STOCKS TO WATCH: Consolidated Graphics, Healtheon, Liberate Technologies, 3Com and Xerox

The printing company warned earnings in its third quarter ending Dec. 31 won't meet estimates. It expects to earn 56 cents a share, compared with an average 70-cent estimate of nine analysts polled by First Call/Thomson Financial. Consolidated Graphics rose 1 11/16 to 20 3/8 at Tuesday's close.

The company, which links doctors and insurers by the Internet, said it will buy Kinetra, a joint venture of Electronic Data Systems Corp. (NYSE: EDS) and Eli Lilly and Co. (NYSE: LLY), for $300 million to expand the electronic transactions it processes for doctors. Healtheon fell 1 1/16 to 37 at Tuesday's close.

Liberate Technologies will be on the rise Wednesday after it topped analysts' estimates in its second quarter and set a 2-for-1 stock split.

The vendor of Internet access software for non-PC devices posted a loss of $12.5 million or 30 cents a share, on sales of $6.1 million.

First Call consensus expected it to lose 31 cents a share in the quarter.

Excluding writedowns of acquisition-related goodwill, warrants and deferred stock compensation, Liberate lost $9.8 million or 23 cents per share in the November quarter.

Shares of Liberate rose to 256 in after-hours trading. The stock soared to 252 1/2 in Tuesday's regular trading, a gain of 36 1/2, or 17 percent.

3Com will see some action Wednesday but it not be the kind that most investors were expecting.

3Com did beat analysts' estimates in its second quarter Tuesday but its total sales actually declined 4 percent from the year-ago quarter.

In the quarter, 3Com pocketed $130.9 million, or 37 cents a share, on sales of $1.48 billion, excluding one-time gains and charges.

First Call consensus predicted 3Com would earn 34 cents a share in the quarter.

Despite the strong earnings, 3Com shares fell more than $2 a share in after-hours trading after closing up 4 1/4, or 9 percent, to a 52-week high of 53 1/8 ahead of the earnings report.

The $1.48 billion in sales represents a 4 percent decline from the year-ago quarter when it earned $133.4 million, or 36 cents a share, on sales of $1.54 billion.

Separately, 3Com announced that CFO Chris Paisley will retire sometime in the summer of 2000.

The stock hit a previous 52-week high of 52 3/16 earlier this week after falling to a low of 20 in April.

Sixteen of the 28 analysts tracking the stock maintain a "hold" recommendation.

Xeros announced some major restructuring moves Tuesday in the hopes of jump-starting its faltering business in the U.S. and abroad.

Earlier this month, Xerox warned that it would fall considerably short of analysts' estimates in its fourth quarter.

First Call consensus originally predicted it would earn 66 cents a share in the quarter. It now is looking for a profit of 40 cents a share.

In Tuesday's announcement, Xerox said its production systems group, which develops high-speed printing and publishing products, will become part of the document solutions group, the organization responsible for developing and delivering solutions addressing industry-specific document challenges, such as book publishing and invoice printing.

"With this change, all of the corporation's product development firepower is now aligned with the appropriate distribution resources. The changes will improve speed, give our product development people clearer lines of sight to the customer and strengthen accountability," said CEO Rick Thoman in a prepared release.

Xerox officials said the changes will streamline the organization and result in end-to-end responsibility for all customer fulfillment.

This is the second quarter in a row that Xerox has issued a profit warning. Analysts lowered their third quarter forecasts after a Xerox warning in October caused by some of the same issues cited this time.

Its shares closed off 23/64 to 20 3/4 ahead of the announcement.

Its shares peaked at 63 15/16 in May before falling to a low of 19 3/4 earlier this month.

Nine of the 15 analysts following the stock maintain "hold" recommendations.