Boring Portfolio

Boring Portfolio Report
Monday, October 7, 1996

by Greg Markus (MF Boring)

ANN ARBOR, Mich. (Oct. 7) Traders may have been wondering whether the Dow would close over the 6000 mark on Monday, but I was wondering whether the Borefolio would close over $60,000. Neither one succeeded today.

After crossing into a new millennium briefly, the Dow ended Monday's session down 13 points. The S&P 500 extended its push into record territory, however, gaining 0.27%, while the Nasdaq finally joined the other major indices in establishing a new high-water mark, at 1251 (+ 0.26%).

As for the Boring Portfolio, it gave back a bit of last Friday's surge, losing 0.22% in value. Four holdings were up and four were down, on generally moderate trading volume.

Three Boring stocks (CSL, CSCO and OXHP) were the subject of stories in Monday's Wall Street Journal.

Carlisle's completed acquisition of the engineered plastics division of Johnson Control's (reported here on Friday) received a brief note in the Journal. Shares of CSL retreated a half-point in light trading today.

A much larger WSJ story wondered "does mighty Cisco Systems Inc. need to start watching its back because of a tiny start-up's promising new technology?" The "tiny start-up" in question is a two year-old, privately-held outfit called Ipsilon Networks, Inc., of Sunnyvale, Calif.

Reiterating a story that appeared in Forbes back in July, the Journal says that Ipsilon's new "IP switch" could render obsolete expensive data routers, sales of which have made Cisco the big enchilada of internetworking. The purpose of routers, which Cisco's founders invented at Stanford in the 1980s, is to identify and translate different data transfer protocols so that computers operating under different systems can communicate with each other.

Ipsilon's premise is that increasing convergence on the Internet Protocol (or IP) as a means of transferring data will soon obviate the need for routers. Based on that idea, Ipsilon's founder, Tom Lyon, developed an IP switch that costs half as much as a router yet operates 5 to 10 times faster because it eliminates a router's translation-oriented software and circuitry.

Ipsilon introduced its IP switches in April. Other companies have since announced their own versions, including 3Com and Ascend. For its part, Cisco says it has a better answer. Last month, it unveiled plans for "tag switching," a new software system that the company says will have the benefits of traditional routing plus the speed of IP switching.

At the same time, says the Journal, there's a debate within Cisco about whether it should endorse Ipsilon's technology, or perhaps work with Ipsilon on a jointly developed industry standard for IP switching.

Or perhaps simply buy Ipsilon? Such a move would hardly be unprecedented at Cisco, which is not the least bit shy of acquiring technology developed elsewhere. For its part, Cisco reportedly says, "No comment."

Ipsilon is not without its skeptics. They wonder "whether the world is ready for an all-IP device, and question whether Ipsilon's approach will work in highly demanding situations, such as at the Internet service providers that Ipsilon hopes will become major customers."

Cisco stock lost a dollar today, presumably in reaction to the Journal story.

A third news item in the Journal reported that Oxford Health Plans is launching a provider network for alternative approaches to healthcare, such as naturopathic medicine, herbology, and acupuncture. According to the story, Oxford Health is establishing a network of 1,000 holistic providers the company has "credentialed" after reviewing their educational background and conducting on-site visits. Services will be available in January in New York, Connecticut and New Jersey.

Oxford hopes to tap into what has been estimated to be a $50 billion market that, although popular with many consumers, is controversial with many conventional docs. The company said employers that now use Oxford HMOs would have access to its alternative providers network for about 3% higher premiums. Customers covered by the new plan would not be required to get preapproval from their primary-care physician to visit a chiropractor, acupuncturist, or naturopathic doctor.

Stephen Wiggins, Oxford's chairman and CEO, said the company's decision to expand into nontraditional care is a response to "demand by consumers to seek an alternative to conventional Western medical solutions." The company intends to build an "integrated" system, combining traditional physicians and alternative practitioners.

OXHP rose $ 3/8 today.

Transmitted: 10/7/96