Boring Portfolio

Boring Portfolio Report
Tuesday, October 21, 1997
by Greg Markus (TMFBoring@aol.com)


ANN ARBOR, Mich. (Oct. 21, 1997) -- The Boring Portfolio posted a 1.29% increase in value Tuesday, as CISCO SYSTEMS (Nasdaq: CSCO) and TIDEWATER (NYSE: TDW) hit all-time highs and not a single Borefolio holding lost ground.

Even that wasn't enough to keep pace with the benchmark averages, however, as strong earnings reports from the likes of MICROSOFT (Nasdaq: MSFT), IBM (NYSE: IBM), a clutch of major banks, oil drillers and, well, lots of folks propelled the Dow to a new closing high and sent the S&P 500 and Nasdaq up by 1.65% and 1.61%, respectively. Debris from last week's train wreck on Wall Street has been all but obliterated by a deluge of handsome quarterly earnings numbers.

Among the most handsome numbers of them all were those posted by Tidewater this morning. The company achieved quarterly earnings of $1.05 per share, blowing away the consensus estimate of $0.90, and topping the high-end forecast by a dime.

That result includes an $8 million reserve -- or $0.09 per share, after tax -- for possible costs associated with litigation in which the company is involved ... and about which it could not comment on advice of counsel. Partially offsetting that charge was a $0.07 per share tax credit resulting from a reduction in the corporate tax rate in Britain.

Tidewater chairman, president, and CEO William O'Malley attributed the outstanding performance to "a continuing bustling market" in the Gulf of Mexico along with "improving markets" internationally. Day rates for Tidewater's fleet continue to increase, and fleet utilization is very high.

In the follow-up conference call, management confirmed they are receiving bids for Tidewater's natural gas compressor subsidiary, and they expect that final bids will be received early next month. It's premature to speculate about what the company would do with the proceeds from the sale of those operations, but paying down debt incurred last year to acquire the O.I.L. fleet is a high priority for this thrifty company. Tidewater has the option of prepaying the loan early without penalty, and the company made a $30 million extra payment just last week.

No program of constructing new vessels is anticipated by Tidewater, and what few new builds the company has seen elsewhere in the market merely keep pace with construction of new drilling rigs. As he has done on many occasions, O'Malley reiterated that he sees no reason to believe that Tidewater is anywhere near peak-earnings. Apparently, investors believe him. TDW closed up $3 1/4 to $68 5/8 in heavy trading.

We'll be providing a summary of Tidewater's conference call shortly. In the meantime, a taped replay is available for 24 hours by dialing 800-475-6701 and entering confirmation code 358977.

As for Cisco, its current fiscal quarter isn't over until the end of this month, so we won't hear about that company's earnings results until Nov. 4. The Kid had no shortage of other news to report today, however, as the stock rose $2 15/16 (on the bid) to a new high.

First, Cisco and INTEL (Nasdaq: INTC) are collaborating on standards that will speed the deployment of cable modems. Coming soon to a desktop in your home ... Cisco-tel.

Meanwhile on the other side of the pond, Cisco will be supplying over 200 StrataCom IGX switches and 15 Cisco voice network switching (VNS) systems to Deutsche Post. When the new equipment is installed, it will enable Europe's largest postal service to providing a national network capable of switching voice, frame relay, and ATM traffic over a single ATM backbone. What that means is that Deutsche Post will not only greatly expand its capacity for handling electronic mail and data, it will also be able to carry voice traffic over that same network during non-peak hours. Wunderbar!

Drip Portfolio -- KSU decision made, now wrap up.
The Fool Portfolio -- Fool blazes past the S&P.
Fool Message Boards -- What are Fools saying?
Evening News -- All the news, early.
Daily Double
-- Earthgrain.
Daily Trouble -- Gargoyles glasses.
Fool Four -- 23% annualized, historically


TODAY'S NUMBERS
Stock  Change    Bid
ATLS  +  7/16  26.88
BGP     ---    25.38
CSL     ---    44.88
CSCO  +2 15/16 84.31
GNT   +  1/4   48.81
ORCL  +1 3/16  35.63
OXHP  +  3/8   73.00
PMSI    ---    13.75
TDW   +3 1/4   68.63
                   Day   Month    Year  History
        BORING   +1.29%   1.74%  29.28%  48.77%
        S&P:     +1.75%   2.64%  31.26%  56.41%
        NASDAQ:  +1.61%   1.59%  32.65%  64.52%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     25.38   125.43%
  8/13/96  200 Carlisle C    26.32     44.88    70.47%
   2/2/96  200 Green Tree    30.39     48.81    60.63%
  6/26/96  100 Cisco Syst    53.90     84.31    56.42%
  5/24/96  100 Oxford Hea    48.02     73.00    52.00%
 12/23/96  100 Tidewater     46.52     68.63    47.50%
   3/8/96  400 Prime Medi    10.07     13.75    36.56%
   3/5/97  150 Atlas Air     23.06     26.88    16.55%
 11/21/96  150 Oracle Cor    32.43     35.63     9.84%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  10150.00  $5647.51
  8/13/96  200 Carlisle C  5264.99   8975.00  $3710.01
   2/2/96  200 Green Tree  6077.49   9762.50  $3685.01
  6/26/96  100 Cisco Syst  5389.99   8431.25  $3041.26
  5/24/96  100 Oxford Hea  4802.49   7300.00  $2497.51
 12/23/96  100 Tidewater   4652.49   6862.50  $2210.01
   3/8/96  400 Prime Medi  4027.49   5500.00  $1472.51
   3/5/97  150 Atlas Air   3458.74   4031.25   $572.51
 11/21/96  150 Oracle Cor  4864.99   5343.75   $478.76

                             CASH   $8028.59
                            TOTAL  $74384.84