Boring Portfolio

Boring Portfolio Report
Tuesday, April 15, 1997
by Greg Markus (MF Boring)

ANN ARBOR, Mich. (April 15, 1997) -- A better than expected report on consumer price increases in March propelled the Dow Jones Industrial Average and S&P 500 Composite higher Tuesday. The Dow rocketed 135 points, or better than two percent.

That was the Dow's second biggest point gain ever. The only larger one -- 187 points -- came on the heels of the 500-plus point crash in October 1987.

The S&P 500 rose 1.5% today.

The Nasdaq joined the party in the early going but eventually fell into negative territory. That slide came in response to last night's cautionary comments from INTEL (Nasdaq: INTC), a weak quarterly report from chip-equipment maker LAM RESEARCH (Nasdaq: LRCX), concerns about slowing software sales, and analyst downgrades of selected networking stocks, including Boring holding CISCO SYSTEMS (Nasdaq: CSCO).

Other than chips, chip equipment, software and networking, the technology sector was just peachy -- which is to say, I suppose, that owners of tech stocks should be grateful the Nasdaq fell only three-tenths of a percent.

The Boring Portfolio, being a diversified mix of stocks spanning a range of industries, pretty much split the difference Tuesday, rising 0.6%. Four stocks up, four stocks down, and one -- ATLAS AIR (Nasdaq: ATLS) -- unchanged on the bid side.

Cisco fell $3 on volume approaching 20 million shares. Salomon Brothers analyst Peter Swartz maintained his "buy" rating on Cisco today but cut his earnings estimate for fiscal 1997 (which ends in July) by nine cents, to $2.00, and lopped two-bits off his FY97 estimate, revising it to $2.60.

In explaining his action, Swartz said that transitions in Cisco's current technology and products, along with industry-wide sluggishness in some customer segments and geographic regions, "will post significant challenges" to the company's ability to achieve his previous estimates.

In other words, even in the challenging environment that Swartz (perhaps appropriately) perceives, he still estimates Cisco to grow earnings at a 30% clip in the coming year.

So, uh, why is the stock at fifty bucks? Am I the only one around here who thinks CSCO is undervalued?

Cisco launched CiscoSecure access control server (ACS) 2.0 for Unix today. In English, this is the latest version of Cisco's software for identifying users when they attempt to enter a company's computer network and determining which parts of the system they are permitted to access. This latest version features a Web-based Java graphical user interface (GUI, pronounced "gooey"). Cisco also announced CiscoSecure EasyACS 1.0, an entry-level access control server for Windows NT environments.

These products are probably not all that significant in the scheme of things. I mention them, though, to underscore the point -- often overlooked -- that Cisco is not just a hardware company. In many ways, one of Cisco's most valuable competitive advantages is its software.

That software dominates networking hardware much the same as MICROSOFT (Nasdaq: MSFT) dominates the desktop. And, as I've rattled on about from time to time here, Cisco and Microsoft (and Intel, too, for that matter), will increasingly find themselves simultaneously muscling in on -- and symbiotically relating with -- one another.

In the case of these new products, for example, Cisco is unveiling software -- and software that is Web-based, no less. That might be construed as stepping onto Microsoft's turf. At the same time, however, one of the new Cisco products will expand functionality within NT environments. That presumably helps Microsoft.

GREEN TREE FINANCIAL (NYSE: GNT) sprouted $3/8, presumably a reaction to falling interest rates. The company reports earnings on Thursday morning. Fresh numbers from First Call show 11 analysts' estimates for the March quarter to range from $0.59 to $0.65 with a mean of $0.63. The Motley Fool will be covering the follow-up conference call, which will occur during the day.

CARLISLE COMPANIES (NYSE: CSL) made up most of yesterday's $1 1/8 loss, rising $7/8 on good volume in advance of its quarterly report, also on Thursday.

Shares of BORDERS GROUP (NYSE: BGP) booked a $1 1/8 gain on above-average volume. Recent SEC filings show that two Borders VPs bought stock on the open market last month. Kenneth Scheve bought 2,000 shares at an average price just under $20 (split-adjusted), and Kevin Rutherford bought 2,956 shares in the neighborhood of $20 3/4. CEO Bob Di Romualdo added 450 shares to the approximately 184,000 he already owned.

By the way, Borders announced it would open a new superstore in Braintree, Mass., this summer. That will be Borders' fifth store in Massachusetts.

After the close of the market, SUN MICROSYSTEMS (Nasdaq: SUNW) and BAY NETWORKS (NYSE: BAY) both reported quarterly earnings that beat analysts' consensus estimates. Guidance from those companies might well affect Cisco and Boring holding ORACLE CORP. (Nasdaq).

Then we've got COMPAQ (NYSE: CPQ) reporting tomorrow and Microsoft on Thursday.

Busy, busy, busy.

(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  ---      25.25
BGP   +1 1/8   21.38
CSL   +  7/8   28.00
CSCO  -3       50.13
GNT   +  3/8   32.13
ORCL  -1 1/2   37.25
OXHP  +1 3/8   63.25
PMSI  -  1/8   9.38
TDW   -  1/4   45.50
                   Day   Month    Year  History
        BORING   +0.57%   0.96%  -3.74%  10.77%
        S&P:     +1.48%  -0.32%   1.89%  21.41%
        NASDAQ:  -0.29%  -0.72%  -6.05%  16.52%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     21.38    89.89%
  5/24/96  100 Oxford Hea    48.02     63.25    31.70%
   3/5/97  150 Atlas Air     23.06     25.25     9.51%
  8/13/96  200 Carlisle C    26.32     28.00     6.36%
   2/2/96  200 Green Tree    30.39     32.13     5.72%
   3/8/96  400 Prime Medi    10.07      9.38    -6.89%
  6/26/96  100 Cisco Syst    53.90     50.13    -7.00%
 11/21/96  100 Oracle Cor    48.65     37.25   -23.43%
 12/23/96  100 Tidewater     46.52     45.50    -2.20%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   8550.00  $4047.51
  5/24/96  100 Oxford Hea  4802.49   6325.00  $1522.51
   2/2/96  200 Green Tree  6077.49   6425.00   $347.51
  8/13/96  200 Carlisle C  5264.99   5600.00   $335.01
   3/5/97  150 Atlas Air   3458.74   3787.50   $328.76
   3/8/96  400 Prime Medi  4027.49   3750.00  -$277.49
  6/26/96  100 Cisco Syst  5389.99   5012.50  -$377.49
 11/21/96  100 Oracle Cor  4864.99   3725.00 -$1139.99
 12/23/96  100 Tidewater   4652.49   4550.00  -$102.49
CASH $7660.41 TOTAL $55385.41