Boring Portfolio

Boring Portfolio Report
Monday, March 24, 1997
by Jeff Fischer (MF BudFox)

ALEXANDRIA, VA., (March 24, 1997) -- Many are dubbing the technology sector as "dead," once again. Last week a Wall Street Journal writer eloquently penned that "the tech cycle is over." History will show that statement, by itself, to be stupid.

While technology stocks were "dying" today, the leaders, including Bore Port holdings, announced a tidal wave of progressive news. The market instead focused on word that MICROSOFT (Nasdaq: MSFT) may release its latest Windows software behind schedule. The stock fell four dollars, even though a delay shouldn't hurt the company financially.

Today the S&P rose 0.87% while the Nasdaq fell 0.91%. These two market indices have split this year, and spread, steadily and increasingly. The Nasdaq is 12% below its high, while the S&P has sunk only 3%.

Today was volatile as investors are nervous going into Tuesday's Fed meeting. Many expect Greenspan to raise interest rates a quarter point. If so, the concern would then be the possibility of more interest rate hikes down the road. Stocks tend to perform below average in periods of rising interest rates, as other investment vehicles compete for dollars, while corporate earnings, at the end of a long chain of events inititated with increased interest rates, may slow. This shouldn't be of concern, though, to those invested for the next five to ten years, and especially to those investing regularly.

Even so, be forewarned: stocks are expected to crater tomorrow if the Fed takes action. Though -- perhaps the strong expectation of declining stock prices will keep it from happening. Tuesday should be interesting.

The Borefolio slipped 0.37% Monday. Cisco Systems was the only substantial loser, falling $2 1/4. No other Bore stocks moved more than a quarter up or down.

Looking down the list of press releases today, there are no fewer than nine announcements wired from the offices of Boring companies. Cisco Systems and Oracle Corp, two world-leaders in their fields, are responsible for all of the releases.

CISCO SYSTEMS (Nasdaq: CSCO) announced an Internet pact with Continental Cable, which is an arm of US West Media Group. The two will conduct trials of Cisco's most advanced Internet technologies, delivering broadband Internet applications such as streaming video, telephony over the Internet (IP telephony) and interactive games. The two entered a marketing deal as well, making Cisco's networking products and support available to Contintental customers.

Cisco's new router technologies will be capable of switching data between networks at speeds of more than one billion bits-per-second. Tests of the technology will begin this year, and Continental will be one of the first broadband Internet providers to use Cisco's gigabit switching routers.

Cisco also announced with MCI Communications that the two teamed together to offer a premium grade of Internet service. Specifics weren't given, but MCI stated new software will allow it to offer multiple classes of service based on individual business customers' requirements. The Cisco technology will be deployed as a software upgrade with MCI's installed base of Cisco 7500 routers.

Cisco: largest installed base of networking products in the world. Cisco: software, not just hardware. World: needs upgrades as quickly as the technology evolves. Equals: good for Cisco.

Cisco also announced joining the Salutation Consortium. The company will participate in developing an industry-standard protocol for locating and controlling computers, consumer devices, and office equipment across the Internet or a company intranet.

The world-leading networker trades at 22 times estimates of $2.09 per share for the year ended in July, and 17 times next year's estimates of $2.74, while expected to grow 35% annually, give or take, and throw in the mandatory pinch of uncertainty. The week of May 5th the company is expected to announce third quarter earnings of $0.53 per share.

Another leader in its field, ORACLE CORP (Nasdaq: ORCL) announced a strategic alliance with NOVELL (Nasdaq: NOVL) which will work to simplify and accelerate the move to network computing. The companies plan to deliver an integrated application platform on the new computers which will allow businesses to take advantage of the Web while lowering overall cost of computer ownership. Novell has agreed to integrate and ship Oracle's new Web Application Server 3.0 technology with its IntranetWare and Web Server software.

Oracle also released Oracle Power Objects Version 2.1 today, with substantial improvements over the earlier version. New versions are being released immediately in French, German, and Swedish, while

localized versions for Czech, Danish, Dutch, Finnish, Hungarian, Italian, Japanese, Norwegian, Polish, Russian and Spanish are planned for release within three months. Bi-directional support is also now included to support Arabic languages.

