STOCKS TO WATCH: ADC Telecom, Maxtor, SGI, Sun and 3dfx

ADC got a bit of good news late Monday when ABN-AMRO raised its fiscal 1999 earnings estimate and reiterated its "buy" recommendation.

Analyst Kenneth Leon bumped the 1999 earnings estimate from $1.35 a share to $1.37 a share even though the telecommunications provider reported lower-than-expected sales in its latest quarter.

"We are pleased with the quarter and are reviewing our model for any changes of growth assumptions in the lines of business," Leon wrote in a research note. "We are comfortable with our current estimates, but there could be potential for upward revisions after further review."

In its third quarter, ADC Telecom easily topped analysts' estimates, on sales of $444 million, slightly less than expected.

There's also a sense that ADC is having difficulties finalizing an important contract with telecom titan AT&T Corp. (NYSE: T).

Analysts were also unnerved by the fact that it spent only $35.8 million on research and development in the quarter, down from $38.5 million in the year-ago quarter.

On Monday, the stock closed off 3/8 to 14 3/8.

The disk-drive maker will be on the move Tuesday after it announced plans to acquire server appliance maker Creative Design Solutions (CDS) in a stock swap transaction valued at around $57 million.

The deal is subject to customary closing conditions and will be accounted for as a purchase, Maxtor said in a statement.

Maxtor said its initial goal with the acquisition of CDS is to build a leading position in the rapidly growing network attached storage market, which provides significant ease of installation at lower cost relative to conventional servers.

Maxtor closed unchanged at 6 3/8.

Rick Belluzzo's out and Robert Bishop's in as SGI's CEO.

Bishop formerly served as SGI's global sales leader.

Bishop joined SGI in 1986 and built its international division for the next nine years. He joined its board of directors in 1993, remaining an active part of the company's management team until 1995.

Bishop had similar responsibilities at Apollo Computer, Inc., from 1982 to 1986 and at Digital Equipment Corp. from 1968 to 1982.

SGI closed up 5/16 to 12 7/16 Monday.

A federal appeals court ordered that an injunction against Microsoft Corp. be reconsidered, a potential setback to Sun's hopes of maintaining the independence of its Java software technology, the Wall Street Journal reported Tuesday.

Sun also announced Tuesday that it is ending a joint effort with International Business Machines Corp. to develop a Java-based operating system for so-called network computers.

In another release, Sun, also said it plans to buy Forte Software Inc., a maker of software tools for developing business applications in Java, in a stock-swap transaction valued at $540 million.

3dfx posted a second-quarter loss of $11.6 million, or 50 cents a share, on sales of $104.8 million Monday. Its shares closed off 3/8 to 14 3/8 ahead of the earnings report.

First Call consensus expected 3dfx to earn 4 cents a share in the quarter.

However, the $11.6 million loss includes the amortization of goodwill as well as a one-time charge for the write-off of in-process research and development associated with the mid-May merger with graphics-board maker STB Systems Inc.

Since 3dfx changed its fiscal calendar, analysts have been scrambling to accurately estimate the company's sales and earnings. In fact, 3dfx was unable to count millions of dollars in sales of its Voodoo3 boards since its merger with STB Systems didn't close until mid-May.

Last quarter, 3dfx missed analysts' estimates, losing $2.1 million, or 14 cents a share, on sales of $40.4 million.

In the year-ago quarter, it made $9 million, or 54 cents a share, on sales of $58.6 million.

3dfx shares hit a 52-week high of 23 in April after falling to a low of 8 in September.

Five of the six analysts following the stock maintain either a "buy" or "strong buy" recommendation.