Monday, March 02, 1998

Cash-King Portfolio Report
by Tom Gardner ([email protected])

ALEXANDRIA, VA (March 2, 1998) -- The month of February is no more -- a month that boasts the birthdates of great brilliance: Langston Hughes, Charles Darwin, Babe Ruth, Thomas Edison, Abe Lincoln, Susan B. Anthony, Galileo, Charles Dickens, Renoir, Victor Hugo, and our own Chief Operating Officer here at Fool Global HQ, Erik Rydholm.

February is gone again.

So, we look to March and to the close of the 1st quarter of fiscal 1998. We await with Foolish eagerness the splatter of Asian-achoo pre-announcements. We look forward to hearing more about this summer's business prospects. I'm looking forward to this month with great enthusiasm, a spirit that won't be shaken if the market falls in the weeks ahead. But let's not get ahead of ourselves. We need to start this month by looking back.

It being Monday, we review last week's performance and news announcements from our Cash-King stocks. The overall portfolio chugged ahead on strength from Microsoft, which rose 9.3% on positive vibes surrounding its split and due to the investing community's increasing fascination with consumer technology.

Today's Query

Which do you spend more time in front of:

  1. A television set

  2. The morning newspaper

  3. The windshield of your automobile

  4. Your desktop computer

  5. Your refrigerator door

Consider what your answer would have been 10 years ago, 25 years ago, and 50 years ago.

In the news this week, Microsoft announced that it is gearing up for the release of Windows 98 with a free event: "Microsoft Extreme." The extravaganza, designed to show off cutting-edge features in the new package, will be broadcast to 38 movie theaters around the U.S. and Canada. Ladies and gents, the hype begins in earnest! This event will also feature a live Q&A exchange between Softy and its users. After an incredibly rich debate about the merits and demerits of Microsoft on the Cash-King Web folder, I'm wondering if we shouldn't send CK writer Rob Landley to a Cineplex Odeon near him to send up some questions!

For more on "Microsoft Extreme," click this link: Microsoft Gears Up for Windows 98.

Now, over to our other technology investment. Out in San Francisco this past week, Intel Corp. executives were flooding the marketplace with information about their development goals for the ten years to come. Intel is aggressively transitioning out of the Information Revolution and into the Communications Age, moving away from high-speed unlinked boxes and into a world where home, small-business, and large-business computer users are simultaneously connectable to all points on the globe (and beyond).

The company's COO Craig Barrett said this week that Intel is planning for 1 billion personal computers to be linked into the Internet by the year 2008. That's a lot of new Fools to meet, greet, steer away from credit-card debt, and encourage into long-term ownership of superior businesses! Intel's networking solutions will enable our Foolish brand of enlightenment to ping from monitor to monitor, from Hong Kong to Harrisburg. We like relying on Intel to get us there.

I highly recommend reading Mr. Barrett's short speech last week by clicking: Intel Networking Event, Craig Barrett, or tap into the paraphrasing of his comments in the following press release: Intel Sees 1 Billion PCs Networked by 2008. It looks like the Internet will continue to visit pain on its bearish detractors in the decade ahead.

From San Francisco, we fly to Atlanta -- or, really, Argentina. The Coca-Cola Co. announced this past week that it has inked an advertising deal with the Cisneros Television Group (CTG), owner of the top rated ad-supported movie channels in Argentina. Cisneros TV reaches viewers across the Southern Cone region of South America, including Uruguay, Paraguay, Chile, Peru and Bolivia.

In the succeeding press release, CTG executive Carlos Cisneros refers to our company as one "whose foresight in recognizing emerging marketing opportunities is virtually unrivaled." The numbers back him up; Coca-Cola generates more than 65% of its sales and 75% of its profits outside of the United States. Is this company really headquartered in Atlanta?

Click here for Coca-Cola's lone news announcement from last week: Coke Partners with Cisneros TV in Argentina.

From Argentina to the Big Apple, from caramelized corn syrup to medicinal compounds, we join Pfizer, which rose $1 1/4 last week, touching its all-time high of $91 3/8 before falling back into the high-$80s. Pfizer announced this past week that it has retained Morgan Stanley as an investment banker and Lazard Freres as a consultant as it reviews options relating to its Medical Technology Group.

Diligent Cash-King readers know that the Medical Technology Group at Pfizer is the smaller, lower-margin component of its massive healthcare division. The Medical Tech Group manufactures surgical instruments as well as cardiology, urology, and radiology products. In looking to sell off all or part of this division, Pfizer is again illustrating its desire to concentrate heavily on the high-margin pharmaceutical side of its business.

To read the press release referred to above, click: Pfizer Might Sell its Medical Technology Group. (Aside: We love how the company emphasizes in the closing skinny on itself in the release that it has $12.5 billion in annual sales and that it spent $1.9 billion on research last year. We're very big, and we're very committed.)

We'll move toward the close of today's report by hopscotching down to Baltimore, Maryland -- home of T. Rowe Price. The company made no announcements this past week and its stock sat at around $66 per share, near where we bought it in the first week of February. With no news out there, I'll just link you to the company's recent aggressive promotion of its family of index funds.

As mutual funds get swallowed up by larger financial institutions, the fund industry is changing. The larger players are intent on establishing wide-ranging relationships with their customers. Don't be surprised to start hearing banks preaching about the underperformance of managed funds as they promote the inexpensive, easy-to-grasp, and notably better performing index funds. Strange bedfellows, indeed.

To read more about and understand T. Rowe's index funds (which T. Rowe Price's stock has dramatically outperformed over the past five years), click here: T. Rowe Price Equity Index Fund Family.

And so the first market day of March comes to an end. Here in Cash-Kingdom, we aim to serve. Hope you enjoyed the report, hope you've spread the word about Foolishness to your 1,000 best friends, and hope you've directed your enemies elsewhere!

Fool on,

Tom Gardner

TODAY'S NUMBERS

Stock  Change    Bid 
 ---------------- 
 KO    -  11/16 68.00 
 INTC  -2 1/16  87.56 
 MSFT  -1 1/2   83.25 
 PFE   -  11/16 87.81 
 TROW  +1 1/2   67.50 
 
                 Day   Month    Year  History 
         C-K      -0.36%  -0.36%   1.40%   1.40% 
         S&P:     -0.16%  -0.16%   4.64%   4.64% 
         NASDAQ:  -0.67%  -0.67%   6.40%   6.40% 
  
     Rec'd    #  Security     In At       Now    Change 
    2/3/98    22 Pfizer        82.30     87.81     6.70% 
    2/3/98    24 Microsoft     78.27     83.25     6.36% 
    2/13/98   22 Intel         84.67     87.56     3.41% 
    2/6/98    28 T. Rowe Pr    67.35     67.50     0.23% 
    2/27/98   27 Coca-Cola     69.11     68.00    -1.60% 
  
  
     Rec'd    #  Security     In At     Value    Change 
    2/3/98    22 Pfizer      1810.58   1931.88   $121.30 
    2/3/98    24 Microsoft   1878.45   1998.00   $119.55 
    2/13/98   22 Intel       1862.83   1926.38    $63.55 
    2/6/98    28 T. Rowe Pr  1885.70   1890.00     $4.30 
   2/27/98   27 Coca-Cola   1865.89   1836.00   -$29.89 
                               CASH  $10696.94 
                              TOTAL  $20279.19 
  
 *The year for the S&P and Nasdaq will be as of 02/03/98