FOOL ON THE HILL An Investment Opinion
Beware the Bloated Balance Sheet
By Bill Mann (TMF Otter)

While the majority of news media and investors put their attention on companies' earnings statements, the Foolish investor knows that the balance sheet holds the key to a company's financial position. Since earnings are an accounting construct, they usually do not hold all of the keys of a company's true performance. There are plenty of companies out there with growing markets and big profits that are quite unhealthy due to poor conversion of these sales into cash.
FULL STORY

RealNetworks Goes for the "Gold"
By Nico Detourn (TMF Nico)

The evolution of business models is the real story behind RealNetworks' new subscription service, as few online media companies have successfully charged for content.
FULL STORY

German 3G Auction in Final Rounds
By Bill Mann (TMF Otter)

After 13 days and 150 rounds of bidding, five companies are left competing for potentially four German 3G wireless spectrum licenses. The auction will raise a minimum of $39 billion for the German government, which says it will use the proceeds to pay down its budget deficit. The losers may end up being the consumers of 3G services, as the companies are going to have to price their services aggressively to recoup these huge expenses, which come prior to any build-out of a network.
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DUELING FOOLS A QuickNews Extra
Qualcomm-athon
With Tom Jacobs (TMF Tom9) and Chris Rugaber (TMF RFK)

Did anyone say wireless? This week we take a look at the wild ways of digital wireless specialist Qualcomm. Is CDMA the way -- or a dead end? Not all Fools agree. So, this week, Tom Jacobs makes his Dueling Fools debut as the bull, while Chris Rugaber growls bear-like. So, read Tom's take. Then read what Chris has to say. Then, read the rebuttals to see how each Fool fires back.
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RULE BREAKER PORTFOLIO A QuickNews Extra
Break Down: Ariba
By Paul Commins (TMF Buster)

Tonight, in our fourth Break Down, we examine Internet marketplace builder Ariba. Even more than most Rule Breaker hopefuls, Ariba is playing a risky new game in which the rules are emerging and subject to change at any time. The bottom line, though, is that Ariba offers the dominant product in a strategic category at just the right time. Early focus and execution in a whirlwind of activity is paying off.
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Analog Devices Ramps Up
By Brian Graney (TMF Panic)

Despite lingering jitters in the market that the semiconductor cycle is reaching its peak, last night's strong results from Analog Devices appear to point to the contrary. Thanks to expanding margins, the company's earnings are growing rapidly and its future has arguably never been brighter. At this point, investors should still focus on business fundamentals rather than cyclical concerns.
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RULE MAKER PORTFOLIO A QuickNews Extra
Cisco's Cash Flow
By Phil Weiss (TMF Grape)

Last week Cisco released earnings for the fourth quarter. For the most part, it was another quarter of stellar results. However, for the first time in at least three years, Cisco's Flow Ratio increased. We're certainly not panicking, but we'll keep a watchful eye on this measurement in the future, especially in light of the changing business landscape.
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FOOL PLATE SPECIAL An Investment Opinion
Kohl's Models Consistency
By Richard McCaffery (TMF Gibson)

Investors who want to see a well-executed retail concept should check out discount operator Kohl's. It's had 35 quarters of consecutive earnings and sales growth. And while its fast growth has been awarded a high multiple, it's less efficient than rivals in some areas of efficiency.
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BREAKFAST WITH THE FOOL
Lycos Brings Home a Profit
By LouAnn Lofton (TMF Lou2)

Lycos, Inc. (Nasdaq: LCOS) reported its fourth-quarter and fiscal-year results yesterday after the bell. The Internet portal and e-commerce company fetched an operating profit for its fourth quarter, turning around a loss from the year before.
FULL STORY

Today's Market Movers

Ups

E-business software and services company BEA Systems (Nasdaq: BEAS) rose $8 1/8 to $57 as the company said fiscal second-quarter (ended July 31) earnings before special items rose to $0.05 per share from $0.02 a year before, a penny ahead of estimates. "We dramatically increased our estimates for the rest of the year," chairman and CEO William Coleman reportedly said on CNBC, "raising revenue from $700 million to $785 million and [EPS] from $0.18 cents to $0.22.''

Online customer relationship management software company Kana Communications (Nasdaq: KANA) added $5 1/2 to $38 today on news that it would team with IBM (NYSE: IBM) to offer interactive customer service systems for e-businesses. The deal, IBM exec Stephanie Hahn told Reuters, could be worth as much as $1 billion in revenues for the two companies over the next two years.

Semiconductor fabrication equipment company Amtech Systems (Nasdaq: ASYS) shot up $5 5/8, or 128.57%, to $10 on news that the company entered the optical component market with a customer's $6.4 million order for 11 diffusion furnace systems over the next 12 months. "Our customer for these products is a well financed European company in a rapidly growing industry," said CEO J. S. Whang.

Chewing tobacco maker UST Inc. (NYSE: UST) advanced $1 7/8 to $19 15/16 today. Salomon Smith Barney analyst Martin Feldman said in a note that the most likely use of R.J. Reynolds Tobacco Holdings' (NYSE: RJR) proceeds from its planned sale of its Nabisco Holdings (NYSE: NA) stake to Philip Morris (NYSE: MO) would be the purchase of UST. Feldman suggested $28 per share as the buyout price, about $4 short of UST's 52-week high. RJR stock rose $1 7/16 to $36 today.

Downs

Shares of PeoplePC Inc. (Nasdaq: PEOP), which provides PC packages that include Internet access and technical support for a fee, moved back $1 1/8 to $8 7/8 in the company's first day of trading. The company sold 8 million shares for $10 each, several dollars lower than the range originally hoped for. Today PeoplePC said it will use $10 million of the proceeds to expand its international business rather than the $40 million originally thought.

Business software company Mercator (Nasdaq: MCTR) lost $12 7/8 to $16 1/16 today as the company delayed its second-quarter 10-Q filing with the SEC because, according to Bloomberg, it didn't have the needed financial data. Mercator expects to file on Monday. The filing will no doubt be closely examined as the company lost some investor goodwill with a July earnings warning that may turn out more serious than some expected.

Integrated circuit maker TelCom Semiconductor (Nasdaq: TLCM), which beat Street earnings estimates for Q2, shed $3 1/2 to $13 3/4 today as the company said Q3 earnings will likely miss the market's $0.23 per share consensus projection provided First Call by four analysts. "The lower revenue forecast is attributed to weakening order patterns associated with wireless customers," the company said in a statement, as revenue is seen flat to slightly down sequentially.

Telecommunications services provider ALLTEL (NYSE: AT) lost $5 13/16 to $56 3/4 following a Reuters report that quoted a company spokesman as saying the company told analysts it expected EPS of $2.70 for the year. The company beat market estimates in the first half and First Call's consensus for 2000 was $2.73. At least one analysts, First Union Securities' Frank Louthan, downgraded the stock today, to "buy" from "strong buy."

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