Boring Portfolio

More on
... from right up close
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (July 7, 1998) -- The Boring Portfolio eased along with the market Tuesday, with losers outnumbering winners five to three.

Shares of Borders Group (NYSE: BGP) gave back some of their recent gains, falling $1 13/16 to $38 1/8. Shares of rivals (Nasdaq: AMZN) and Barnes & Noble (NYSE: BKS) also closed lower.

In Monday's Boring recap, I pointed out that my experience with the websites of the three major online booksellers led me to conclude that they are all pretty much indistinguishable in terms of offering good prices and ready availability for the more popular audiobooks. My informal explorations of the big three's traditional book offerings (the ones you, like, read) leads me to basically the same conclusion.

The three sites differ considerably in some other respects, however. As noted here last night, still has a way to go to equal and in terms of the functionality of its search engine. also has less in the way of content: book reviews, chapter excerpts, customers' comments, and so forth. That's not entirely surprising, given that debuted less than two months ago, ceding a considerable lead in "web-weeks" to the competition.

By far the most significant difference among the sites, however -- and one that appears to have gotten obscured amidst the exploding stocks of minor league e-tailers of '80s disco music collections, books-on-tape, last-generation software, and lord knows what else -- is that is the only one of the big three sites that currently offers books, music, and video -- and in substantial depth.

When I last looked (which was about an hour ago), didn't offer videos. B&N's site has neither videos nor music., in contrast, claims to have the largest in-stock multimedia selection of any online retailer, with more than 10 million books, CDs, and videos available for immediate shipping.

Moreover, the lead that Amazon and B&N have in terms of search capabilities and content is likely to be eliminated very soon, if Rick Vanzura, senior vice president of e-commerce and fulfillment at Borders, is to be believed.

When I spoke with Vanzura earlier today, he told me that search functionality and content were the top two areas that his team is working on in advance of the official "grand opening" of later this summer.

Vanzura said they have received literally thousands of suggestions from customers who have completed a brief online survey at the Website or have submitted ideas by email.

Vanzura was reluctant to spell out in detail what other features they are looking to add to, but he noted that "if you look at our online survey, it'll give you an idea of what we're looking at."

Vanzura pointed out that Borders already has agreements with a number of content providers -- including Salon, Muze, Jazz Times, Rough Guides, and more. That content -- plus plenty more provided by customers themselves -- is filling out the website considerably.

I mention all this not to show any disrespect to or They're two great e-commerce leaders. Rather, my expectation is that just as the bricks-and-mortars world of retailing can comfortably accommodate plenty of great stores, so can the virtual world. Moreover, each of the big three has its own approach to e-commerce, and those approaches will almost certainly evolve considerably over time.

Amazon, of course, is 100% e-commerce, the original. B&N is competing aggressively and has demonstrated a willingness to spend mega-millions to ink partnerships with America Online (NYSE: AOL) and other Web landlords. Borders is experimenting with its own third way, establishing a strong Web presence that leverages the brand and well-deserved reputation for service while declining to shell out the big bucks for online "real estate."

Each of us will decide which of these makes for the best investment -- or whether any of them does, for that matter.

For myself, I like Borders. That's partly because the stock continues to be very attractively priced for a company that is projected to grow earnings reliably at around 25% into the next millennium. It's also because I live within jogging distance of Borders HQ and can thus literally watch and read about what the company is doing from close up.

Speaking of which, the lead story of this evening's edition of the Ann Arbor News is that Borders is apparently planning to open a second superstore here in TreeTown, less than 600 yards from the B&N superstore that opened here a couple of years ago. Really.

According to the News, the second Borders, to be located in a refurbished mall on the east side of Ann Arbor, would be slightly larger than half the size of the 40,000 square-foot Borders #001 that's located a Frisbee toss away from the campus of the University of Michigan.


Speaking of cool, has anyone else noticed that the stock of FelCor Suite Hotels (NYSE: FCH) is creeping up ahead of our favorite REIT's annual meeting, scheduled for July 27?

FCH gained $3/4 to close at $32.

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

07/07/98 Close

Stock  Change    Bid 
 ANDW  -  3/16  18.06 
 CGO   +  3/4   38.00 
 BGP   -1 13/16 38.13 
 CSL   -  5/8   44.56 
 CSCO  -  1/4   92.69 
 FCH   +  3/4   32.00 
 PNR   +1 11/16 43.00 
 TBY   -  3/16  9.06 
                   Day   Month    Year  History 
         BORING   -0.84%   2.48%   6.86%  34.46% 
         S&P:     -0.23%   1.84%  18.98%  85.75% 
         NASDAQ:  -0.07%   0.71%  21.51%  83.30% 
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     38.13   238.70% 
   6/26/96  150 Cisco Syst    35.93     92.69   157.94% 
   8/13/96  200 Carlisle C    26.32     44.56    69.28% 
    3/5/97  150 Atlas Air     23.06     38.00    64.80% 
   4/14/98  100 Pentair       43.74     43.00    -1.70% 
   5/20/98  400 TCBY Enter    10.05      9.06    -9.78% 
   11/6/97  200 FelCor Sui    37.59     32.00   -14.87% 
   1/21/98  200 Andrew Cor    26.09     18.06   -30.77% 
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  15250.00 $10747.51 
   6/26/96  150 Cisco Syst  5389.99  13903.13  $8513.14 
   8/13/96  200 Carlisle C  5264.99   8912.50  $3647.51 
    3/5/97  150 Atlas Air   3458.74   5700.00  $2241.26 
   4/14/98  100 Pentair     4374.25   4300.00   -$74.25 
   5/20/98  400 TCBY Enter  4018.00   3625.00  -$393.00 
   11/6/97  200 FelCor Sui  7518.00   6400.00 -$1118.00 
   1/21/98  200 Andrew Cor  5218.00   3612.50 -$1605.50 
                              CASH   $5528.69 
                             TOTAL  $67231.82