Boring Portfolio

Boring Portfolio Report
Tuesday, November 04, 1997
by Greg Markus (TMFBoring@aol.com)


ANN ARBOR, Mich. (Nov. 4, 1997) -- The S&P 500 and Nasdaq each gained less than two points Tuesday, or 0.19% and 0.07% respectively. By comparison, the Boring Portfolio rose more than two percentage points, led by a $2 3/4 jump in BORDERS GROUP (NYSE: BGP).

This morning, Borders pre-announced results for its October quarter and provided some additional details about its Internet initiative. Borders said it expects to report break-even results for the quarter. Analysts had been expecting a repeat of the three-cent loss the company reported for the same period last year. This quarter's fine results were attributed in part to comparable store sales gains of 7.3% at the Borders superstores and a modest 0.1% decline in "comps" at Waldenbooks.

Borders also said it would launch its Internet initiative in early January. In the past, management had said they expected to open their Website for selling ahead of the holiday season. No details were provided in that regard. The launch will involve partnernships with CNET (Nasdaq: CNWK), including that company's SNAP! Online service, and INFOSEEK (NASDAQ: SEEK). Other online partners are Salon, "the Web's leading on-line literary magazine," Harvest, "the world's leading out-of-print booksearch company," and IBM (NYSE: IBM), which is Borders's main technology partner.

Border's management also affirmed their confidence in the company's "ability to grow EPS at a 25% annual rate beyond 1997, including the effects of the Internet and other strategic spending." Details will be provided when the company makes its full third-quarter report on Nov. 17.

Oil services stocks continue strong. TIDEWATER (NYSE: TDW) surged across the $70 mark in intraday trading, ending up $1 15/16 to a new closing high at $69 5/8.

Upon spotting a press release this morning headlined "PRIME MEDICAL SERVICES (Nasdaq: PMSI) Enters California Prostate Market," my initial reaction was one of surprise. I hadn't realized there was much of a market for prostates in California ... but then all sorts of strange things happen out there.

A closer reading revealed that Prime was announcing that the company has formed its second prostate thermotherapy services partnership, in southern California. Prime owns a 26% interest in the partnership, with the balance held by 113 urologists. Prime expects to begin providing services to hospitals and physicians in the region by next month. PMSI stock was unchanged on the bid today, at $13 1/4.

This afternoon, I liquidated the Borefolio's other investment in the healthcare industry, selling 100 shares of OXFORD HEALTH PLANS (Nasdaq: OXHP) at $25 3/8. This morning, Oxford reported third-quarter results that on their face were even worse than some folks were expecting in light of Oxford's earlier warning: a net loss of $78.2 million, or $0.99 per share. Not surprisingly, the stock dropped a bit further yet.

If folks bothered to read beyond the second sentence of the press release, however, they might have discovered that not all the news was bleak. For one thing, revenues topped $1 billion and were up 31% over a year ago. Also, the $0.99-loss figure includes an after-tax charge of $51.9 million for payment obligations that exceeded the company's original estimates. On an operating basis, EPS was approximately a positive $0.30.

Also, membership enrollment continues to grow, increasing by more than 109,000 during the quarter of 1997, including 29,700 members added with the acquisition of Compass PPA in Chicago, to a total of 1,942,600 on Sept. 30. That's almost 35% higher than the year-ago number. And more than 47,400 net new members have enrolled thus far in the fourth quarter.

The challenges, of course, remains not inconsiderable, and in a conference call lasting nearly two hours this morning, Chairman Stephen Wiggins went through all of those challenges in detail -- in particular, certain anticipated increases in administrative costs and tighter profits in the Medicare business.

There's neither time nor space to go through those details here tonight, but The Motley Fool will provide equity interest in it.

My deadline has come and gone, so I'll simply announce the happy news that CISCO SYSTEMS (Nasdaq: CSCO) took in $1.87 billion in revenues in its fiscal first quarter ending October and earned $0.59 per share. Revenues exceeded last year's figure by 30%, and EPS was up 26%. The earnings number beat the Street's consensus by a penny. Cisco also announced a three-for-two stock split, to take effect next month.

In true Cisco tradition, this evening's conference call was a marathon. We'll write up a summary and make that available to you ASAP, as well.


TODAY'S NUMBERS
Stock  Change    Bid
ATLS  +  1/8   28.38
BGP   +2 3/4   28.75
CSL   +  7/8   42.75
CSCO  -1 1/4   83.44
GNT   +  3/16  44.19
ORCL  +  7/8   36.69
PMSI    ---    13.25
TDW   +1 15/16 69.63
                   Day   Month    Year  History
        BORING   +2.12%   3.30%  21.30%  39.58%
        S&P:     +0.19%   2.86%  27.00%  51.34%
        NASDAQ:  +0.07%   2.36%  26.34%  56.70%

     Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     28.75   155.41%
  8/13/96  200 Carlisle C    26.32     42.75    62.39%
  6/26/96  100 Cisco Syst    53.90     83.44    54.80%
 12/23/96  100 Tidewater     46.52     69.63    49.65%
   2/2/96  200 Green Tree    30.39     44.19    45.41%
   3/8/96  400 Prime Medi    10.07     13.25    31.60%
   3/5/97  150 Atlas Air     23.06     28.38    23.06%
 11/21/96  150 Oracle Cor    32.43     36.69    13.12%

     Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  11500.00  $6997.51
  8/13/96  200 Carlisle C  5264.99   8550.00  $3285.01
  6/26/96  100 Cisco Syst  5389.99   8343.75  $2953.76
   2/2/96  200 Green Tree  6077.49   8837.50  $2760.01
   3/8/96  400 Prime Medi  4027.49   5300.00  $1272.51
   3/5/97  150 Atlas Air   3458.74   4256.25   $797.51
 11/21/96  150 Oracle Cor  4864.99   5503.13   $638.14
 12/23/96  100 Tidewater   4652.49   6962.50  $2310.01


                             CASH  $10538.60
                            TOTAL  $69791.73


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