Boring Portfolio

Boring Portfolio Report
Monday, April 7, 1997
by Greg Markus (MF Boring)

ANN ARBOR, Mich. (April 7, 1997) -- The Boring Portfolio went nine for nine on Monday, extending its string of positive sessions to four. Altogether, the Borefolio's net asset value soared 2.44%, as compared with gains of 0.56% for the S&P 500 and 1.18% for the Nasdaq.

BORDERS GROUP (NYSE: BGP) matched the Borefolio by scoring its fourth consecutive gain, up $5/8 to $21 1/4. Stocks of retailers have held up fairly well throughout the market downturn and are helping lead the market out of the hole it's stumbled into.

Press releases and related news poured out of CISCO SYSTEMS (Nasdaq: CSCO) and ORACLE CORP. (Nasdaq: ORCL) over the week-end and on Monday.

Cisco rose $3 5/8 to a bid of $54 3/8, as Cowen & Co. reiterated its "strong buy" rating on the stock and Bear Stearns reiterated its "buy."

Those recommendations came on the heels of an announcement from Cisco late Friday that it had added two new models to its Cisco Catalyst 5000 series of networking switches for corporate intranets.

The Cisco Catalyst 5002 is a kind of "entry level" switch, which at $1295 costs roughly a third of the existing Catalyst 5000. The second new product, the Cisco Catalyst 5500, is a high-performance switch that incorporates Asynchronous Transfer Mode (ATM) cell-switching capabilities with the architectures of the Catalyst 5000 family in a single chassis. "It is the first solution to address all the requirements for fast-growing corporate intranets, including scalability, performance, manageability and reliability," said the press release. It's priced like it, too -- $6,995 to $13,495.

Cisco also introduced a suite of software products for the Catalyst 5000-series switches. The new software, which is part of the Cisco IOS platform, enables network managers to control network reliability, multimedia, security, quality of service, and other factors.

Hang in there -- almost done. Buried in the press releases is a note that Cisco is now extending what it calls "NetFlow Switching" to the Catalyst 5000 series. Until now, this feature was available only on Cisco's top-end 7500 router. As I understand it, this is a big deal because it combines switching and routing functions (Layer 2 and Layer 3, for you network plumbers) to greatly speed transmission. From the press release:

"The first packet is processed by a router, which then passes the flow identity to the Catalyst 5000 multilayer switches. Subsequent packets are 'cut through' to dramatically scale performance. Using hardware-based Catalyst 5000 implementations, NetFlow Switching can scale from hundreds of thousands of packets per second to multiple millions of packets per second."

If you make it all the way down to the bottom of the news, you discover that "the Catalyst 5000 series, LightStream1010 and the Cisco 75xx routers will support Tag Switching for routed backbone and Internet scalability in mid to late 1997." Tag switching, you may recall, is Cisco's approach for further speeding transmission of data packets over networks.

Using the "religious wars" storyline that sells magazines, trade journals have made a big deal about the competition between Cisco's tag switching approach and the IP switching alternative championed by "tiny" Ipsilon Networks. Ipsilon's name never seems to appear in the trades without the appellation "tiny" preceding it.

Ipsilon is $20 million less tiny today, because CABLETRON (NYSE: CS) announced that it had made an investment of that magnitude in Ipsilon. Cabletron said the partnership will broaden its offerings by combining its networking gear with Ipsilon's software and hardware.

Cabletron has been hampered by gaps in its product line. For its part, Ipsilon recently canceled a scheduled appearance at a networking conference for investors. Speculation was that the company was in financial difficulty. Possibly this new venture will work out well, with each partner filling a critical need for the other.

According to a Reuters story, Ipsilon plans to release a switching product targeting the Internet-transmission market "by the end of the year" -- in other words, just about the time that Cisco's tag-switching products will ship. Could be interesting.

