Boring Portfolio

Boring Portfolio Report
Monday, December 8, 1997
by Greg Markus (TMFBoring@aol.com)


ANN ARBOR, Mich. (Dec. 8, 1997) -- The Boring Portfolio posted its seventh consecutive gain Monday despite a somewhat mixed U.S. equities market. The Borefolio rose 0.78%, as compared with a fine 1.08% advance in for the Nasdaq but a 0.14% retreat by the S&P 500 from the record high it established Friday.

The Borefolio's twin tech gorillas participated in the Nasdaq party: Oracle (Nasdaq: ORCL) jumped $1 3/16, while Cisco Systems (Nasdaq: CSCO) picked up $3/8.

In getting a head start on tonight's recap, I had written: "Oracle's fiscal second quarter ended in November, and the company is slated to report its results within a few days. Analysts' consensus estimate is for earnings of $0.23 per share, according to First Call. That would represent a 28% advance over the year-ago $0.18."

Well, scratch that. After the market closed, Oracle dropped the news that fiscal second quarter earnings came in at $0.19 per share, four cents below expectations. Revenues increased 23% to $1.61 billion.

In the press release, Oracle's CFO, Jeff Henley, is quoted as follows: "Clearly, we were disappointed with the results this quarter. While several factors impacted the quarterly license growth, the economic situation in Asia-Pacific clearly had a significant impact. In addition, the strength of the dollar continued to have a dramatic effect on our reported results this quarter. Without the impact of currency exchange, overall revenue growth would have been 29%."

The conference call is going on as I write this. As is our custom, we'll provide a timely summary of it for you.

For now, all I can offer is that although the magnitude of the shortfall is certainly surprising, the fact that it occurred is not. With more than half of its revenues coming from overseas, Oracle has been challenged all year by a strong dollar and sluggish economies in parts of Europe and Asia.

On top of that, growth in license revenues for Oracle's core database products was below most analysts' expectations in the first fiscal quarter, which ended in August. Sales of applications that run on top of Oracle's database were up nicely in the quarter, however, as were consulting and service fees. Oracle's press release does not contain a detailed breakdown of revenues, so we await the conclusion of the conference call for that information.

Elsewhere in the Borefolio, FelCor Suite Hotels (NYSE: FCH) rallied on the heels of last week's announcement that FelCor had purchased the Sheraton (NYSE: ITT) hotel in Burlington, Vermont. The likely significance of this news is not only that FelCor has added another fine hotel to its lineup but that, contrary to the concerns of some investors, it demonstrates that FelCor can execute deals with Sheraton even now that that chain is being acquired by Starwood Lodging (NYSE: HOT).

With today's gain, FelCor moves into the black for the Borefolio. If only I could say the same for Oracle.


TODAY'S NUMBERS
Stock  Change    Bid
CGO   +  1/2   28.19
BGP   -  1/4   30.19
CSL   +  3/16  44.81
CSCO  +  3/8   89.69
FCH   +1 5/16  37.94
GNT   -  1/4   29.13
ORCL  +1 3/16  32.31
PMSI  +  1/8   13.25
TDW   +  5/16  62.69

                   Day   Month    Year  History
        BORING   +0.78%   3.26%  16.59%  34.17%
        S&P:     -0.14%   0.78%  32.62%  58.03%
        NASDAQ:  +1.08%   1.28%  27.92%  58.66%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     30.19   168.18%
  8/13/96  200 Carlisle C    26.32     44.81    70.23%
  6/26/96  100 Cisco Syst    53.90     89.69    66.40%
 12/23/96  100 Tidewater     46.52     62.69    34.74%
   3/8/96  400 Prime Medi    10.07     13.25    31.60%
   3/5/97  150 Atlas Air     23.06     28.19    22.24%
  11/6/97  200 FelCor Sui    37.59     37.94     0.92%
 11/21/96  150 Oracle Cor    32.43     32.31    -0.37%
   2/2/96  200 Green Tree    30.39     29.13    -4.15%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  12075.00  $7572.51
  8/13/96  200 Carlisle C  5264.99   8962.50  $3697.51
  6/26/96  100 Cisco Syst  5389.99   8968.75  $3578.76
 12/23/96  100 Tidewater   4652.49   6268.75  $1616.26
   3/8/96  400 Prime Medi  4027.49   5300.00  $1272.51
   3/5/97  150 Atlas Air   3458.74   4228.13   $769.39
  11/6/97  200 FelCor Sui  7518.00   7587.50    $69.50
 11/21/96  150 Oracle Cor  4864.99   4846.88   -$18.11
   2/2/96  200 Green Tree  6077.49   5825.00  -$252.49

                             CASH   $3021.10
                            TOTAL  $67083.60