FOOL PLATE SPECIAL
An Investment Opinion by Louis Corrigan

Informix Returns

Trading in penny stock land at $4 just six weeks ago, shares of enterprise database software developer Informix (Nasdaq: IFMX) rallied as much as $2 to $9 3/8 this morning following the announcement of an unexpected fourth quarter profit of $0.05 per share on operating income of $17.8 million. That crushed estimates, which had called for a loss of $0.15 per share. The company reported $181.2 million in revenue, a drop from the $216.8 million recorded in the year-ago period but 21% above the third quarter's $149.9 million. Perhaps more important, software license revenues came in just 30% below year-ago levels, much better than the 40% collapse that some analysts had been expecting. License revenues were also 36% higher than those reported in the depressed third quarter.

In contrast to troubles at its competitors, such as the fourth quarter weakness at Sybase (Nasdaq: SYBS) and the December debacle that crushed Oracle (Nasdaq: ORCL), Informix reported relatively strong business on all fronts, including the Asia Pacific region. And contrary to Oracle's report that the U.S. telecommunications industry might be reaching its saturation point for sophisticated database software, Informix issued a separate press release last night highlighting strength in the telecommunications market. It reported new deals with BellSouth, GTE Data Services, and Mobile Telecommunications, as well as a spate of international contracts.

This earnings report is sure to be seen as Informix's return to health after a devastating 1997. Trading as high as $36 just two years ago, Informix found itself suffering from slowing sales in the latter part of 1996 leading to a full-fledged drop-off by the March '97 quarter. It had lost focus on its UNIX sales because of attention directed toward its technologically advanced object-relational software. In July, 3COM (Nasdaq: COMS) president Robert Finocchio was brought in as CEO to turn the ship around. But just days later, this aspiring database titanic hit an iceberg. Problems with revenue recognition led to a full-fledged audit of recent financial statements. By September, Informix was talking about even more wide-scale revisions. The full scope of the problems became clear on November 18 when the company announced that financial records from January 1994 to June 1997 would be restated, reducing reported revenues by $278 million and net income by $236 million. A $98 million profit for FY96 suddenly turned into a $74 million loss.

The fourth quarter results suggest that Informix has now plugged its holes. After raising capital in the fall, the company is now sitting on $155 million in cash and securities. It has also cut costs, trimming its general and administrative expenses by 10% from the fourth quarter of '96. More important, it has shown that customers do indeed still have confidence in the firm. Major contract wins during the quarter included the likes of banking giant First Union and mutual fund behemoth Fidelity Investments. Informix is concentrating on the high-end high-growth database market, providing solutions for Web/content management and data warehousing. Its Universal Data Option, an extension of its object-relational software, now claims 1,000 customers. Though a nickel per share in earnings each quarter can't support a $9 stock price, the 9.8% operating margins should rise if Informix can recover some sales momentum -- and this quarter's surprising good news seems likely to help the firm accomplish that.

UPS

Mutual funds holding company United Asset Management (NYSE: UAM), parent of fund groups such as Pilgrim Baxter, gained $1 1/16 to $24 1/8 after Franklin Funds reported in an SC 13G filing that it has raised its stake in the firm to 10.3% of outstanding shares, up from 5.76% last quarter. Word is that value manager Michael Price is behind the purchase.

Eastman Kodak Co. (NYSE: EK) announced today that it has agreed to acquire a majority interest in online retail/wholesale imaging intermediary PictureVision. Privately held PictureVision gives Eastman Kodak an innovative customer interaction channel, leverages other companies' investments in photofinishing operations rather than laying out its own cash to get a hold on the retail channel, and enhances its efforts in the digital imaging market. Eastman Kodak was down $1/4 tot $66 7/16 at midday.

DeKalb Genetics Corp. (NYSE: DKB) added another $3 5/16 to $57 5/16 this morning after the seed company rose over 60% yesterday on news that it is putting itself on the block. Potential suitors include Monsanto (NYSE: MTC), Novartis AG of Switzerland, AgrEvo of Germany, and Dow Chemical (NYSE: DOW).

