FOOL PLATE SPECIAL
An Investment Opinion
by Warren Gump

Waste Management Dumped

Shares of Waste Management (NYSE: WMI), the nation's largest waste disposal company, were dumped this morning after warning that revenue and earnings would fall short of expectations for Q2 and the rest of the year. According to the company's brief press release issued last night, earnings for the quarter are expected to be $0.67-$0.70 per share, below the First Call consensus estimate of $0.78. For the year, the company now projects that it will earn $2.65 to $2.70 a share, compared to consensus estimates of $3.01. In the same periods last year, the company earned $0.41 and $1.82, respectively, excluding charges. In other words, earnings will still be rising dramatically, just not quite at the same level that analysts were predicting. The stock was compacted $17 7/16 to $36 1/8.

The company blamed this quarter's shortfall on the its North American solid waste operations, where revenue is expected to come in $250 million shy of the company's original projections. Based on reported analyst estimates, this represents about 7% of the company's overall expected revenue for the quarter. Although the company said it was still analyzing reasons for this slowdown in growth, analysts suggested that Waste Management might have lost business because it raised prices 3%. The company will provide more details about the quarter in its formal earnings release on August 3rd, but it did say that operating margins improved.

In sympathy with today's news, the nation's other big trash haulers also declined. Browning Ferris Industries (NYSE: BFI) threw away $7/8 to $42 11/16, while Allied Waste Industries (NYSE: AW) stunk its way down $2 3/8 to $18 3/16. Although I don't know too much about the trash business, does it really make a lot of sense for all three of the biggest players to lose value because Waste Management's earnings were short of estimates? I find it hard to believe that the nation's trash removal needs have declined substantially over the past quarter. If the business is not going to Waste Management, its business is probably going somewhere else. That should bode well for somebody.

Of course, grabbing volume from a competitor wouldn't mean much if it weren't accomplished on profitable economic terms. With the information I've seen, though, it doesn't sound like a price war is underway. I think today would be a better day to look at Waste Management's competitors to see if they are worth considering for investing. For that matter, given the huge plunge in Waste Management's price and its position as the nation's biggest player in a business with huge economies of scale, you might even want to take a deeper look at the instigator of today's rout.

UPS

Cable systems operator Cox Communications (NYSE: COX) advanced $1 9/16 to $38 1/8 after announcing that it will exchange its 50.3 million shares of AT&T (NYSE: T) stock, worth $2.85 billion as of yesterday's close, for AT&T cable TV systems serving roughly 495,000 customers and about $750 million in other considerations, including cash.

Electronics manufacturing services (EMS) firm Smartflex Systems (Nasdaq: SFLX) soared $4 15/32 to $9 1/2 after agreeing to be acquired by privately held automotive, commercial, and defense electronics manufacturer Saturn Electronics & Engineering for $10.50 per share in cash, or roughly $68 million.

TV and video security communications equipment maker Odetics Inc. (Nasdaq: ODETA) rose $1 1/2 to $11 1/2 after a U.S. Court of Appeals reversed a U.S. District Court ruling and reinstated a $70.6 million patent infringement judgment in favor of Odetics to be paid by Storage Technology Corp. (NYSE: STK). However, the court turned down Odetics' request for enhanced damages. Storage Technology, which said it was "disappointed" by the appellate court's action, fell $9/16 to $22 1/4.

Information technology training software developer CBT Group (Nasdaq: CBTSY) tacked on $2 1/8 to $19 1/4 after signing what it called the "largest contract in its history," a five-year deal to develop and administer virtual technical certification programs for employees of Unisys Corp. (NYSE: UIS) worth about $25 million. The company also said it has hired Internet and technology attorney David Drummond as its new CFO.

Internet-based automated business administrative services provider Concur Technologies (Nasdaq: CNQR) was lifted $8 3/8 to $41 5/8 by a BancBoston Robertson Stephens upgrade to "strong buy" from "buy."

Online and direct retailer Shop At Home (Nasdaq: SATH) gained $2 7/16 to $10 7/16 after Prudential Securities started coverage of the firm with a "strong buy" rating and a 12-month price target of $15 per share. Prudential was the lead underwriter for a 5.8 million share secondary offering by the company last week.

PIMCO Advisors Holdings (NYSE: PA), the publicly traded pass-through entity for investment manager PIMCO Advisors L.P., gained $4 to $33 9/16 after The Wall Street Journal Europe reported that PIMCO is in talks to be acquired by German insurer Allianz A.G. in a transaction valued up to $5 billion.

