Star Tribune from Minneapolis, Minnesota • Page 38

2D SaturdayApril 241993Star Tribune Analyst sees sellof in video-game retailer Funco as a buying opportunity Well, maybe not. But Wall Street certainly did, further evidence of how jumpy investors are these days. Tony Carideo neys have interpreted it." Suess said he believes the decision puts Multifoods "back to the position where it's no longer a question of whether we can claim a deduction on those assets." Now, he said the question facing his company and others with similar issues will again focus on whether the assets were fairly valued and the depreciation schedules valid. Suess said the ruling will have nd material impact on Multifoods' earnings. He said the company had set up reserves to anticipate an adverse ruling.

At least one other company with a keen interest in the Supreme Court's case is Cowles Media, publisher of the Star Tribune. Cowles Chief Financial Officer James Viera said the company has under appeal an IRS ruling that disallowed deductions for the customer lists to several consumer and special interest magazines the company has acquired in the past seven years. Other local companies reportedly with an interest in the case include Dayton Hudson Corp. and Honeywell Inc. Depending on your timeframe, Funco Inc.

was either one of the year's biggest and best initial public offerings, or one of the year's most disappointing round trips. Someone who bought this stock wrtett the Minneapolis brokerage house of Miller, Johnson Kuehn brought it public a year ago at $5 a share- would have been a happy camper 'round about Feb. 1 1, when the stock peaked at $17.73 a share. That runup put the stock at or near the. top of the IPO performance charts at the time.

Since-then, Funco, the Eden Prairie-based retail chain that sells new and used video games and such, has gone irftb a steady swoon. This past week the; stock dropped 22 percent, to $8 a bringing it to within shouting distance of its IPO price. Steven Hosier, an analyst at Miller, Johnson who follows the company, acknowledges that when the stock was in the 1 4 to 1 5 range it was "a little pricey." Given that on a trailing basis Funco was selling at 1,500 times earnings, ttiaj seems a reasonable assessment. Future earnings are a ways out Because; of the chain's rapid expansion -Twit's now up to 59 stores in the Twin Cities, Chicago, Milwaukee and Dallas Hosier is forecasting a loss of 12 cents a share in the fiscal year ther company completed April 4. He" does anticipate a profit of 4 to 5 cents a share in the fourth quarter, however, and for the year the company gust started, 42 cents a share on revenues of more than $50 million.

That ort of performance puts the stpck-et 19 times projected earnings, a -Considerable improvement over a multiple of 1,500. Dayton's chief financial officer as predicting Wall Street was going to lower its earnings estimates by 10 to 15 percent. Barkelew spent most of the morning trying to calm those who believed Dayton Hudson was signaling a much tougher year ahead than it had described earlier. No, she said, it wasn't a change from Dayton Hudson chairman Ken Macke's comments in this space Thursday, when he said he remained comfortable with earnings estimates in the range. The comment that the company expects analysts to lower their earnings "is not correct," she said.

"The fact is, we are not uncomfortable with analysts' estimates for 1993 in the $5.50 to $6 range." But Wall Street was uncomfortable with Dayton Hudson. Jeffrey Feiner, an analyst at Salomon Brothers, took what he read as a broad hint and shaved his full year's estimate to $5.80 from $5.90 a share. And in spite of Dayton's protestations, investors shaved an additional $3.25 a share (4.4 percent) out of a stock that traded into the mid-80s as recently as early April. It probably didn't help the situation that Macke did seem to go a step further in the Wall Street Journal's Friday editions, in which he was quoted as saying the company is "less optimistic for the year now than we were six months ago." Barkelew said Macke gave that interview a week ago about the same time he spoke with the New York Times, in which he said basically the same thing he said here this week. Barkelew said she didn't feel his comments to the Times and the Journal were inconsistent.

day at $25.50. In a chat yesterday, Green said Hutch began to feel the pinch in its order rate within the past two weeks. They don't measure change in the computer biz in nanoseconds for nothing. Love those wasting assets The U.S. Supreme Court this week let business off the hook on what could have been a multibillion-dollar tax bill involving intangible assets such as newspaper subscriber and customer lists.

