Boring Portfolio

Boring Portfolio Report
Monday, June 23, 1997
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (June 23, 1997) -- The Dow plummeted 192 points, or 2.47%, in "profit-taking" Monday to close at 7604. It was the average's second largest point drop ever. The S&P 500 fell 20, or 2.24%. The recent runup in the Nasdaq was somewhat less than that of the other two averages, and so was today's subsequent decline, with the Nasdaq losing 13 points, or 0.88%.

The Boring Portfolio, being a relatively diversified mix of three- and four-letter issues, split the difference, falling 1.37% from the record high it established Friday. Borefolio losers outnumbered gainers two to one.

Monday's largest Borefolio loser was GREEN TREE FINANCIAL (NYSE: GNT), off $2. Green Tree fell along with most other interest-rate sensitive issues as the yield on the long bond crept up to 6.70%. On Friday, Green Tree offered for sale about $300 million in home equity loan and home improvement loan asset-backed securities.

Shares of ORACLE (Nasdaq: ORCL) were up most of the day ahead of tomorrow's unveiling of Oracle8 at Radio City Music Hall, but the stock ended the session off $1/4 on the bid, at $48 1/4.

On the winning side, TIDEWATER (NYSE: TDW) rose $1/8 to $43 1/2. Dillon Read initiated coverage of the stock today with an "outperform" rating. The stock may have benefited as well from comments included in James K. Glassman's column in the Sunday issue of The Washington Post.

Glassman wrote: "With a recent acquisition, Tidewater Inc. now dominates the business of servicing the offshore drillers in the Gulf of Mexico and has international operations as well. James H. Stone, an analyst for Schroder Werthem & Co., figures that Tidewater can cut its overhead and probably increase its rates this summer. Sales rose 25 percent last year, and profit nearly doubled. The stock trades at a price-to-earnings (P/E) ratio of 12, based on profit estimates for the fiscal year ahead."

Glassman's entire column, which offers opinions on where the oil and gas industry is headed, is at the Post's website and is entitled Rainwater Flows With Oil and Gas.

Shares of CISCO SYSTEMS (Nasdaq: CSCO) managed to pick up $7/16 in the face of today's market sell-off. In recent weeks Cisco execs have dropped hints that a partnership with a major telecom company was in the works. Today, Cisco and Alcatel Telecomm, part of French giant ALCATEL ALSTHOM (NYSE: ALA), announced an agreement to develop networking products aimed at integrating the Internet with public telecommunications networks.

The alliance will reportedly result in ten to twelve products over the next two years, with the focus on developing products for carriers' network backbones and network access systems.

Well down in the press release it says that "Alcatel and Cisco plan to work together in the Internet Engineering Task Force (IETF) to develop a common set of standards for fusing routing and switching technologies. These standards would enable network operators to build large, high-speed IP networks with ATM switching technology in the backbone." Also, "... Alcatel intends to use Cisco's Tag Switching technology wherever appropriate."

Hark! The voice of "Tag Switching" is heard throughout the land!

Cisco-watchers may recall that Tag Switching is Cisco's solution for speeding up network transmission. It is viewed by some as a superior solution to the IP-switch alternative offered by privately-held Ipsilon Networks and its partners. It is viewed by others as "vaporware."

I grant that skeptics may regard this passing reference to using Tag Switching in future products "wherever appropriate" as being only somewhat less suspicious than news of the latest Elvis sighting. Regardless, today's announcement adds Alcatal's not inconsiderable weight to the effort to establish Tag as a standard.

Speaking at a news conference in New York, Cisco CEO John Chambers said that "by the year 2000" the Alcatel strategic partnership "ought to result in $500 million-plus of incremental revenue that would not have come to us otherwise."

Chambers also said he expects to announce three additional strategic partnerships in the next 12 to 18 months, including "a couple of systems integrators and a major multi-national carrier," according to Reuters.

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(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  +  1/8   32.63
BGP   ---      24.13
CSL   +  5/8   37.00
CSCO  +  3/8   69.31
GNT   +  1/2   38.00
ORCL  -1 3/16  48.38
OXHP  -  3/4   73.38
PMSI  -  1/16  11.44
TDW   -  3/8   43.38
                   Day   Month    Year  History
        BORING   +0.04%   7.11%  13.58%  30.70%
        S&P:     +0.08%   5.94%  21.32%  44.57%
        NASDAQ:  -0.00%   3.34%  12.09%  39.02%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     24.13   114.33%
  5/24/96  100 Oxford Hea    48.02     73.38    52.79%
   3/5/97  150 Atlas Air     23.06     32.63    41.49%
  8/13/96  200 Carlisle C    26.32     37.00    40.55%
  6/26/96  100 Cisco Syst    53.90     69.31    28.59%
   2/2/96  200 Green Tree    30.39     38.00    25.05%
   3/8/96  400 Prime Medi    10.07     11.44    13.59%
 11/21/96  100 Oracle Cor    48.65     48.38    -0.57%
 12/23/96  100 Tidewater     46.52     43.38    -6.77%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   9650.00  $5147.51
  5/24/96  100 Oxford Hea  4802.49   7337.50  $2535.01
  8/13/96  200 Carlisle C  5264.99   7400.00  $2135.01
  6/26/96  100 Cisco Syst  5389.99   6931.25  $1541.26
   2/2/96  200 Green Tree  6077.49   7600.00  $1522.51
   3/5/97  150 Atlas Air   3458.74   4893.75  $1435.01
   3/8/96  400 Prime Medi  4027.49   4575.00   $547.51
 11/21/96  100 Oracle Cor  4864.99   4837.50   -$27.49
 12/23/96  100 Tidewater   4652.49   4337.50  -$314.99

                             CASH   $7788.54
                            TOTAL  $65351.04