Fiber optic network builder Metromedia Fiber Network (Nasdaq: MFNX) added $2 7/16 to $39 1/2 after Goldman Sachs started coverage of the firm with a "recommended list" rating and a 6-month price target of $60 per share.

E-commerce networking services company Digital Island (Nasdaq: ISLD) tacked on another $6 5/16 to $39 after rising 54% yesterday on news that budding industry Internet hub BidCom is a customer in a new strategic relationship.

DOWNS

Enterprise application integration software company New Era of Networks (Nasdaq: NEON) dimmed $25, or 56.7%, to $19 1/16 after warning that it expects a second-quarter loss of between $0.12 and $0.22 per share, before charges and assuming a normalized tax rate of 35%. Analysts expected a profit of $0.12 a share. "First, we have incurred expense items related to our continued building of infrastructure so we can respond effectively to market opportunities," said CEO Rick Adam. "Second, a number of sales we expected did not close by the end of the quarter.'' The company expects to announce results on July 20.

Medical devices designer and maker Respironics Inc. (Nasdaq: RESP) coughed up $2 5/8 to $11 1/2 after last night saying it expects fiscal Q4 EPS to be about $0.18, missing Wall Street's $0.28 consensus estimate. Cost containment initiatives and delays that have slowed new product introductions hurt results, the company said. Respironics also said it's undertaking a restructuring that will cut its worldwide workforce by 10%.

E-commerce software developer Sterling Commerce (NYSE: SE) gave up $9 3/4 to $26 after saying fiscal Q3 EPS is projected at $0.38 or $0.39, missing First Call's $0.41 mean estimate. The results were hurt by delays in closing several large quarter-end deals, slower-than-expected product growth, and disappointing returns from Sterling's XcelleNet acquisition.

Rehabilitation and assisted-living facilities operator HCR Manor Care (NYSE: HCR) skidded $4 3/16 to $20 5/16 after last night directing investors to expect Q2 EPS of between $0.30 and $0.35. First Call's consensus estimate was $0.44. "Operational trends in the company's skilled nursing facilities have continued to reflect the softness which was reported in the first quarter this year," said CEO Paul Ormond. The company also said a series of asset sales, many to Alterra Healthcare (AMEX: ALI), are expected to close in Q3 and yield $200 million.

Front-office automation software company Vantive Corp. (Nasdaq: VNTV) shed $2 13/16 to $10 on news that it expects a Q2 loss of between $0.05 and $0.07 before a restructuring charge. First Call's analyst survey showed a $0.04 EPS estimate. The company also authorized a plan to buy back up to $10 million of its shares on the open market and said the COO position is being phased out; Phil Dunkelberger is resigning as COO and president and will work with CEO Tom Thomas during the transition.

Contact center technologies company Melita International (Nasdaq: MELI) unplugged $1 5/8 to $9 13/16 on news that it anticipates Q2 EPS of between $0.12 and $0.14, well off First Call's four-analyst $0.23 profit estimate. "Several sales that we felt would close this quarter... slipped to the third quarter," said CEO Aleksander Szlam. "However, we have a very strong pipeline going into this quarter and are confident in our ability to execute for the remainder of the year."

Building industry metal products manufacturer NCI Building Systems (NYSE: NCS) rusted $3 to $19 15/16 on news that it expects fiscal Q3 EPS growth of approximately 20% over last year's $0.58. That points to a figure of about $0.70 per share, which disappointed the analysts who told First Call to look for $0.82 for the quarter. "We are experiencing some cost pressure... in certain portions of our components operations," said CEO Johnie Schulte Jr. "We are also not realizing the planned level of efficiency in our overall manufacturing operations."

Platinum and palladium mining firm Stillwater Mining Co. (AMEX: SWC) dulled $3 to $27 3/8 after Merrill Lynch cut its near-term rating on the stock to "neutral" from "accumulate." The company said Friday it has been having trouble meeting production targets because of inexperienced employees, mine infrastructure construction, and inefficiencies during recently completed contract negotiations with its workers' union.

Online SEC filings information service Edgar Online (Nasdaq: EDGR) gave back $2 3/4 to $16 5/16 this morning after grabbing $9 9/32 yesterday on news of plans to expand its information offerings beyond corporate filings tracking.

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Contributing Writers Brian Graney (TMF Panic), a Fool David Marino-Nachison (TMF Braden), a new Fool Editing Brian Bauer (TMF Hoops), another Fool Bob Bobala (TMF Bobala), a Fool's Fool Jennifer Silber (TMF Amused), Fool at last