Still on Cisco: SUN MICROSYSTEMS (Nasdaq: SUNW) said it will offer Cisco products and services to its customers in the U.S. and Canada through its aftermarket unit, Sun Express. Later this year, Sun plans to extend the offerings to its customers in Europe and Japan.

Now to Oracle. Shares of the company rose $7/8 on Monday. Oracle announced the immediate availability of Release 10.7 of Oracle Projects, a suite of applications within Oracle Financials that supports the tracking, budgeting, and administration of project-based activities. Major new functionality added to Oracle Projects includes a graphical user interface, simpler project administration, enhanced budgeting and inquiry capabilities, a new Personal Time and Expense module, and spreadsheet-style budget entry.

Oracle also introduced a software suite for linking so-called Network Computers to networks. Two of the three pieces of software from Oracle's Network Computer Inc. division are in limited release for pilot projects, with commercial shipment scheduled for summer.

Quick takes:

Last year, INTEGRATED HEALTH SERVICES (NYSE: IHS) and CORAM HEALTHCARE (NYSE: CRH) agreed to merge in a deal valued at $280 million. Today, Integrated Health said the deal was off. I mention that here because Coram, which is in deep financial trouble, owns 30 lithotripters, and at one time there was speculation that PRIME MEDICAL SERVICES (Nasdaq: PMSI) might offer to take some of those stone-busters off Coram's hands.

I've got a call in to Prime to see whether they have a comment on this development. I'll keep you posted.

OXFORD HEALTH PLANS (Nasdaq: OXHP) rose $1 1/2. The company debuted today on the Fortune 500 list, at #460 with $3.0750 billion in sales for 1996. Three cheers -- one for each billion!

Three cheers, as well, for ATLAS AIR (Nasdaq: ATLS). In its first month in the Borefolio, Atlas has already risen to third place in the standings, with a 15.5% gain. Not bad at all, especially considering the tough month for equities in which it accomplished this. Atlas Air soared $1 1/4 on Monday to close at a bid of $26 5/8.

(c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.

Stock  Change    Bid
ATLS  +1 1/4   26.63
BGP   +  5/8   21.25
CSL   +  5/8   29.75
CSCO  +3 5/8   54.38
GNT   +  1/8   33.00
ORCL  +  7/8   39.63
OXHP  +1 1/2   59.50
PMSI  +  1/8   10.13
TDW   +1 1/8   45.63
                   Day   Month    Year  History
        BORING   +2.44%   3.29%  -1.51%  13.33%
        S&P:     +0.56%   0.66%   2.89%  22.60%
        NASDAQ:  +1.18%   2.42%  -3.07%  20.21%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     21.25    88.78%
  5/24/96  100 Oxford Hea    48.02     59.50    23.89%
   3/5/97  150 Atlas Air     23.06     26.63    15.47%
  8/13/96  200 Carlisle C    26.32     29.75    13.01%
   2/2/96  200 Green Tree    30.39     33.00     8.60%
  6/26/96  100 Cisco Syst    53.90     54.38     0.88%
   3/8/96  400 Prime Medi    10.07     10.13     0.56%
 11/21/96  100 Oracle Cor    48.65     39.63   -18.55%
 12/23/96  100 Tidewater     46.52     45.63    -1.93%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   8500.00  $3997.51
  5/24/96  100 Oxford Hea  4802.49   5950.00  $1147.51
  8/13/96  200 Carlisle C  5264.99   5950.00   $685.01
   3/5/97  150 Atlas Air   3458.74   3993.75   $535.01
   2/2/96  200 Green Tree  6077.49   6600.00   $522.51
  6/26/96  100 Cisco Syst  5389.99   5437.50    $47.51
   3/8/96  400 Prime Medi  4027.49   4050.00    $22.51
 11/21/96  100 Oracle Cor  4864.99   3962.50  -$902.49
 12/23/96  100 Tidewater   4652.49   4562.50   -$89.99
                             CASH   $7660.41
                            TOTAL  $56666.66