Boring Portfolio

Andrew Redux
Wednesday, March 11, 1998
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (March 11, 1998) --The Dow and S&P 500 continued to march into record territory on Wednesday, and the Nasdaq advanced 0.48%.

The Boring Portfolio's three "C-symbol" stocks -- Carlisle Companies (NYSE: CSL), Cisco Systems (Nasdaq: CSCO), and Atlas Air (NYSE: CGO) -- rose nicely, but a 10% decline in shares of Andrew Corp. (Nasdaq: ANDW) depressed the overall value of the portfolio modestly.

As noted here last night, Andrew warned after the close of trading Tuesday that sales and earnings per share for the March quarter could be "about 10-15% below" last year's quarterly revenues of $202 million and EPS of $0.28. The company attributed the shortfall primarily to sluggish spending by its customers in the U.S. wireless infrastructure market and delays in infrastructure construction, especially in Brazil and Southeast Asia.

Andrew management emphasized that because lead times between orders and shipments continue to shorten, visibility of sales patterns for the remainder of March is limited. Projections for the balance of the fiscal year ending in September are even more tenuous. That said, the company believes that its June and September quarters should come out ahead of last year, based on what customers are saying now.

As for the long haul, Andrew executives insist that there is every reason to believe that the communications buildouts in South America, Southeast Asia, China, and other parts of the world will pick up eventually, as will the PCS buildout in the U.S., even if the schedule is stretched out somewhat.

Disappointment with the short-term news aside, that argument remains awfully compelling. At least it is to me.

Any earnings projections for the balance of Andrew's fiscal year are, of course, little more than guesstimates at this point. But if one is willing to take the company's guidance at face value, it suggests something along the lines of $0.24 for the March quarter and perhaps $0.68 to $0.70 for the second half of the fiscal year (versus $0.64 last year). Roll that together with the $0.32 earned in the January quarter and you're looking at $1.24 to $1.26 for fiscal '98.

I happened to see Merrill Lynch's estimates today, and they're in that range, as well -- for what it's worth.

If those numbers are anywhere near right, the stock looks like it offers good value at current prices. Barring any news of some fundamental long-term change in the nature of the business, I see no reason to sell the Borefolio's investment in Andrew. In keeping with good Foolish practice, you'll do your own homework and arrive at your own decision, of course.

There was good news regarding Cisco Systems today -- in terms of blossoming partnerships with AT&T Solutions -- in building out a new global data network for Citicorp (NYSE: CCI) -- and with Northern Telecom (NYSE: NT) -- in connection with Cisco's newly announced acquisition of DSL developer NetSpeed Inc.

More on that this week.

FoolWatch -- It's what's going on at the Fool today.

Stock  Change    Bid 
 ANDW  -2 9/16  22.13 
 CGO   +  7/16  31.13 
 BGP   -  7/16  33.81 
 CSL   +1       47.94 
 CSCO  +1 5/16  62.63 
 FCH   +  3/8   35.38 
                   Day   Month    Year  History 
         BORING   -0.24%  -1.48%  -0.98%  24.60% 
         S&P:     +0.40%   1.82%  10.10%  71.88% 
         NASDAQ:  +0.48%  -0.77%  11.87%  68.77% 
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     33.81   200.39% 
   8/13/96  200 Carlisle C    26.32     47.94    82.10% 
   6/26/96  150 Cisco Syst    35.93     62.63    74.28% 
    3/5/97  150 Atlas Air     23.06     31.13    34.98% 
   11/6/97  200 FelCor Sui    37.59     35.38    -5.89% 
   1/21/98  200 Andrew Cor    26.09     22.13   -15.20% 
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  13525.00  $9022.51 
   8/13/96  200 Carlisle C  5264.99   9587.50  $4322.51 
   6/26/96  150 Cisco Syst  5389.99   9393.75  $4003.76 
    3/5/97  150 Atlas Air   3458.74   4668.75  $1210.01 
   11/6/97  200 FelCor Sui  7518.00   7075.00  -$443.00 
   1/21/98  200 Andrew Cor  5218.00   4425.00  -$793.00 
                              CASH  $13625.51 
                             TOTAL  $62300.51