIES (NYSE: MO) gained $2 3/8 to $45 on hopes that the cigarette industry will put to bed its legal problems in a far-reaching deal. White House spokesman Mike McCurry said the industry and state attorneys general are not anywhere close to a deal.

Apparently, the deal was priced in before the close yesterday, but EXCITE INC. (Nasdaq: XCIT) announced after the close of trading yesterday that INTUIT (Nasdaq: INTU) will invest $40 million in the search engine and content company to create a new online financial channel. Excite was trading up $3/8 to $15 3/4 at noon.
Securities broker and investment bank FIRST MICHIGAN CAPITAL CORP. (AMEX: FMG) gained $5 1/4 to $14 after agreeing to be acquired for $15 per share by Canadian-based broker FAHNESTOCK VINER HOLDINGS (NYSE: FVH), which acquired Waterhouse Securities last year.

POLO RALPH LAUREN (NYSE: RL) gained $5 3/4 from its initial public offering price of $26 to $31 3/4. With 98.5 million shares outstanding, the company is now valued at $3.1 billion. More on the IPO will be available in a special FoolWire later today.

Pizzeria Uno restaurant operator UNO RESTAURANT CORP. (NYSE: UNO) rose $1 to $7 after launching a Dutch auction tender offer for one million Uno shares, which will all be bought at a single price between $6 and $7.50 per share.

COUNTRYWIDE CREDIT INDUSTRIES (NYSE: CCR) jumped $1 7/8 to $29 1/8 after Standard & Poor's said it will include the shares of the mortgage lender and financial services company in the S&P 500 Index.

Paper and wood products company CHAMPION INTERNATIONAL CORP. (NYSE: CHA) gained $3 3/8 to $52 1/2 after UBS Securities raised its rating on the company to "strong buy" from "hold," saying it sees $2.5 billion in assets that would make nice candidates for sales.

DOWNS

INTEL CORP. (Nasdaq: INTC) was brought down $3 to $144 1/2 after ZDNet reported yesterday that Intel will cut Pentium MMX prices from 36% to almost 50% in a bid to deliver a "hammer blow" to ADVANCED MICRO DEVICES (NYSE: AMD) and CYRIX CORP. (NYSE: CY). A bevy of analyst downgrades followed that news, with Cowan & Co. lowering its ratings on Advanced Micro and Intel to "hold" from "buy," and Goldman Sachs lowering a its 1997 EPS estimate on Intel to $8.50.

ACCELGRAPHICS INC. (Nasdaq: ACCL) lost $4 1/16 to $5 after the maker of 3-D graphics boards and hardware pre-announced a sequential decline in revenues of up to 17% and EPS of $0.04 to $0.05, below consensus expectations of $0.12.

3DLABS INC. (Nasdaq: TDDDF) came down $1 7/8 to $26 5/8, loosing ground for a second day as investors worry about other companies in the computer graphics board industry that have pre-announced weaker results, a group that includes DIAMOND MULTIMEDIA (Nasdaq: DIMD).

Irrigation equipment manufacturer LINDSAY MANUFACTURING (Nasdaq: LINZ) was watered down $4 3/16 to $30 3/4 on reporting Q3 EPS of $0.61, up 8.9% year-over-year, but below estimates of $0.64.

CARDINAL HEALTH (NYSE: CAH) fell $4 3/8 to $55 5/8 after Morgan Stanley lowered its rating on the medical supplies and pharmaceuticals distributor to "outperform" from "strong buy."
MULTIPLE ZONES INTERNATIONAL (Nasdaq: MZON) was smashed for a $3 1/8 loss to $5 3/8 after the PC catalog retailer said it will take a write-down on its Apple Computer inventory because sales of those products are declining faster than expected.

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FOOL PORTFOLIO                  BORING PORTFOLIO

ATCT down $1/4 at $5 3/4        ATLS dn $3/4 at $34 7/8
AOL unch. at $59 1/2            BGP down $3/4 at $24
CHV up $5/8 at $74 1/2          CSL down $1/8 at $34 1/8
COMS down $11/16 at $46 7/8     CSCO dn $13/16 at $62 7/8
DJT up $1/8 at $11 1/4          GNT down $1/2 at $34 3/4
GM down $1/4 at $57 1/8         ORCL up $11/16 at $49 3/8
IOM up $3/4 at $20 3/4          OXHP dn $1 1/8 at $70 7/8
KLAC down $1 1/8 at $43 3/8     PMSI unch. at $11 5/8
LU up $3/4 at $67               TDW down $1/4 at $40 7/8
MMM up $1 3/8 at $95 3/4
T up $3/8 at $36 7/8