AMR Corporation and Intersil Business Editors CHICAGO--(BUSINESS WIRE)--Sept. 23, 2004 Zacks.com releases details on a group of stocks that are part of their exclusive list of Stocks to Sell Now. These stocks are currently rated as a Zacks Rank #5 (Strong Sell). Since inception in 1988 the S&P 500 has outperformed the Zacks #5 Ranked Strong Sells by 141.8% annually (11.7% vs. 4.5% respectively). While the rest of Wall Street continued to tout stocks during the market declines of the last few years, we were telling our customers which stocks to sell or avoid. Among the #5 ranked stocks today we highlight the following companies: Blockbuster, Inc. (NYSE:BBI) and Hutchinson Technology, Inc. (NASDAQ:HTCH). Further they announced #4 Rankings (Sell) on two other widely held stocks: AMR Corporation (NYSE:AMR) and Intersil Corporation (Nasdaq:ISIL). To see the full Zacks #5 Ranked list of Stocks to Sell Now then visit: http://at.zacks.com/?id=92 Here is a synopsis of why these stocks have a Zacks Rank of 5 (Strong Sell) and should most likely be sold or avoided for the next 1 to 3 months. Note that a #5/Strong Sell rating is applied to 5% of all the stocks we rank: Blockbuster, Inc. (NYSE: BBI) is a leading global provider of in-home movies and game entertainment. Earlier this month, Viacom announced the ratio at which it would exchange its own shares for those of Blockbuster, enticing investors to make the deal by offering a premium of 19 percent, based on the closing values of the stock September 7th. However, due to industry weakness, along with Blockbuster's investment in its key growth initiatives, the company announced that it expects diluted earnings per share for 2004 to decrease about -30% from the adjusted diluted earnings per share total for 2003. As for its second quarter, Blockbuster reported net income of 26 cents per diluted share, which edged past the consensus by a penny but fell year-over-year from 34 cents. The company has experienced some recent downward revisions from analysts, and its earnings estimates for the year ending December 2004 have moved lower over the past month. However, Blockbuster remains on track or ahead of schedule with all of its strategic initiatives, which includes transforming the company into a broader entertainment destination where customers can rent, buy or trade movies and games, new or used, in-store or online. For the moment though, investors may want to hold off on a position until analysts give this industry leader's earnings estimates a lift. Hutchinson Technology, Inc. (NASDAQ: HTCH) is the leading worldwide supplier of suspension assemblies for disk drives. Excluding a tax benefit, the company's third quarter net income would have totaled $4.138 million, or 16 cents per diluted share. In the comparable fiscal 2003 period, Hutchinson Technology reported net income of $16.407million or 55 cents per diluted share, on net sales of $120.127 million. The company's gross profit margin in the fiscal 2004 third quarter was 24% compared with 32% in the fiscal 2003 third quarter. The decline resulted from lower suspension assembly shipment volume, lower component sales and lower utilization of production capacity. Over the last month, analysts have lowered full year fiscal 2004 earnings estimates by -5% due to the sluggish sales and gross profit. However, Hutchinson Technology believes the downturn is temporary and said it continues to expect industry-wide demand for suspension assemblies to grow at about the same rate as growth in disk drive shipments. Once the company passes by this tough time, it should be able to get back on track, and the company does continue to sign agreements with leading disk drive manufacturers. However, the best move right now may be to wait and watch for its earnings estimates to gain more upside momentum. Below is a synopsis of why these two stocks have a Zacks Rank of 4 (Sell) and should also most likely be sold or avoided for the next 1 to 3 months. Note that a #4/Sell rating is applied to 15% of all the stocks we rank: AMR Corporation (NYSE: AMR) operations fall almost entirely in the airline industry. AMR's principal subsidiary is American Airlines, Inc. American is one of the largest scheduled passenger airlines in the world excluding special items, AMR reported a second quarter loss of (15 cents) per share in July. That loss marked a significant improvement over the year-ago deficit of ($2.26) per share, but was still a wider loss than the consensus. Similar to its industry peers, AMR had to grapple with a challenging environment, led by very high fuel prices and rising labor costs. Yesterday, the company announced that it will increase most domestic U.S. and U.S. to Canada fares $5 one way and $10 round trip. The increase, which is effective immediately, is necessary to help offset the continuing high cost of fuel. The company has experienced more downward revisions from analysts than upward revisions of late, and its loss per share estimate for the year ending December 2004 has widened over the past several months. AMR said it ran much more efficiently, than it did in the year-ago quarter, and is making changes to improve its earnings potential on a daily basis. The entire industry is feeling the pressure right now. Once the environment improves, a leader like AMR should be a big beneficiary. At the moment though, it might be best to hold off opening or widening any positions in AMR. Intersil Corporation (Nasdaq: ISIL) is a world leader in the design and manufacture of high performance analog solutions. In July, the company reported a pretty good second quarter. Net revenue was $144.2 million, an increase of +5% from the first quarter of 2004 and +15% from the second quarter of 2003. On a generally accepted accounting principles (GAAP) basis, net income was $27.2 million or 19 cents per diluted share of common stock for the second quarter of 2004. This compares to net income of $27.3 million or 19 cents per diluted share for the first quarter of 2004. However, earlier in September the company reduced its estimates based on recent and forecasted order rates from customers. Intersil now expects revenue to be approximately $140 million, where previously, the company had expected revenue between $154 million and $160 million. This revised revenue should result in adjusted earnings per share of approximately 15 cents for the third quarter. The lower revenue forecast is a result of orders trending below previous expectations, driven by lower than expected end demand, along with customer reductions in component inventory levels. Analysts have followed the company's warning and recently decreased the third quarter estimates from 22 cents down to 16 cents. The company's rapidly expanding portfolio of products should enable them to generate profitable growth and strong cash flow throughout the business cycle, but investors may want to wait until orders increase and stronger revenues materialize. To truly take advantage of the Zacks Rank, you need to first understand how it works. That's why we created the free special report; "Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions." Download your free copy now to prosper in the years to come. http://at.zacks.com/?id=93 About the Zacks Rank For over 15 years the Zacks Rank has proven that "Earnings estimate revisions are the most powerful force impacting stock prices." Since inception in 1988 the #1 Ranked stocks have generated an average annual return of +33.1% compared to the (a)S&P 500 return of only +11.97%. Also note that the Zacks Rank system has just as many Strong Sell recommendations (Rank #5) as Strong Buy recommendations (Rank #1). And since 1988 the S&P 500 has outperformed the Zacks #5 Ranked Strong Sells by 141.8% annually (11.97% vs. 4.5% respectively). Thus, the Zacks Rank system can truly be used to effectively manage the trading in your portfolio. 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Zacks Sell List Highlights Blockbuster, Hutchinson Technology,
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