FOOL PLATE SPECIAL
An Investment Opinion by Alex Schay

Oracle Crashes

Database software company Oracle Corp. (Nasdaq: ORCL) crashed $9 1/4 to $23 1/8 this morning after the company posted second quarter earnings per share of $0.19 last night. The results fell short of consensus estimates of $0.23 per share. The company attributed much of the loss to weakness in Asia, which accounts for roughly 15% of Oracle's total revenue. Revenue from Asia rose a mere 1% in U.S. dollars, and in local currencies it rose 15%. The company blamed the "strength of the dollar" for having a "dramatic effect" on reported results for the quarter, but even without the negative currency exchange the company's local currency revenue growth was considerably shy of previous quarters when it had grown between forty and fifty percent. This has led some analysts to conclude that Oracle's Q2 is a sign of a more general slowdown in both its database and applications business.

Oracle's core competence, as articulated by its controversial CEO Larry Ellison, is building servers with large quantities of data and delivering that data to a large number of users across "The Network" in a secure, reliable, and economical fashion. Ellison feels that the two discernable eras of computing thus far -- the mainframe era followed by the PC era -- will by course of "natural" evolution (which he will help usher in) be followed by "the network era." Any talk of Oracle immediately brings to mind Ellison's evangelism surrounding the role of the network computer and his public swipes at Bill Gates, Microsoft, Windows, and the personal computer. This morning, The Motley Fool was fortunate enough to have Guy Kawasaki (of Apple fame, and author of How to Drive Your Competition Crazy) speak before the company. In his book, Kawasaki notes that part of the early success of Apple was due to its ability to "muster a cadre of raging, inexorable thunderlizard evangelists who could buoy Macintosh by providing emotional and technical support." In other words, "Turn Customers into Evangelists."

A necessary condition for this to occur is the creation of a cause that employees will champion, where every single worker and customer is a salesperson for the company, in Kawasaki's words -- something you believe in and want others to believe in as much as you do. Regardless of what you may think of the "NC," Ellison's vision has definitely trickled down to his employees. Many honestly feel that people who can't afford personal computers will be some of the first to try NCs, bringing the power of "the Net" to all. (The cynical among you will probably never be convinced that the campaign is anything more than marketing hype.) Despite the fact that Oracle had little to do with the actual development of the NC, the company's future success is tied to the success of the NC. Employees are on board, it remains to be seen whether or not customers will begin to proselytize as well. With even Microsoft rolling out such products as the NetPC, Windows CE, the Win Terminal, and WebTV, the battle is just beginning. [For more on Oracle's earnings report, check out the Fool's conference call synopsis.]

UPS

Computer Learning Centers (Nasdaq: CLCX) gained $3 3/4 to $62 after the information technology training company announced an agreement to acquire Montreal-based Delta College for $13 million in Computer Learning Centers common stock. Though small ($6.7 million in revenues for fiscal 1997), Delta College offers Computer Learning a beachhead to expand in Montreal and the province of Quebec. The valuation also comes at a significant discount to the valuation the public equity markets have ascribed to Computer Learning Centers.

Belize-based holding company BHI Corp. (Nasdaq: BHIKF) rose $2 to $30 1/4 after reporting Q2 EPS of $0.70, up from Q1 earnings of $0.68 per share. Through six months of the company's fiscal year, revenues increased 20% and EPS grew 18%.

C-Cube Microsystems (Nasdaq: CUBE) moved $15/16 higher to $20 3/8 after announcing agreements to supply DVD decoders for Dell Computer's new Dimension XPS DS PCs and for set-top decoder boxes made by Zenith for Bell South.

Portrait studio company CPI Corp. (NYSE: CPY) climbed back above $20 today, gaining $1 15/16 to $21 7/16 on announcing a Dutch auction tender offer under which it will repurchase just under 20% of its outstanding shares for prices ranging from $18 to $23 per share.

Protein Design Labs (Nasdaq: PDLI) was flattened for a $6 5/8 to $40 1/8 after German company Boehringer Mannheim returned to Protein Design the rights to its for Anti-Hepatitis B and Anti-Cytomegalovirus antibodies and said that it is stopping its Phase II studies using these antibodies. Protein Design added that this will open new partnering activities but will affect near-term financial results.

Hilton Hotels (NYSE: HLT) fell $1 9/16 to $27 11/16 on announcing that it expects Q4 EPS to come in flat to up to 15% over last year because of one-time events, including the closure of its New Orleans riverboat casino and delays in opening its Star Trek attraction in Las Vegas. Lower-than-expected growth in "major gaming markets" apparently didn't bother investors.

Environmental services company and alternative energy supplier Wheelabrator Technologies (NYSE: WTI) gained $1 3/8 to $16 after striking a definitive agreement to be acquired by struggling parent company Waste Management Inc. (NYSE: WMX) for $16.50 per share in cash. Earlier this year, Waste Management offered $15 per share in cash for the approximately one-third of Wheelabrator that it doesn't already own.

DOWNS

Mego Mortgage Corp. (Nasdaq: MMGC) slid $2 7/16 to $4 3/16 after the high loan-to-value mortgage lender said it will mark down by at most $16 million the value of mortgage servicing rights or other mortgage-related securities it holds. The markdown will reduce first quarter earnings and will reduce owners' equity by 30% at most.

Neurogen Corp. (Nasdaq: NRGN) was slammed for a $6 7/8 loss to $13 1/2 after the company reported that it has halted a Phase I study that was attempting to assess the maximum tolerated dose of an obesity drug under development with Pfizer Inc. (NYSE: PFE). Subjects in the study exhibited accelerated production of certain liver enzymes, which did not manifest themselves in any sort of symptoms, but Neurogen decided to stop the study as a result. The company said its timetable for further studies of the obesity drug will be pushed out by at least one quarter.

System Software Associates (Nasdaq: SSAX) fell $3 7/8 to $11 3/8 after the enterprise resource planning software company reported operating earnings that were reduced by one-time charges for loan conversions and other events. With a standard tax rate of 35%, though, Q4 EPS looked to be in the range of $0.20 to $0.21, below estimates of $0.23. Revenues for the quarter reached $125.6 million, a company record.

Auto parts retailer AutoZone Inc. (NYSE: AZO) lost $2 1/8 to $29 1/2 even though the company reported Q1 EPS of $0.31, which met expectations, as well as a 7% increase in quarterly same-store sales.

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