UPS AND DOWNS

Champion International, Diamond Offshore, Grand Toys, Staples, Mentor Graphics, and other market movers...

August 4, 1999

UPS

Paper maker Champion International Corp. (NYSE: CHA) rolled up a $4 3/4 gain to $59 5/16 after ABN Amro started coverage of the firm with a "buy" rating and a 12-month price target of $65 per share. Fellow paper company Georgia-Pacific (NYSE: GP) rose $1 15/16 to $49 15/16 and Bowater (NYSE: BOW) tacked on $2 13/16 to $52 11/16.

Contract offshore oil and gas driller Diamond Offshore (NYSE: DO) advanced $2 3/16 to $33 13/16 after Merrill Lynch picked the company as a "focus 1 selection" and set a 6- to 12-month price target of $45 per share.

Montreal-based toy developer and distributor Grand Toys Ltd. (Nasdaq: GRIN) gave its shareholders something to smile about today, jumping $2 3/8 to $7 after announcing a licensing agreement with Nintendo Co. Ltd. to manufacture and distribute a line of products based on the Pokemon character in Canada.

Japanese Internet access and services provider Internet Initiative Japan Inc. (Nasdaq: IIJI) gained $8 5/16 to $31 5/16 in its first day of trading after selling 7.16 million American depositary shares at a price of $23 per share.

Breadman, Juiceman, and George Foreman Grill maker Salton Inc. (NYSE: SFP) served up a $1 15/16 gain to $24 5/8 after saying its fiscal 1999 earnings will top the First Call mean estimate of $2.17 per share thanks to strong customer demand for its products. The company also said that it will delay a planned common stock offering due to "current market conditions."

British staffing services company Select Appointments (Nasdaq: SELA) added $2 5/16 to $28 3/16 after posting Q2 EPS of $0.31, up from $0.23 a year ago and ahead of the First Call mean estimate of $0.28.

Chemical company Union Carbide (NYSE: UK) jumped $10 9/61 to $59 3/8 after agreeing to be acquired by Dow Chemical Co. (NYSE: DOW) in a deal valued at $11.6 billion in stock and assumed debt. For more details on the merger, see today's Breakfast With the Fool.

Disability insurer UnumProvident (NYSE: UNM) bounced back $1 13/16 to $38 after tumbling 30% yesterday after reporting Q2 operating earnings that missed the mean analysts' estimate by a dime. Donaldson, Lufkin & Jenrette raised its rating on the firm today to "top pick" from "buy."

DOWNS

Shares of several office supply retailers fell today after Donaldson, Lufkin & Jenrette cut its ratings on the shares to "market perform" from "buy." Staples (Nasdaq: SPLS) fell $3 1/16 to $23 5/16 and OfficeMax (NYSE: OMX) dropped $1 3/16 to $9; Office Depot (NYSE: ODP) was spared a big loss, moving back just $1/8 to $16 13/16.

Electronic hardware and software design tools maker Mentor Graphics (Nasdaq: MENT) lost $1 1/16 to $8 5/16 after last night reporting Q2 EPS of $0.09, $0.02 better than last year but flat with estimates. Revenues, essentially flat with year-ago levels, disappointed, but gross margins rose to 76% from 72%. Several brokerages downgraded the stock today.

Video store chain and movie website operator Hollywood Entertainment (Nasdaq: HLYW) was reeling after a loss of $2 5/8 to $14 3/8 today. The company said Q2 EPS was $0.20 excluding its Reel.com online operations, a nickel better than last year but a penny below First Call's six-analyst consensus estimate. Revenues rose 45% but general and administrative expense (excluding Reel.com) was 5% of revenue, higher than the year-ago 4.5%. Reel.com's revenues increased 35% from Q1.

E-business and e-commerce consultant Nextera Enterprises Inc. (Nasdaq: NXRA), which reported Q2 net income excluding stock compensation charges of $0.04, $0.02 off First Call's four-analyst consensus estimate, fell $1 13/16 to $5 3/16. "Two large engagements, totaling $16.8 million of new business, closed later than originally anticipated," said Chairman and CEO Gresh Brebach. "Further impacting the quarter was the decline in demand for ERP-related services, which resulted in a reduction in the use of contractors and a slight reduction in the utilization of mid-level technologists and consultants."

Internet portal designer Online Systems Services (Nasdaq: WEBB), which said Q2 losses were $0.52 as losses from operations fell to $2.8 million from $1.7 million last year and revenues moved back to $192,000 from about $300,000, gave up $2 9/16 to $9 1/2 in today's trading.

Hotel real estate investment trust FelCor Lodging Trust (NYSE: FCH) gave up $2 1/8 to $17 1/4 after turning in Q2 funds from operations of $1.06, a nickel better than last year but flat with Street expectations. The Fool's Boring Port sold FelCor in January.

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