RULE MAKER PORTFOLIO

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What Happened to Cash-King?

The Weekly News
Intel speeds up Celeron line

By Rob Landley (landley@flash.net)

Austin, TX (Dec. 22, 1998) -- Winter has finally arrived in Austin, and the weekly news has finally arrived in the Rule Maker portfolio. Wall Street's haggling pits were a bit distracted last week by the impeachment of the president and the bombing of Iraq, but they managed to agree on some semi-random short-term prices at which they'd be willing to buy and sell shares of our companies anyway. Let's see where the roulette wheel stopped, shall we?

Intel (Nasdaq: INTC) had a lot of news. It's working to speed up its Celeron line (what a surprise) to defend against vigorous low-end competition from companies like Advanced Micro Devices (NYSE: AMD) and National Semiconductor (NYSE: NSM). Personally, I still think the whole Celeron line is a horrible idea, a distraction from Intel's original market advantages of the best price to performance ratio and rapid product cycle time due to manufacturing skill. All of Intel's products start at the high end and migrate to the low end during their life cycle. Starting a product at the low end is just dumb. Intel can drive AMD out of business anytime it wants to by cutting prices, but Intel allows its competitors to thrive and grow in order to maintain margins.

Still, so far the company has successfully maintained its margins without much impact on volume, so I can't complain too much. But I think revving the development cycle faster and migrating the high end chips down to the low end more rapidly is a better idea than backing up the flow with Celerons, unless Intel is worried about its ability to produce new high-end processors like Xeon and Merced.

Speaking of new high-end processors, new developments are occurring on what techies refer to as "the bleeding edge." (That's beyond the "cutting edge" -- technologies into the stuff that doesn't reliably work yet.) This article is about the successful testing of photonic circuitry at a university lab. You know how fiber optics are a heck of a lot better than copper wire for carrying data? Well the same thing applies to photons vs. electrons in microchips, but it's still years away from mass production. Still, the process will probably interest Intel well before our ten year holding period comes up for renewal.

The new Diet Coke advertising campaign is a cross-promotional deal with several book publishers. It features sneak peeks at new romance and suspense novels, excerpts of which will appear in Coke's packaging. Coke continues to sell itself, but The Coca-Cola Co. (NYSE: KO) is doing its best to help the process along.

Pfizer's (NYSE: PFE) Viagra is humming along, currently working its way towards approval by the Japanese Health Ministry.

A sales analyst at Prudential initiated coverage of T. Rowe Price (Nasdaq: TROW) on Friday. Ooh. Wow. How do we get them to stop again? The TROW dividend will be 10 cents per share for everyone who owns the stock as of December 28, with the checks mailed out on January 12.

Schering-Plough's (NYSE: SGP) PR department is offering free rides on "The Traffic Congestion Relief Bus" in New York City all this week, sponsored by Claritin. I suppose that makes sense.

Finally, Cisco (Nasdaq: CSCO) had a good day Friday, announcing the availability of new software: IOS version 12. Cisco was the subject of a recent "Dueling Fools," which is worth a read and you can vote for the better argument at the end of it.

Personally, I'm out of eggnog. I think I'll go make some tea instead (British style, with milk in it, of course,) and try very hard to catch up on our strategy board. Beats going outside, it's COLD out there.

Until tomorrow,

- Oak


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12/22/98 Close
Stock  Change    Bid
AXP   +  7/8   101.63
CHV   -  1/4   83.75
CSCO  -  7/8   93.81
KO    +1 11/16 67.44
GPS   +1 3/16  52.31
EK    -  9/16  73.44
XON   +  1/8   74.94
GM    +  3/16  73.88
INTC  -3 5/8   119.06
MSFT  -2       138.44
PFE   +2 1/8   117.19
SGP   +1 1/16  53.44
TROW  +  1/4   36.00

                 Day     Month   Year    History
        R-MAKER  +0.24%   6.08%  29.16%  29.16%
        S&P:     +0.06%   3.43%  19.64%  19.64%
        NASDAQ:  -0.80%   8.79%  27.28%  27.28%

Rule Maker Stocks

    Rec'd    #  Security     In At       Now    Change
    2/3/98   24 Microsoft     78.27    138.44    76.87%
   6/23/98   34 Cisco Syst    58.41     93.81    60.61%
    5/1/98 55.5 Gap Inc.      34.06     52.31    53.59%
    2/3/98   22 Pfizer        82.30    117.19    42.39%
   2/13/98   22 Intel         84.67    119.06    40.61%
   8/21/98   44 Schering-P    47.99     53.44    11.34%
    2/6/98   56 T. Rowe Pr    33.67     36.00     6.91%
   5/26/98   18 AmExpress    104.07    101.63    -2.35%
   2/27/98   27 Coca-Cola     69.11     67.44    -2.42%

Foolish Four Stocks

    Rec'd    #  Security     In At     Value    Change
   3/12/98   20 Exxon         64.34     74.94    16.48%
   3/12/98   20 Eastman Ko    63.15     73.44    16.30%
   3/12/98   17 General Mo    72.41     73.88     2.03%
   3/12/98   15 Chevron       83.34     83.75     0.49%

Rule Maker Stocks

    Rec'd    #  Security     In At     Value    Change
    2/3/98   24 Microsoft   1878.45   3322.50  $1444.05
   6/23/98   34 Cisco Syst  1985.95   3189.63  $1203.68
    5/1/98 55.5 Gap Inc.    1890.33   2903.34  $1013.01
    2/3/98   22 Pfizer      1810.58   2578.13   $767.55
   2/13/98   22 Intel       1862.83   2619.38   $756.55
   8/21/98   44 Schering-P   2111.7   2351.25   $239.55
    2/6/98   56 T. Rowe Pr  1885.70   2016.00   $130.30
   5/26/98   18 AmExpress   1873.20   1829.25   -$43.95
   2/27/98   27 Coca-Cola   1865.89   1820.81   -$45.08

Foolish Four Stocks

    Rec'd    #  Security     In At     Value    Change
   3/12/98   20 Exxon       1286.70   1498.75   $212.05
   3/12/98   20 Eastman Ko  1262.95   1468.75   $205.80
   3/12/98   17 General Mo  1230.89   1255.88    $24.98
   3/12/98   15 Chevron     1250.14   1256.25     $6.11

                              CASH    $120.62
                             TOTAL  $28230.53
 
*Please note: On 8/4/98 $2,000 cash was added to the
portfolio. $2,000 will be added every six months.

*The year for the S&P and Nasdaq is as of 02/03/98

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