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C-K is Buying Cisco

by Rob Landley
(landley@flash.net)

Austin, TX (June 22, 1998) -- It's been a hot couple of weeks here in Austin, in a thermally warm sort of way. A record breaking heatwave has driven temperatures above 110 degrees. I'm perspiring as I type. Man.

It's also been a very hot recent week on the Fool Web boards, especially the new Cash King Companies folder (web), where the debate over our newest stock purchase remains intense. Even before Cisco Systems (Nasdaq: CSCO) was finally selected, I was pleased to see so many people announcing their own selections, and their intention to buy them no matter what happened in our Foolish vote.

That's our goal as a company: to help educate investors, to give them the confidence to make their own decisions, and to make the whole process enjoyable -- it should be. We don't agree with Wall Street -- we don't think that managing a portion or all of your money is like doing dental work on yourself.

For those of you who missed it, here's the final tally of the Cash-King vote. With 3,114 votes cast, the five nominees were ranked by our community, thus:

37% Cisco Systems
27% General Electric
22% Dell Computer
08% Schering Plough
06% Tellabs

That winner with thirty-seven percent of the vote is Cisco Systems, which we'll be adding to our portfolio in the next week. If you don't know what Cisco does or haven't looked at its financial statements, you should definitely read our Cisco Systems buy report. Phil did a wonderful job with the write-up.

Ok, let's get to last week's news. First up, our numerical performance toted up for the week that was. Here it is:

 
  
 Cash-King  Last    This     Change 
 Microsoft  $85.69   $94.63  + 10.4% 
 AmEx      $102.75  $106.63   + 3.8% 
 T Rowe     $33.88   $35.06   + 3.5% 
 Intel      $68.44   $69.94   + 2.2% 
 Pfizer    $109.50  $111.25   + 1.6% 
 Coca-Cola  $80.69   $80.38   - 0.4% 
 Gap Inc.   $61.00   $58.75   - 3.7% 
  
  
 Fool Four  Last    This     Change 
 Exxon      $69.31   $70.06   + 1.1% 
 Chevron    $81.38   $81.31     0.0% 
 E. Kodak   $69.81   $67.13   - 3.8% 
 GM         $69.88   $67.13   - 3.9% 
 
S&P 500 1098.84 1100.65 + 0.2% Total CK $21,382 $21,626 + 1.1%


Ok, first up Microsoft (Nasdaq: MSFT) -- also known as Monoplesoft or Micropoly. Our MSFT shares rose more than 10% last week. Rather than provide a Foolish overview of the slew of opinions about Mr. Softy's position, I'll just provide a bunch of links.

1. Ralph Nader reports that he tried to but was unable to buy a computer without Windows on it.
Click here: Nader and Microsoft.

2. The Software Publisher's Association formally asked the Justice Department to widen the Microsoft probe.
Click here: The SPA and Microsoft.

3. AT&T sues Microsoft for forcing customers to switch to Windows NT.
Click here: AT&T and Microsoft.

4. Alan Greenspan thinks the free market will deal with monopolies without the need for government intervention.
Click here: Alan Greenspan and Microsoft.

5. Microsoft's Windows application is expected to have 95% of the Operating System market next year.
Click here: Windows and Microsoft.

6. Microsoft sets low expectations for Windows 98.
Click here: Windows 98 and Microsoft.

7. Bill Gates says the antitrust suit will not hurt Microsoft.
Click here: Bill Gates and Microsoft.

Microsoft remains unbelievably profitable, but to my eye, it has filled its niche so tightly that it can't seem to breath without storming adjacent companies. My other Cash-King managers don't seem to have a problem with this, citing cases like Standard Oil a century ago. The future for Microsoft is going to teach us a lot about our public markets.

The Gap (NYSE: GPS) released its quarterly results last week: Sales for the quarter rose from $1.2 billion last year to $1.7 billion dollars this year. In response, Goldman Sachs downgraded the company from "Priority" to "Recommended" -- I don't even PRETEND to understand that. Or care. For a look at Gap's quarterly performance, click here: Gap's 1st quarter report.

Our financial stocks had nothing doing. The only news out of T. Rowe Price (NYSE: TROW) recently was that it declared a quarterly dividend of eight and a half cents per share, payable on July 7th to anybody who owns the stock as of today (click here for details: T Rowe's Dividend.) American Express (NYSE: AXP) also had a fairly quiet week.