In a 5-4 decision, the court said that if businesses could determine the useful life and dollar value of the assets, they could seek a tax deduction based on the depreciation of those assets. The Internal Revenue Service had taken the position in the case that such assets were inextricable from "good will," namely the price in excess of asset value, and are taxable. One local company the Supreme Court's decision will affect is International Multifoods which sued the IRS last spring in a case involving the same issues. Multifoods is contesting roughly $36 million of value that it wants to depreciate in connection with the acquisition of three of its divisions VSA Fred's Frozen Foods and PueringerMultifoods. All three divisions are significant distributors, and Multifoods is arguing that it should be allowed to put a value on the customer lists and depreciate them based on a certain useful life.

Duane Suess, vice president-tax for the company, said he believed that the Supreme Court's verdict "confirmed the tax law as I have interpreted it and as many other tax attor- The Dayton Hudson Tempest brings to mind a similar mini-drama that has engulfed Hutchinson Technology. Hutch stock has been cut almost in half since the beginning of the month, when the first signs of a slowdown in the personal computer industry began to appear. The first cracks came in the last week of March, when rumors of an inventory glut spread. Then on April 2, Conner Peripherals Inc. of San Jose, announced that it was cutting its work force because of the lackluster disk-drive business.

Its CEO, Fin-nis Conner, said then that supply exceeded demand by 30 percent. That day, calling from Singapore, no less, Jeff Green, Hutch's chief executive said, "The disk-drive market has always been turbulent. It jumps around a lot, but it hasn't been unusually jumpy lately." Any softness in the company's order rate? "No," Green replied, "there's just been a lot of movement. And I don't think there have been any unusual changes in our order rate." In the company's Thursday earnings release, Green is quoted as saying that yes, indeed, the excess inventory is real and has "resulted in a recent decrease in overall demand for suspension assemblies that we expect will continue for the near term." The first reports of the inventory glut took 24 percent out of the stock. Yesterday's release, which happened to accompany a nice second quarter, took 19.5 percent more out of the stock.

A stock trading at $47 at the beginning of the month closed yester The most recent weakness in the stock, Hosier said, is attributable to an April 14 announcement by Sega of America of a joint venture with Time Warner and Tele-Communications Inc. Their new interactive cable channel will allow subscribers to download and sample new Sega games. Some investors interpreted the news as the distant death knell of the retail outlet concept. Sega has since been trying to calm its retailers, telling them that it sees the new channel as a marketing tool, not as a replacement for its retail system. Hosier, the only analyst who actively follows the stock, believes the selloff in Funco is a buying opportunity: "I don't think that there's any fundamental change with the company," he said.

"Could the Sega Channel have an impact? Sure, maybe five years down the road. But Funco has a good management team, and I think they'll take steps to anticipate it." He said, she said Ann Barkelew, a spokeswoman for Dayton Hudson had what can only be described as a hectic Friday morning. Her employer's stock was rocked by an article yesterday in Investor's Daily. The piece quoted Percent change: Week Month By industry: Medical 3.7 RetaH Technology Utilities Industrials Financial food All stocks MARKETS UPDATE April 23, 1993 YMtorday'S volume 258,810,000 437.03, 445 What NYSE did: Frt. Thu.

746 789 1183 1148 563 2505 69 18 17 Advanced Declined Unchanged Issues Traded New Hlght New Lows 440 435 430 425 Gainers Lsat Nt Pet Losers Laet Not Pet Most active Vol. (000) Latt Nt vJLnStr 2 14.3 Tndycfts 1814 3 14.1 AMD 3806 30ft ft CptVlsn 3 12.5 LSI Lg 11 1ft 11.7 Chryslr 3306 39 vJLTVpC 214 ft J2.5 TMMxAn 8ft -Jft 11.3 Hmstke 3293 16 1 Hmstke 16 1 11.3 EqtRI 2ft ft 10.5 WalMts 2948 26 Marvel a "27" 2" 105 Analog 17ft' -2 "105 PhllMr 2790 47 QlobM 4 10.3 UtdMMpf 10 -114 10.4 BankAm 2573 47ft 1 CrysBd '2 14 10.0 TrMMxn 9 1ft 10.2 RJRpfA 2505 7ft ft JameswayJ 2 ft 10.0 CltyNC 8 ft 9.9 AmExp 2463 29ft 1 MorgnP "6ft 10.0 SclAtls 25 2 9.5 RJRNab 2416 5 TIS 2ft ft 9.5 Alleen 5ft 8.9 QnMotr 2409 4016 1ft NYSE Index: Close Chop. Composite 241.85 Industrial 289.17 Transportation 236.28 ".49 Utility 112.55 .64 Financial 211.84 8:309 10 11 12 1 2 3 Market Market opant Twin Cltlea time cloaea Yesterday's volume 24393,100 Whet OTC did: Frt. Thu. 1 Open Close Chng.