Specialty drug maker SangStat (Nasdaq: SANG) rose $3 1/8 to $27 3/4 after receiving a positive letter from the FDA regarding its continuing evaluation of the firm's Cyclosporine transplant drug. The letter contains questions that SangStat intends to answer in the next 2-3 weeks and represents one of the final steps prior to outright FDA approval of the drug, which helps prevent graft rejection in transplant recipients.

Construction and agricultural equipment maker Gehl Co. (Nasdaq: GEHL) jumped $1 3/4 to $20 3/4 after reporting Q4 EPS of $0.43 versus $0.34 a year ago, beating the First Call consensus estimate of $0.31. The company's CEO said favorable interest rates, housing starts, and milk prices helped earnings in the quarter.

Israeli digital graphics equipment maker Scitex Corp. (Nasdaq: SCIXF) gained $3/4 to $10 13/16 after reporting Q4 EPS of $0.13 compared with a loss of $0.57 a year ago and ahead of the First Call mean estimate of $0.10. The company also announced that it will acquire digital printing systems manufacturer Idanit Technologies Ltd. for $60 million in cash.

Ligand Pharmaceuticals (Nasdaq: LGND) rose $1 3/16 to $14 9/16 after the gene transcription company reported that its Targretin drug caused "complete regression" of 72% of breast cancer tumors in trials with rats.

Wireless communications network supplier Powerwave Technologies (Nasdaq: PWAV) crested $1 11/16 to $15 15/16 after signing an agreement to supply power amplifiers for cellular phone maker LM Ericsson's (Nasdaq: ERICY) cellular base station equipment.

Medical device company ArthroCare Corp. (Nasdaq: ARTC) was lifted $1 1/2 to $15 1/2 after announcing an agreement with Boston Scientific Corp. (NYSE: BSX) to develop and market ArthroCare's Coblation technology, which uses radiofrequency energy to remove tissue and stimulate the formation of new blood vessels in the heart.

Integrated circuit maker TriQuint Semiconductor (Nasdaq: TQNT) gained $2 1/16 to $24 3/16 after reporting Q4 EPS of $0.17 versus $0.19 a year ago, in line with the First Call mean estimate for the quarter.

Lam Research Corp. (Nasdaq: LRCX) climbed $1 11/16 to $28 after Sanford Bernstein upgraded the wafer fabrication equipment maker's stock to "outperform" from "market perform."

Boating products retailer West Marine (Nasdaq: WMAR) motored $1 1/2 higher to $26 1/8 after reporting Q4 earnings of $0.02 per share, just shy of the First Call mean estimate of $0.03 per share.

Gardner Denver Machinery (NYSE: GDI) rose $1 1/2 to $24 1/2 after reporting Q4 EPS of $0.53, a 47% increase from the $0.36 earned a year ago and ahead of the First Call consensus estimate of $0.47. The air compressor and oil and gas pump maker said the higher earnings stemmed from the strong economy, favorable results from three recent acquisitions, and higher demand for its oil pumps.

The American depository receipts of Finnish cellular phone maker Nokia AB (NYSE: NOK.A) gained $4 3/4 to $87 1/2 after the company reported Q4 earnings of $1.33 per share, beating the First Call mean estimate of $1.21. When expressed in Finnish marks, the earnings represent a 41.5% increase from the results a year ago.

Creative Technology (Nasdaq: CREAF) gained $2 5/16 to $20 3/4 after the graphics accelerator card maker said it will begin shipping its 3D Blaster Voodoo2 graphic cards on Feb. 20. The new cards contain the Voodoo2 Graphics chipset designed by Fool portfolio holding 3Dfx Interactive (Nasdaq: TDFX).

DOWNS

Cytyc Corp. (Nasdaq: CYTC) crumbled $5 5/8 to $20 7/8 after the maker of systems for automated Pap smear diagnoses received word from the Blue Cross/Blue Shield Association Technology Evaluation Center that its ThinPrep system offers "only modest improvements in diagnostic accuracy." Cytyc vehemently denied the BC/BS conclusions, saying that ThinPrep's documented performance in diagnosing cervical cancer is superior to conventional Pap smear diagnosis.

