Boring Portfolio

Cisco Goes Low
... as well as high
by Greg Markus
(TMF Boring)

ANN ARBOR, Mich. (June 22, 1998) -- The Dow and S&P 500 closed down and up a couple of points, respectively, on this first trading day of summer. The Nasdaq, however, roared ahead by 25 points, or 1.38%.

The Boring Portfolio nearly matched that, gaining 1.29%, as daily winners outnumbered losers five to two. Shares of cellar-dweller Andrew Corp. (Nasdaq: ANDW) were unchanged at a bid of $18.

Andrew issued a bit of news Monday. The company announced it has been awarded a $3 million (US) contract by the Canadian Public Works and Government Services Canada to supply and install the WeatherSeeker weather radar system across the breadth of our upstairs neighbor.

Well okay, ay?

Carlisle Companies (NYSE: CSL) stock snapped a losing streak by rising $1 1/4 to $42 3/16. No news, which is exactly the point: nothing happened that should have caused CSL to fall in the first place.

Shares of Cisco Systems (Nasdaq: CSCO) climbed $1 1/2 to establish yet another record high, at a bid of $84 5/8.

As Cisco watchers know by now, late last week telecom giant Lucent Technologies (NYSE: LU) announced that it was suing The Kid for allegedly infringing on eight patents related to data networking. The patents cover Bell Labs-developed technology associated with routers, frame relay network equipment and Asynchronous Transfer Mode (ATM) equipment.

Lucent will be seeking damages for Cisco Systems' infringement of its patents and an injunction prohibiting Cisco's use of its patents in the future.

Apparently, Lucent just found out that Cisco makes and sells data networking equipment. If you can't lick 'em or partner with 'em, sue 'em, I guess.

While this suit and the recent flurry of acquisition activity among data networking and telephone equipment companies has focused attention at the high-end of the communications market -- and rightfully so -- it's worth keeping an eye on what's going on at the low end, as well.

In the past couple of years, Cisco has not only pushed into the domain of the large, global telecoms, such as Lucent and Northern Telecom (NYSE: NT), it has also been steadily moving toward the desktop -- that is, the area of the individual user and the small office and home office (SOHO) customer.

3Com (Nasdaq: COMS) had enjoyed largely uncontested dominance of the low-end market, but no more. 3Com has increasingly found itself in the unenviable position of being squeezed between the rock of Intel (Nasdaq: INTC) on one side and the hard place of Cisco on the other.

As noted in a recent item at Smart Money magazine's Website, Cisco has continued to increase its revenue on hubs and low-end switches at an impressive 25% sequential rate -- up from $589 million at the end of last year to $741 million in the first quarter of this year, according to market research firm The Dell'Oro Group.

Cisco has also established a division focused exclusively on the SOHO market and put one-time 3Com executive Howard Charney in charge of it. Moreover, two weeks ago Cisco's board promoted Don Listwin, 39, to the post of executive vice president, solidifying his position as heir apparent to CEO John Chambers.

In his new role, Listwin will add head up Cisco's new consumer line of business.

Sounds like Cisco is as serious at the low end as it is at the high end.

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

06/22/98 Close

Stock  Change    Bid 
 ANDW    ---    18.00 
 CGO   +  9/16  34.38 
 BGP   +1 1/16  35.69 
 CSL   +1 1/4   42.19 
 CSCO  +1 9/16  84.63 
 FCH   -  7/16  32.38 
 PNR   +  1/4   39.63 
 TBY   -  5/16  8.50 
                   Day   Month    Year  History 
         BORING   +1.29%  -0.25%   0.95%  27.02% 
         S&P:     +0.23%   1.13%  13.68%  77.47% 
         NASDAQ:  +1.38%   1.52%  15.00%  73.48% 
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     35.69   217.05% 
   6/26/96  150 Cisco Syst    35.93     84.63   135.51% 
   8/13/96  200 Carlisle C    26.32     42.19    60.26% 
    3/5/97  150 Atlas Air     23.06     34.38    49.08% 
   4/14/98  100 Pentair       43.74     39.63    -9.41% 
   11/6/97  200 FelCor Sui    37.59     32.38   -13.87% 
   5/20/98  400 TCBY Enter    10.05      8.50   -15.38% 
   1/21/98  200 Andrew Cor    26.09     18.00   -31.01% 
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  14275.00  $9772.51 
   6/26/96  150 Cisco Syst  5389.99  12693.75  $7303.76 
   8/13/96  200 Carlisle C  5264.99   8437.50  $3172.51 
    3/5/97  150 Atlas Air   3458.74   5156.25  $1697.51 
   4/14/98  100 Pentair     4374.25   3962.50  -$411.75 
   5/20/98  400 TCBY Enter  4018.00   3400.00  -$618.00 
   11/6/97  200 FelCor Sui  7518.00   6475.00 -$1043.00 
   1/21/98  200 Andrew Cor  5218.00   3600.00 -$1618.00 
                              CASH   $5511.82 
                             TOTAL  $63511.82