<THE LUNCHTIME NEWS>

Wednesday, May 12, 1999
THE MARKET MIDDAY
DJIA 10962.29 -63.86 (-0.58%) S&P 500 1353.17 -2.44 (-0.18%) Nasdaq 2587.02 +20.34 (+0.79%) Russell 2000 447.27 +0.46 (+0.10%) 30-Year Bond 91 27/32 +2/32 5.83 Yield

FOOL PLATE SPECIAL
An Investment Opinion
by Warren Gump

Treasury Secretary Rubin to Resign

The stock market took a quick plunge early this morning on news that Treasury Secretary Robert Rubin will announce his resignation later today. The White House confirmed that the speculation was accurate. After dipping around 50 points in early trading, the Dow Jones Industrial Average plunged an additional 150 points immediately after news of the resignation crossed the wires. The index has bounced back somewhat and is currently down 63.86 points to 10,962.29 at midday. Deputy Treasury Secretary Lawrence Summers will become acting Secretary and is expected to be nominated to take the post.

Rumors have regularly popped up over the past few years that Secretary Rubin would resign. Many speculate that last year's international economic crises delayed the resignation, as Rubin didn't want to leave when the world was awash in turmoil and uncertainty. Rubin is a rare government official -- one who is trusted and respected by Wall Street. Before joining the Clinton team as Assistant to the President for Economic Policy in January 1993, Rubin spent 26 years at investment bank Goldman Sachs (NYSE: GS), ending up as cochairman. He became Treasury Secretary in 1995.

As always, the market's knee-jerk reaction to uncertainty was a quick sell-off. The two captains of the current U.S. economic prosperity are thought to be Secretary Rubin and Federal Reserve Chairman Alan Greenspan. While losing the experience of someone like Rubin changes those dynamics, Deputy Secretary Summers has worked with Rubin for several years and is believed to have similar views.

We'll have to wait to see the ultimate outcome of this leadership shift. While mildly concerned by losing someone who understands the government and capital markets so well, a positive sign can be extrapolated from today's news. Rubin probably wouldn't resign if he were concerned about the worldwide economic situation. He must feel that the battered economies of Asia and Latin America are making progress toward regaining health, which should bode well for everybody.

UPS

Internet portal operator Lycos (Nasdaq: LCOS) grabbed $9 3/4 to $108 on news that the deal for it to merge with USA Networks (Nasdaq: USAI) and Ticketmaster Online-CitySearch (Nasdaq: TMCS) has been called off. The proposed merger was vehemently opposed by Lycos shareholders -- in particular David Wetherell, chairman of Internet investment firm CMGI Inc. (Nasdaq: CMGI), Lycos' largest shareholder. Lycos, USA Networks and Ticketmaster Online-CitySearch did sign a deal for Ticketmaster Online and CitySearch to provide content for Lycos' national network. Ticket purchase links on Lycos will be directed to the Ticketmaster Online-CitySearch site. Shares of Ticketmaster Online-CitySearch moved up $3 7/8 to $36 1/2 this morning.

Computer networking firm Cisco Systems (Nasdaq: CSCO) moved up $5 3/16 to $117 1/16 after posting higher-than-expected fiscal Q3 profits of $0.38 per share, up from $0.30 a year ago and ahead of the analysts' mean estimate of $0.37. Revenues for the quarter jumped 44% to $3.15 billion from $2.18 billion. The company also announced that it will split its stock 2-for-1 effective June 21. It will be Cisco's eighth stock split since it went public in 1990.

In other Cisco news, customer management and billing software company Portal Software (Nasdaq: PRSF) rose $23 3/4 to $55 3/8 after Cisco agreed to buy 3 million shares of Portal stock for about $39 million. Portal will become Cisco's provider of customer and billing services for Cisco's data Internet protocol offerings.

Cable television company TCA Cable TV (Nasdaq: TCAT) tuned in $7 15/16 to $60 after Cox Communications (NYSE: COX) agreed to buy the company for $63.89 per share, or $4 billion, in cash and stock. That represents a 23% premium to TCA's closing price yesterday of $52 1/16. For more on the news, head back to this morning's Breakfast With the Fool.

Contact lenses and surgical instruments maker Cooper Cos. (NYSE: COO) gained $2 7/8 to $19 1/8 after it said to expect fiscal Q2 EPS higher than First Call's $0.34 mean estimate. "We are seeing significant improvement in our gross margins from successfully integrating manufacturing technologies in our contact lens plants following our acquisition of Aspect Vision Care," said CEO A. Thomas Bender. "At the same time, we continue to gain market share with our high margin specialty toric lenses as sales continue to be strong.''