Over at Pfizer (NYSE: PFE), unfortunately, the FDA announced that it can't yet approve Zeldox, an anti-psychotic drug Pfizer hopes will compete with similar offerings from Johnson & Johnson and Eli Lilly. They are demanding more information. (Click here: FDA requests more information.

And the nation's largest HMO announced on Friday that it won't pay for Viagra, partially because they don't consider it a medical necessity and partially because they estimate meeting the demand for Viagra would cost almost twice as much as they spend on all viral drugs combined. Click here to find out why: Kaiser will not cover Viagra.

And finally, Pfizer continues research to improve Viagra, trying to make it faster-acting with fewer side effects. Here's the company's report on that: Pfizer hard at work.

Down in Atlanta, Coca-Cola (NYSE: KO) is enjoying the hot summer, especially when it comes to increased sales of its various non-carbonated beverages. Makes sense to me. Click here: Non-Carbonated Beverages on a Summer Roll.

And finally, Intel (Nasdaq: INTC) talked about faster and cheaper chip designs last week, but the biggest news out of Intel is a new Java Virtual Machine called NetFire, which they're developing in cooperation with Novell. In addition to being blazingly fast, it's supposed to be able to support parallel processing and take advantage of Intel's upcoming 64 bit Merced processors. Here's a report on that new machine: Novell Working with Intel on NetFire.

So, all of our Cash-King companies are busy making money for their owners. And, after less than six months of whittling down our cash position, we're now inching toward the S&P 500 -- looking to sweep past and never look back. Onward!

What's up this week in the land of Cash-Kings? Starting tomorrow, I'd like to talk about how and why Fools like us have the opportunity to buy stock and become owners in profitable companies. What exactly is a corporation? How does it work? Why is it publicly traded?

Fool on,

Rob Landley


06/22/98 Close
Stock  Change    Bid 
 ---------------- 
 AXP   -1 1/8   105.50 
 CHV   +  7/16  81.75 
 KO    +  3/4   81.13 
 GPS   +  1/8   58.88 
 EK    +  1/8   67.25 
 XON   +  9/16  70.63 
 GM    +  15/16 68.06 
 INTC  +3 15/16 73.88 
 MSFT  +1 3/16  95.81 
 PFE   +  3/16  111.44 
 TROW  +  1/16  35.13 
 

                  Day   Month    Year  History 
         C-K      +0.76%   3.01%   8.95%   8.95% 
         S&P:     +0.23%   1.13%  10.17%  10.17% 
         NASDAQ:  +1.38%   1.52%   9.25%   9.25% 
  
 Cash-King Stocks 
  
     Rec'd    #  Security     In At       Now    Change 
     2/3/98   22 Pfizer        82.30    111.44    35.41% 
     2/3/98   24 Microsoft     78.27     95.81    22.41% 
    2/27/98   27 Coca-Cola     69.11     81.13    17.39% 
     5/1/98   37 Gap Inc.      51.09     58.88    15.24% 
     2/6/98   56 T. Rowe Pr    33.67     35.13     4.31% 
    5/26/98   18 American E   104.07    105.50     1.38% 
    2/13/98   22 Intel         84.67     73.88   -12.75% 
  
 Foolish Four Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Exxon         64.34     70.63     9.78% 
    3/12/98   20 Eastman Ko    63.15     67.25     6.50% 
    3/12/98   15 Chevron       83.34     81.75    -1.91% 
    3/12/98   17 General Mo    72.41     68.06    -6.00% 
  
  
 Cash-King Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
     2/3/98   22 Pfizer      1810.58   2451.63   $641.05 
     2/3/98   24 Microsoft   1878.45   2299.50   $421.05 
    2/27/98   27 Coca-Cola   1865.89   2190.38   $324.49 
     5/1/98   37 Gap Inc.    1890.33   2178.38   $288.05 
     2/6/98   56 T. Rowe Pr  1885.70   1967.00    $81.30 
    5/26/98   18 American E  1873.20   1899.00    $25.80 
    2/13/98   22 Intel       1862.83   1625.25  -$237.58 
  
 Foolish Four Stocks 
  
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Exxon       1286.70   1412.50   $125.80 
    3/12/98   20 Eastman Ko  1262.95   1345.00    $82.05 
    3/12/98   15 Chevron     1250.14   1226.25   -$23.89 
    3/12/98   17 General Mo  1230.89   1157.06   -$73.83 
  
                               CASH   $2037.63 
                              TOTAL  $21789.57 
   
 *The year for the S&P and Nasdaq will be as of 02/03/98 
       

</THE CASH-KING PORTFOLIO>

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