Synthetic bone graft materials manufacturer Interpore International (Nasdaq: BONZ) dropped $2 1/8 to $6 1/8 after announcing that it has signed a merger agreement with spinal implant systems maker Cross Medical Products (Nasdaq: CRSS) in a stock-for-stock transaction. Cross Medical shareholders will receive 1.275 Interpore shares for each Cross Medical share. Interpore also reported fourth quarter earnings of $0.25 per share, far above the First Call mean estimate of $0.09.

Rechargeable batteries maker BOLDER Technologies Corp. (Nasdaq: BOLD) lost $3/8 to $9 3/8 after announcing yesterday that the debugging of its first high-volume production line is proceeding more slowly than originally anticipated. BOLDER's high-powered batteries are designed to replace larger, heavier nickel cadmium batteries.

Anicom Inc. (Nasdaq: ANIC), which specializes in the distribution of multimedia wiring systems, fell $1 5/16 to $14 11/16 after announcing a fourth quarter loss of $0.17 a share compared with EPS of $0.05 last year and the consensus First Call estimate of $0.09.

Biotechnology company Regeneron Pharmaceuticals (Nasdaq: REGN) slid $1/2 to $9 after announcing fourth quarter earnings of $0.02 per share versus a loss of $0.32 per share for the year-earlier period. EPS was better than the First Call mean estimate of a loss of $0.24.

Information technology support services provider National TechTeam (Nasdaq: TEAM) skidded $1 to $10 1/16 after reporting flat fourth quarter earnings that were unchanged from the prior-year period. The First Call estimate was for $0.06 per share.

Glenayre Technologies (Nasdaq: GEMS) tumbled $1 to $12 7/16 after reporting a severe fourth quarter loss of $2.01 per share compared with earnings of $0.27 per share last year. The wireless telecom systems and software company said results were hurt by one-time charges totaling $131.2 million related to Glenayre's three 1997 acquisitions and "expensing of business process re-engineering costs previously capitalized." Adding back extraordinary charges, the company's EPS for the quarter came in around $0.18, topping the First Call mean estimate of $0.14, but the company said first quarter results will fall sequentially.

Penn Traffic Co. (NYSE: PNF) lost another $9/16 to $5 1/16 after announcing yesterday that same-store sales for the fourth quarter dropped 7.3% from the prior-year period. The company operates 264 supermarkets in Pennsylvania, upstate New York, Ohio, and West Virginia under the "Big Bear," "Big Bear Plus," "Bi-Lo Foods," "P&C Foods," and "Quality Markets" trade names.

Real-estate mortgage company Redwood Trust (NYSE: RWT) fell $1 1/4 to $19 7/8 after reporting fourth quarter EPS of $0.30, lower than Q4 1996 earnings of $0.39 and the First Call consensus estimate of $0.34. Redwood greatly decelerated its purchases of mortgages earlier this year when it saw prices for mortgages as being too high, which in retrospect looks like a market-timing blunder given the continued decrease in interest rates throughout the second half of 1997.

Italian footwear company Fila Holdings (NYSE: FLH) plunged $1 7/16 to $20 13/16 after announcing that deteriorating market conditions in the fourth quarter will reduce its expected profits by about $10 million. The company, which will report its fourth quarter results on February 26, said profits were hurt by retail overstocking in the U.S. and Asia and by excess inventory sales.

CONFERENCE CALLS

Please see the Motley Fool's Conference Calls page for call information and links to synopses.

Click here for continually updated Portfolio Numbers.

WE DELIVER - Get The Lunchtime News delivered
to your e-mailbox every afternoon!

ANOTHER FOOLISH THING

See something moving a stock that we didn't cover?
E-mail the Fool News Team
and we will start working on the story.
Unfortunately, we cannot answer every e-mail
or respond to individual questions.

Dale Wettlaufer (TMF Ralegh), Fool
Alex Schay (TMF Nexus6), Fool
Yi-Hsin Chang (TMF Puck), Fool
Brian Graney (TMF Panic), Fool
Louis Corrigan (TMF Seymor), Fool
Contributing Writers

Brian Bauer (TMF Hoops), Fool
Editor