Online reference services provider Infonautics Inc. (Nasdaq: INFO) rose $1/2 to $7 after it reported a pact to market a cobranded version of its "Company Sleuth" service with Lycos.

E-commerce and community company iTurf Inc. (Nasdaq: TURF) took on $7 1/2 to $39 1/8 after announcing a marketing agreement with America Online (NYSE: AOL) that will cost iTurf $8 million for two years. iTurf parent Delia's (Nasdaq: DLIA) gained $2 7/16 to $21 1/4 this morning.

Wire, cable, and refractory products company Alpine Group (NYSE: AGI) zoomed ahead $3 7/8 to $17 5/8 after London's Cookson Group agreed to buy the company's 83.4% owned unit, Premier Refractories, for $115 million of stock and $295 million of debt assumption.

Broadband communications integrated circuits maker Broadcom Corp. (Nasdaq: BRCM) raced up $6 1/4 to $98 15/16 this morning. Last night, the company unveiled a new high-speed Ethernet chip expected to boost the power of corporate networks without pricey fiber optic cables.

Air bed maker Select Comfort Corp. (Nasdaq: AIRB) woke up $2 to $14 1/4 after it announced plans to buy back up to $10 million shares of company stock on the open market "effective immediately."

Integrated circuit manufacturer Atmel Corp. (Nasdaq: ATML), upgraded to "strong buy" from "accumulate" at Prudential Securities, moved up $2 1/16 to $20 13/16 in this morning's trading. The brokerage raised its 12-month price target to $35 per share from $26.

Earnings Movers


Engle Homes
(Nasdaq: ENGL) up $1 3/16 to $13 3/8; fiscal Q2 EPS: $0.60 vs. $0.34 last year; estimate: $0.47

Federated Department Stores (NYSE: FD) up $1 7/8 to $52 7/8; Q1 EPS: $0.40 vs. $0.27 last year; estimate: $0.31

Pomeroy Computer Resources (Nasdaq: PMRY) up $1 1/16 to $12 13/16; Q1 EPS: $0.43 vs. $0.37 last year; estimate: $0.43

Sterling Software
(NYSE: SSW) up $1 7/8 to $23 1/8; fiscal Q2 EPS: $0.40 (before charges) vs. $0.28; estimate: $0.38

DOWNS

Casual apparel retailer Abercrombie & Fitch (NYSE: ANF) dropped $4 1/16 to $89 7/16 despite reporting fiscal Q1 EPS of $0.23 a share compared with $0.12 a year ago. Analysts had predicted EPS of $0.17. Same-store sales rose 22% during the quarter, on the back of a 48% increase last year. The company also announced a 2-for-1 stock split.

Specialty finance company Rock Financial Corp. (Nasdaq: RCCK) was rocked for $3 to $19 after saying its Q2 earnings will be "substantially below" the $0.18 per share reported in Q1 due to a slide in conventional loan margins and investments in its RockLoans.com mortgage website. The company added that earnings through the rest of the year may also come in below analysts' expectations as it invests in a marketing campaign for RockLoans.com and moves into a new facility.

Russian telecommunications services firm Rostelecom (NYSE: ROS) lost $1 to $5 1/8 after Russian President Boris Yeltsin dismissed Prime Minister Yevgeny Primakov after just eight months on the job, citing Primakov's inability to jumpstart the struggling Russian economy. Wireless telecommunications company Vimpel-Communications (NYSE: VIP) also dropped $3 1/4 to $20 5/16.

British communications services provider Cable & Wireless (NYSE: CWP) slipped $1 3/4 to $39 7/8 on news that software giant Microsoft (Nasdaq: MSFT) is in talks to acquire up to 30% of the company's cable TV unit, according to The Wall Street Journal. That deal would give Microsoft equity stakes in all three of the top cable operators in the U.K.

Internet advertising firm 24/7 Media (Nasdaq: TFSM) shed $2 1/8 to $43 after reporting a Q1 loss of $0.42 per share compared to a loss of $0.64 per share last year, which was still a bit worse than the loss of $0.40 per share expected by analysts surveyed by First Call. The company also unveiled a multi-year agreement to market Visa and MasterCard credit cards for a unit of Fleet Financial (NYSE: FLT), which could generate up to $32 million in revenues.

Financial news website operator TheStreet.com Inc. (Nasdaq: TSCM) gave back $3 to $57 after rising 216% yesterday following its initial public offering of 5.5 million shares at a price of $19 per share.

Wireless broadband telecommunications network firm WinStar Communications (Nasdaq: WCII) slumped $1 1/4 to $53 7/8 following a Scott & Stringfellow downgrade to "long-term buy" from "strong buy."

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Editing
Brian Bauer (TMF Hoops), another Fool
Bob Bobala (TMF Bobala), a Fool's Fool
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