30 Ind. 3414.04 3413.77 15.40 20 Tm. 1620.84 1618.02 9.26 15 UtJ. 239.36 238.86 .81 65Stk. 1286.60 1285.39 6.09 REGIONAL STOCK NOT LMt Pet RorUnd 7ft V4 6.8 Venturn 9 5.9 Dacnark 7ft 5.6 OlyFin 5 14 4.9 Lectec 1114 ft 4.7 NtwkSy 9ft 4.0 UHraPc 714 14 3.6 FSIInt 5'Vm Vis 3.3 MQIPhr 8ft -I- 14 3.0 BenEye 9 14 2.7 Name Lin Net Pet HawkCb 51 125 Reshln 6ft 10.3 RecovEng 814 8.3 Innovex 9 ft 8.3 MedQr 5 ft 8.0 MlleHme 814 ft 5.7 Rlmage 13 5 2 Jostens 18 1 5.1 UHltCrs 4914 2 5.1 DaytHd 71ft 3 4.4 IMWi-HAWMIIIffl 1 Hum Vol (000) Uat Net Damark 1002 7ft FtBfcSy 949 29 ft DaytHd 787 71ft 314 Jostens 638 18 1 Honwels 514 33ft ft SUude 442 3114 ft MMM 427 113ft 1 UHltCrs 345 4914 2tt Buffets 317 29ft OnMllls 305 64 Nwn UH Net Damark 12.5 7ft AlrCure 9.0 4ft HutchT 5.2 25ft Rlmage 3.6 13 Aequtrn 2.7 2V Tennant 2.3 40H 14 Buffets 2.2 29 Innovex 2.1 9 ft Funco 1.9 8 ft QrdCesn 1.9 37ft Advanced 1262 1343 Declined 1417 "1297 Unchanged 1639 7 1677 Issues Traded 4318 4317 New Highs 1 99 103 New Lows 68 40 OTC Indexes: Ctoee Chng.

NASDAQ Comp. 658.41 5.10 NASDAQ Ind. 672.39 5.57 NASDAQ Fin. 836.92 6.47 NMSComp. 291.11 2.34 NMSIrtd.

268 75 2.31 Gainers Latt Not Pet Losers Laet Nt Pet Most active Vol. (000) Laet Net Clattis 2ft ft 53.9 AttMed 2 1ft 42.9 Intel 9709 92 3ft Invltrowt 5ft "Vl'w 39.7 RkMtHel 27.3 TICm A ft PenChk "18 5" 38.5 NwGnFd 2 27.3 Amgen 3290 39 ft VldeCrt 2 ft 33.3 AerSysE 2 ft 20.0 DellCpts 2847 28 2 CelScwt 31.3 Aequtrn Ae Vw 196 Mtostts 2790 81 1 LasVwtA 'Vie 31.3 Qroupl 10ft 2ft 19.2 Maxtor 2309 6ft i MonAvl 72ft ft 28.6 CndhvdB 5ft. 1ft 18.5 SunMIc 2210 26ft ft NuWstpf 23 5 27.8 JQ Ind 214 ft 18.2 Intel wt 2189 19ft ft 8pOlagwt 9ft 2 "267 JBRst 514 -1ft 17.7 OreUlyA" 2060 1914 Candles 3 25.0 DgPrdu'n 3ft 17.7 Novell 1863 30 1 Z3 mmm i nn-i-ir- i Cloae Chng. Comp. Ind.

