Boring Portfolio

Boring Portfolio Report
Tuesday, April 22, 1997
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (April 22, 1997) -- Tuesday belonged to blue chips. The Dow soared 174 points (2.6%) -- one of the index's largest point gains ever -- to close at 6834. The slightly less elite S&P 500 rose 1.87% -- still terrific but no match for the Dow.

As is becoming the custom, the Nasdaq demonstrated what that well-worn descriptor "technology-laden" means, as the Nasdaq Composite Index rose but three-quarters of a percent. And if you dug down into the Russell 2000, you'd find that your typical small-cap stock actually lost ground on Tuesday.

The Boring Portfolio is bereft of Dow stocks, holds only a smattering of S&P 500 issues, and is well-larded with Nasdaq stocks and small-caps. So you can pretty well surmise how it fared today: up 0.84% -- not bad, but well back of the darling dozen or so that attract most of the cash these days.

Breaking it down, the Borefolio had seven winning stocks, two losers, and two unchanged -- actually far better than the NYSE distribution.

The oilpatch has been one of the stronger groups of late, and particularly so today. The Borefolio's representative from that group, TIDEWATER (NYSE: TDW) rose $7/8. The company is expected to post its quarterly results at the end of the month. According to fresh numbers in First Call, analysts are looking for earnings of $0.69 per share -- or almost double the $0.35 Tidewater reported last year. Trading at 15-times projected EPS for calendar 1997, this Tide has plenty of room to rise.

Possibly to commemorate Earth Week -- or possibly because of a favorable bond market -- GREEN TREE FINANCIAL (NYSE: GNT) grew $3/8 to close at $31 5/8. Trading volume topped one million shares.

Wonder of wonders, shares of CISCO SYSTEMS (Nasdaq: CSCO) actually gained $1/8 Tuesday. Perhaps traders realized that INTEL's (Nasdaq: INTC) newly announced networking products are likely to affect Cisco's profits not at all, and might even be a small net benefit insofar as they help to accelerate the interconnectedness of desktops everywhere.

That reminds me.... A watchful reader pointed out a grave error in my commentary yesterday regarding Intel "versus" Cisco: the amusement park down the road from Cisco HQ is not Six Flags, it's Great America.

See that? Yet another example of the educational benefits of a wired world!

While we're still on the subject of Cisco (and aren't we always?), one of its competitors in the high-end switching market issued its quarterly report today. Shares of Ontario-based NORTHERN TELECOM (NYSE: NT) jumped $3 3/8 after that company posted earnings of $0.41 per share -- three cents above analysts' expectations. Not bad, ay?

On the losing side of the ledger, ORACLE (Nasdaq: ORCL) fell $7/8 to a bid of $35 1/4. The company announced today that it is shipping version 2.0 of its Oracle Applications for the Web. The new software extends Oracle's traditional database applications to a webbified, network-computer environment.

Oracle also announced the availability of a bundle of database development tools consisting of Oracle Database Designer and Oracle Power Objects, version 2.1. Database Designer is a graphical tool for designing, creating, and maintaining databases. Power Objects is for BASIC geeks, enabling them to develop client/server, intranet, and mobile applications.

Meantime, the countdown continues for the launch of Oracle8, currently slated for blast-off on June 24. An article published last week at the InfoWorld website reiterates a point that's been circulating around the database world for a while now, namely that Oracle8 will be a lot more evolutionary than revolutionary in the way it handles "objects," such as graphics, video clips, and other non-alphanumeric data.

The article quotes Oracle's Ken Jacobs, vice president of product strategy, as saying that Oracle8 is designed as a data-centric product, rather than one that offers every possible object-oriented feature. "You will not see in Oracle8 every whiz-bang feature," Jacobs said. "We're building an object-relational database; we're not building an OODBMS [object-oriented database management system]."

As I've said in past Boring recaps, I happen to think that this approach makes a lot of sense. Certainly INFORMIX's (Nasdaq: IFMX) less than stellar experience with its own brand of Universal Server suggests that the boundary that differentiates a leading-edge product from a bleeding-edge one is a line that businesses cross at their peril.

In the conference call following Oracle's last quarterly earnings report (a summary of which is available in The Motley Fool "Earnings Central" archives), company execs pointed out that many Oracle8 beta-testers are finding that the new software's ability to handle very large-scale databases is at least as valuable a feature from the user's point of view as its ability to manage objects is.

If that finding generalizes beyond the beta-testers to the broader database market, Oracle may well have hit the sweet spot by providing a new product that offers enough advantages as to make it worthwhile for businesses to migrate to it but not so many bells and whistles as to make the transition overly complicated or cumbersome.

Oracle's current quarter ends next month -- as does its fiscal year. Analyst's are looking for FY97 earnings of $1.26 per share, which would constitute a 33% gain over FY96. Current consensus estimate for fiscal 1998 is for EPS of $1.67 -- another 33% gain. With ORCL currently trading at 28-times projected earnings for the fiscal year that ends in about five weeks, shares of the second-largest software company on earth look very reasonably priced to me.

(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  ---      24.75
BGP   +  3/4   21.00
CSL   ---      27.88
CSCO  +  1/8   47.38
GNT   +  1/2   31.63
ORCL  -  7/8   35.25
OXHP  +  7/8   61.25
PMSI  -  1/8   8.88
TDW   +  7/8   46.38
                   Day   Month    Year  History
        BORING   +0.84%  -1.12%  -5.72%   8.50%
        S&P:     +1.87%   2.31%   4.57%  24.61%
        NASDAQ:  +0.73%  -0.74%  -6.06%  16.50%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     21.00    86.56%
  5/24/96  100 Oxford Hea    48.02     61.25    27.54%
   3/5/97  150 Atlas Air     23.06     24.75     7.34%
  8/13/96  200 Carlisle C    26.32     27.88     5.89%
   2/2/96  200 Green Tree    30.39     31.63     4.07%
   3/8/96  400 Prime Medi    10.07      8.88   -11.86%
  6/26/96  100 Cisco Syst    53.90     47.38   -12.11%
 11/21/96  100 Oracle Cor    48.65     35.25   -27.54%
 12/23/96  100 Tidewater     46.52     46.38    -0.32%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   8400.00  $3897.51
  5/24/96  100 Oxford Hea  4802.49   6125.00  $1322.51
  8/13/96  200 Carlisle C  5264.99   5575.00   $310.01
   3/5/97  150 Atlas Air   3458.74   3712.50   $253.76
   2/2/96  200 Green Tree  6077.49   6325.00   $247.51
   3/8/96  400 Prime Medi  4027.49   3550.00  -$477.49
  6/26/96  100 Cisco Syst  5389.99   4737.50  -$652.49
 11/21/96  100 Oracle Cor  4864.99   3525.00 -$1339.99
 12/23/96  100 Tidewater   4652.49   4637.50   -$14.99
CASH $7660.41 TOTAL $54247.91