STOCKS TO WATCH: GT Interactive, National Semi and Secure Computing

The communications-equipment maker met analysts' estimates in its second quarter Tuesday, earning $14 million, or 23 cents a share, on record sales of $570.3 million.

Its shares closed off 7/16 to 8 5/8 ahead of the earnings report.

First Call consensus expected the Carrollton, Texas firm to earn 23 cents a share.

In the year-ago period, it raked in $16.6 million, or 27 cents a share, on sales of $445.7 million.

Excluding the effects of a restructuring charge and gains from asset sales, net income for the second quarter would have been $11.4 million, or 19 cents a share.

GT Interactive reported a wider-than-expected loss in its fourth quarter and announced that it had hired Bear Stearns to look into the possibility of either selling or merging the company with another software developer.

Its shares closed off 3/16 to 3 _ Tuesday.

In its fourth quarter, GT Interactive lost $72.3 million, or $1 a share, on sales of $93.5 million.

First Call consensus expected the software developer to lose 42 cents a share in the quarter.

Company officials also announced that it has obtained commitments for an additional $30 million in subordinated debt from existing shareholders to execute its growth plan for fiscal year 2000.

Company officials said Tuesday that although it's losing one of its biggest customers, it will still meet analysts' estimates this quarter.

After market close Tuesday, the Internet marketing agency announced the end of its relationship with AT&T Corp. (NYSE: T). But the company said it still expects to meet Wall Street forecasts. First Call's survey of two analysts predicted a loss of 21 cents a share for Modem Media in 1999, including losses of 6 cents a share for the current quarter and the next one, and a loss of 4 cents a share in the fourth quarter.

"Based on worldwide demand for our services including recent client wins, our global expansion strategy, and comfort with our current revenue forecasts, the time was right to make this move," said G.M. O'Connell, chairman and CEO of Modem Media.

According to Modem Media's 1998 annual report, AT&T was its largest customer, generating 20.7 percent of Modem Media's revenue last year. Modem Media posted total sales of $42.5 million in 1998.

Shares of Modem Media gained 1/16 to 25 3/16 Tuesday.

National Semiconductor has reached an agreement to sell its money-losing Cyrix PC processor business to Via Technologies Inc., a Taiwanese maker of chip sets, and a deal could be announced as early as Wednesday, an industry source told Reuters.

"They have reached an agreement in principle,'' said one industry source who asked not to be identified. ``I expect they will announce it soon, probably as early as tomorrow.'' The value of the deal was not immediately available.

Secure Computing said Tuesday that it would report a staggering loss of between 42 cents to 49 cents a share in its second quarter. The dismal performance resulted in the resignation of CEO Jeff Waxman.

First Call consensus expected the software developer to earn 5 cents a share in the quarter.

In a company release, Secure Computing said Waxman had resigned to pursue personal interests and that COO John McNulty will take the helm.

Company officials said it now expects sales of between $5.7 million to $6.2 million in the quarter, a decline of between 57 percent to 61 percent from the year-ago quarter.

Secure Computing will also absorb charges of approximately $12 million in the quarter after slashing major parts of its product mix and restructuring.

Telecommunications equipment maker Tellabs Inc. (Nasdaq: TLAB) said on Wednesday it had agreed to buy NetCore Systems Inc. in an all-stock deal valued at about $575 million.

Tellabs said it expected the purchase of the Wilmington, Mass.-based developer of carrier-class IP routing and ATM switching solutions will be one to two cents dilutive to earnings per share in 1999, and neutral to slightly accretive to profits in 2000.