Boring Portfolio

The Kid Goes Solo
... and tech stocks soar
by Greg Markus
(TMF Boring)

ANN ARBOR, Mich. (June 23, 1998) -- The Boring Portfolio rose 1.54% Tuesday, led by a $2 1/4 advance in Cisco Systems (Nasdaq: CSCO) to $86 7/8, yet another all-time high. The Borefolio's gain surpassed that of the S&P 500 but was no match for the Nasdaq's 2.14% surge.

Cisco was the subject of a lead story in this morning's New York Times. In an interview with the Times, Cisco CEO John Chambers acknowledged that his company tried but failed in efforts to establish partnerships with telecommunications technology providers Lucent Technologies (NYSE: LU) and Northern Telecom (NYSE: NT).

Lucent's recently filed suit against The Kid for alleged patent infringement and Nortel's pending purchase of Bay Networks (NYSE: BAY) were only the most visible manifestations of the clashing cultures and corporate goals of Cisco and the "traditional" telecom giants.

Chambers told the Times that Cisco will continue on alone in defending its market leadership in advanced data networking equipment while simultaneously leading the integration of voice and data communications.

"Voice traffic is going to come under a data infrastructure," Chambers said, "and that is where we are strong."

No doubt.

On the other hand, few industry analysts believe that the traditional switched networks are going to be ripped out and melted down for scrap anytime soon. Those networks contain a tremendous amount of intelligence and reliability. The challenge -- and the opportunity -- will be to develop and market cost-effective ways to integrate the, uh, legacy telephony infrastructure with newer packet-based, data-oriented ones.

Cisco knows that, and the Lucents and Nortels do, too. The communications revolution is still in the early innings. Enjoy the game -- one in which the players change teams, combine to form ones, and rewrite the rules and even alter topography of the field as they play.

It was hard to find a four-letter stock that didn't rise today. To prove the point, even unloved Andrew Corp. (Nasdaq: ANDW) popped $1 1/4 to $19 1/4 on good volume. After all, even the fanciest communications equipment is of little use without some means of transmitting and receiving the signals; and whether that transmission occurs via cable, through the air or, heck, across string stretched between tin cans, Andrew has what you need.

Carlisle Companies (NYSE: CSL) enjoyed Monday's $1 1/4 rebound so much, it did it again today.

On the downside, FelCor Suite Hotels (NYSE: FCH) lost $1/2 to $31 7/8 as the company formally announced that its 1998 annual shareholders' meeting will be held on Monday, July 27 at (where else?) the Embassy Suites Hotel-Park Central, located at 13131 N. Central Expressway, in Dallas, Texas. At that meeting shareholders are expected to approve FelCor's merger with Bristol Hotel (NYSE: BH), which was announced back on March 24.

After the merger, FelCor, which is the world's largest owner of Embassy Suites hotels, will also become the world's largest owner of Holiday Hospitality-branded hotels. FelCor also owns a portfolio of Doubletree, Sheraton, and Hilton properties.

That's just dandy, one might say. But the stock has gone nowhere since we bought it last fall. Why keep this lodging REIT lodged in our bag o' stocks?

Because although tech stocks are the darlings of the moment, the good values available in the better issues (such as FelCor) of the beaten-down REIT industry will eventually collect a crowd. Until then, dividends well north of 6% help us pass the time.

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

06/23/98 Close

Stock  Change    Bid 
 ANDW  +1 1/4   19.25 
 CGO   -  1/2   33.88 
 BGP   +  5/8   36.31 
 CSL   +1 1/4   43.44 
 CSCO  +2 1/4   86.88 
 FCH   -  1/2   31.88 
 PNR   +  3/8   40.00 
 TBY   +  1/16  8.56 
                   Day   Month    Year  History 
         BORING   +1.54%   1.28%   2.50%  28.97% 
         S&P:     +1.48%   2.63%  15.36%  80.09% 
         NASDAQ:  +2.14%   3.69%  17.46%  77.20% 
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     36.31   222.60% 
   6/26/96  150 Cisco Syst    35.93     86.88   141.77% 
   8/13/96  200 Carlisle C    26.32     43.44    65.01% 
    3/5/97  150 Atlas Air     23.06     33.88    46.91% 
   4/14/98  100 Pentair       43.74     40.00    -8.56% 
   5/20/98  400 TCBY Enter    10.05      8.56   -14.76% 
   11/6/97  200 FelCor Sui    37.59     31.88   -15.20% 
   1/21/98  200 Andrew Cor    26.09     19.25   -26.22% 
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  14525.00 $10022.51 
   6/26/96  150 Cisco Syst  5389.99  13031.25  $7641.26 
   8/13/96  200 Carlisle C  5264.99   8687.50  $3422.51 
    3/5/97  150 Atlas Air   3458.74   5081.25  $1622.51 
   4/14/98  100 Pentair     4374.25   4000.00  -$374.25 
   5/20/98  400 TCBY Enter  4018.00   3425.00  -$593.00 
   11/6/97  200 FelCor Sui  7518.00   6375.00 -$1143.00 
   1/21/98  200 Andrew Cor  5218.00   3850.00 -$1368.00 
                              CASH   $5511.82 
                             TOTAL  $64486.82