631.15 2.29 Mfg. 740.53 2.52 Utility 1 228.60 1.19 Food 1689.42 5.89 Finance 683.17 7.17 i Tech. 588.00 6.86 Upper Growth Fund Index Trie Upper Growth Fund Index measures the daily performance of the 30 largest growth mutual funds. Yesterday's closing in London, Frankfurt and Tokyo, LONDONThe Financial Times Stock Exchange vJp Index of 100 issues fell 37.3 points to 2843.8. $One U.S.

dollar yesterday equaled: 0.6353 British pounds, down from 0.6459. DM 1.5820 German marks, down from 1.6066. 110.45 Japanese Yen, up from 109.95. 1 .2609 Canadian dollar, down from 1 .2630. 726-1 1 I I I I I I I I I 1 676 551 650 625-: oi i i i i Fab.

Mar. Apr. Yesterday's volume 18,720,800 AMtXcteelrKlex down down to 418.73 Mostsctlve Vol. (000) Let NT RoyaKnlx 1811 .,.4 EchoBy 1786 7 ft Nabors 1742X15 Wthfrd 1229 1114 ft I 556 18ft 1 CheySftt I 1462123,:: HTH 457 10 ft WMur "I 6ft; Hemlon 415 7 1 FRANKFURTThe 30- share DAX index fell 9.64 points to 1657.10. TOKYOThe 225-share Nikkei average rose 112.84 points to 19704.15.

Gold rose to $346.50 per ounce from $340.00. Silver rose to $3,950 per ounce from $3,920. West Texas Crude rose to $19.95 par barrel from $19.75. 608.96 Percentage for the day Value change for the day 1 yeerago Souree: Upptf Analytical ScurW Corp. Stock market Unexpectedly weak durable goods report, drop in bond prices tug at Dow Auto stocks also rose, as domestic automakers reported increases in mid-April auto sales of more than 15, percent.

General Motors rose 2 tq 40'i, Chrysler advanced to 39ft, and Ford added to 52. 1 Advanced Micro Devices led thd most-actives on the NYSE and fell 'i to 30'2. The semiconductor maker's stock rose 2 Thursday after it said it would ship its Intel clone microproJ cessors. Meanwhile, Intel led the most-actives in over-the-counter" trading, falling 3 to 92'A. Associated Press Nework, N.Y.

Stock prices fell Friday after the gov-ernrnent issued a surprisingly weak report on orders for durable goods and bond prices also dropped. Th Dow Jones industrial average 15.40 to 3,413.77, leaving the blue chip indicator with a 64.84 point loss for the week. Stocks began their decline at the opening bell after the Commerce Department said new orders for durable goods plunged an unexpectedly steep 3.7 percent in March despite a rebound in demand for military equipment. The drop, to a seasonally adjusted $130 billion, was the worst since December 1991 and much larger than the 1 percent decline analysts expected. "If you extract military and transportation orders, which can be large and erratic, it was still a negative number, which generally suggests that there is) still corporate caution," said Eric Miller, chief market strategist at Donaldson, Lufkin Jenrette Securi decline in the dollar, that it will either lead the Fed to defend it with higher short-term interest rates, or higher import prices, which are inflationary," Johnson said.

A weaker dollar also could discourage foreign investment in dollar-denominated securities, Johnson pointed out. "That the Clinton administration seems to be disregarding those risks is very troubling," he said. The dollar declined against all major currencies yesterday except the Japanese yen. ties. The bearish economic data should have boosted bond prices, but they also languished.

The Treasury's 30-year bond was off $6.25 per $1,000 in face value and yielded 6.79 percent, up from 6.74 percent Thursday. Bonds were lower in part because of the continued weakness in the dollar, which also affected stocks, said Hugh Johnson, chief investment officer at First Albany Corp. "There is a deep concern about the A number of large industrial stocks were hit hard. Alcoa fell l'i to 63; International Paper fell VM to 65V4 and 3M fell 1ft to ll3'. Bank stocks fell in reaction to higher interest rates and continued profit-taking.

Chemical Bank fell l' to 37, BankAmerica declined Ps to 47', and Citicorp lost to 27. One bright spot was gold stocks, which rose with gold prices. Home-stake Mining rose 1 to 16. New-mont Gold advanced 2ft to 41'i. American Barrick added 1 to 20'i.

HPWraraiTnTiTEl RE Hi 6v 1 a 1 1 1 Of bloomington on 35W, 1 block south of 494 J-bbad 000 miles per year, 1st mo. payment, license, title, fees $450 non-refundable acquisition fee due at delivery. Total payments Taxes extra. Jli" 'Closed end lease $2550 cap reduction or trade equity, based on 15.