Oracle also announced it has joined forces with a Swedish telecommunications company in creating a new wireless message service which brings the Internet to mobile service subscribers. The company also announced that its subsidiary, Network Computer Inc., is working with DIGITAL EQUIPMENT (NYSE: DEC) on a powerful, low-cost network computing platform.

Oracle: leading data-base software and information management company in the world. Oracle: largest installed base of clients in the business. Upgrades of such systems: needed as assuredly as the business world grows. Equals: good for Oracle.

Oracle Corp trades at 31 times fiscal year estimates of $1.26 per share, the year ending in May. The stock trades at 23 times estimates of $1.67 for fiscal year 98, ending in fourteen months, while the company is expected to grow 31% annually in the foreseeable future. Oracle announces year-end results the week of June 20th. Earnings expectations for the final quarter have been raised by fourteen analysts in the last 30 days.

In other news, INTEL CORP (Nasdaq: INTC) announced it expects personal computers to deliver one gigabyte per second internal bandwidth capabilities by the year 2000.

From a single day of news releases from leading technology companies, does it appear the "tech cycle is over"?

How about: just begun. How about: great investment opportunity over the coming five, ten, twenty years. How about: focusing on short-term cycles is idiotic when the big picture begs to be admired.

Finally, on Friday, GREEN TREE FINANCIAL (NYSE: GNT) offered for sale a package of $519.4 million in investment securities backed by home equity and home improvement loans. The offering, which was in 18 parts, was Green Tree's fourth of the current quarter and brought the company's total securitizations this quarter to $1.82 billion (with a "B").

MF Boring is in a distant land right now, enjoying the sun. He'll probably read of tomorrow -- Tuesday -- in a newspaper on Wednesday or Thursday, while basking in the glow of a warm afternoon. He's enjoying himself. If you're a long-term investor you may as well pretend that you're in a distant land, too, whatever the market does. Enjoy tomorrow. Every one of them.

(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.

Today's Numbers

Stock  Change    Bid
ATLS  -  1/4   24.38
BGP   -  1/8   39.88
CSL   +  1/8   31.13
CSCO  -2 1/8   47.00
GNT   +  1/4   37.63
ORCL  -  1/8   39.75
OXHP  ---      61.50
PMSI  ---      10.88
TDW   - 1/4   46.25
                   Day   Month    Year  History
        BORING   -0.37%  -1.19%  -1.21%  13.68%
        S&P:     +0.87%   0.01%   6.77%  27.23%
        NASDAQ:  -0.91%  -5.07%  -3.75%  19.37%

     Rec'd   #  Security     In At       Now    Change
  2/28/96  200 Borders Gr    22.51     39.88    77.12%
  5/24/96  100 Oxford Hea    48.02     61.50    28.06%
   2/2/96  200 Green Tree    30.39     37.63    23.82%
  8/13/96  200 Carlisle C    26.32     31.13    18.23%
   3/8/96  400 Prime Medi    10.07     10.88     8.01%
   3/5/97  150 Atlas Air     23.06     24.38     5.71%
  6/26/96  100 Cisco Syst    53.90     47.00   -12.80%
 11/21/96  100 Oracle Cor    48.65     39.75   -18.29%
 12/23/96  100 Tidewater     46.52     46.25    -0.59%

     Rec'd   #  Security     In At     Value    Change
  2/28/96  200 Borders Gr  4502.49   7975.00  $3472.51
   2/2/96  200 Green Tree  6077.49   7525.00  $1447.51
  5/24/96  100 Oxford Hea  4802.49   6150.00  $1347.51
  8/13/96  200 Carlisle C  5264.99   6225.00   $960.01
   3/8/96  400 Prime Medi  4027.49   4350.00   $322.51
   3/5/97  150 Atlas Air   3458.74   3656.25   $197.51
  6/26/96  100 Cisco Syst  5389.99   4700.00  -$689.99
 11/21/96  100 Oracle Cor  4864.99   3975.00  -$889.99
 12/23/96  100 Tidewater   4652.49   4625.00   -$27.49

                             CASH   $7660.41
                            TOTAL  $56841.66