Monday, May 18, 1998

Cash-King Portfolio Report
by Rob Landley

Austin, TX (May 18, 1998) -- Greetings from smoke-shrouded Austin, Texas. I have two theories on the air quality here: 1) They set Mexico on fire to make the tens of thousands who moved here from Los Angeles feel at home. 2) It's some kind of Murphy's Law reaction to all the anti-smoking ordinances we've passed in this city over the past decade. (Cough. Gasp. Wheeze...


Like it or not, it's Monday. Here then (and now) we present the week that was, or certainly seemed to be at the time. Pass your eyes over the magic numbers!

Cash-King   Last    This   Change 
 Microsoft   $85.69  $89.38 + 4.3% 
 Gap (*)     $52.19  $52.56 + 0.7% 
 Coca-Cola   $76.44  $76.88 + 0.6% 
 T. R. Price $35.38  $34.00 - 3.9% 
 Intel       $84.06  $80.25 - 4.5% 
 Pfizer     $111.13 $104.50 - 6.0% 
 Fool Four   Last     This  Change 
 GM          $68.69  $73.88 + 7.6% 
 Exxon       $73.19  $73.69 + 0.7% 
 Chevron     $84.88  $85.00 + 0.1% 
 E Kodak     $71.50  $69.63 - 2.6% 
 S&P 500    1108.14 1108.73   0.0%   
 Total C-K  $21,572 $21,442 - 0.6% 

In the top story of the week: Microsoft blinked. Faced with the prospect of a major new lawsuit (Microsoft faces major antitrust case), Microsoft offered the Feds a stand-off Thursday morning, which was accepted. The deal was that Microsoft (Nasdaq: MSFT) wouldn't ship Windows 98 to manufacturers until Monday, and the Feds wouldn't sue until then either. Wonder of wonders, the two sides spent the weekend actually TALKING to each other. Israel, Ireland, Microsoft. Well, two out of three ain't bad -- cuz today the talks broke off. Our Lunchtime News team came out with a fine report on what's going on with Microsoft.

The lawsuits against Microsoft that aren't affected by this deal include Sun's new one (Sun seeks to block shipment of Windows98) announced Tuesday, which seeks to prohibit Microsoft from shipping any version of Java in Windows 98 (such as the current one) which Sun deems incompatible.

I don't intend to bust on Mr. Softy here, but I have to say that a negotiated settlement would have been (and would be) a good thing for Microsoft. Playing hardball with the federal government hasn't proved to be a public relations miracle. But worse -- guess what, the Justice Department doesn't stop coming!

Like it or not, the release of Windows 98 is big news, and it doesn't look like good news for Intel. According to reviews from CNN and PC World (Windows 98: A convenience?), the difference between Windows 95 and Windows 98 is fairly minor, about as big as the difference between Windows 3.1 and Windows 3.11. Patches, bug fixes, a few new drivers, some interface tweaks, but nothing major.

This is good news for users. Not only can they ignore the upgrade if they choose (especially since much of the upgraded code is downloadable from Microsoft's website), but Windows 98 is so similar to Windows 95 that it apparently installs cleanly over the old version. They don't need to buy a new machine. Windows98 won't be a boon for Intel.

All this has NOTHING to do with the reason that The Great Karnak (er, "Kurlak") lowered his rating on Intel (Nasdaq: INTC), of course, but it provides a nice segue into the second half of Win-tel. That was explained pretty darn well right here at The Fool in Friday's evening news (Kurlak on Intel). Personally, I think the downgrade is bunk, and I plan to elaborate on that in tomorrow's C-K report.

Pfizer's (NYSE: PFE) still in the news. And on supermarket tabloids. And prominently featured in several Saturday Night Live skits. And Bob Dole thinks it's "great." As expected, Viagra sales continue to break records, posting 570,000 written prescriptions in the month of April (Viagra breaks the bank). There is now a serious push to approve it for women too, potentially doubling its market.

On the down side, Mexico is still blocking imports of the drug until they get more evidence that it's safe and effective. They might take a look at Thursday's study in the New England Journal of Medicine -- and you might too: New England Journal on Viagra. Pfizer also released its 1st quarter report last week: (PFE's 10-Q) showing net income up 15% over the same quarter in 1997.

Oh, and... on April 30th, Pfizer was downgraded by CS First Boston. Let's meet back in 18 months and see how well that one worked out for CS. Thank goodness for historical quotes online! Already today Pfizer was upgraded by Gruntal & Co and the stock rose 6%.

Tom Gardner talked about the Gap (NYSE: GPS) at length last week. Sales are up. Earnings are up. Margins are up. Life is good at our casual clothier. Here's a link to Tom's coverage of their report: Gap's 1st quarter report.

And finally, Coca-Cola's (NYSE: KO) worrying about the threat of sanctions against India screwing up its sales there (global business interests will play an increasing role in smoothing out international disputes in the century ahead, dontcha think?). And T. Rowe Price (NYSE: TROW) had no news again. Both are too busy making money to bother making much news. Works for me.

Tomorrow, why the market glut of Intel compatible processors worries Kurlak but doesn't worry me. Until then -- Fool on!

- Rob Landley


Stock  Change    Bid 
 CHV   -2 5/16  82.69 
 KO    +  9/16  77.44 
 GPS   +  3/8   52.94 
 EK    +  7/8   70.50 
 XON   -1 1/8   72.56 
 GM    -  1/4   73.63 
 INTC  -  15/16 79.31 
 MSFT  -3 3/8   86.00 
 PFE   +6 3/16  110.69 
 TROW  +1 3/8   35.38 
                  Day   Month    Year  History 
         C-K      +0.45%  -0.71%   7.69%   7.69% 
         S&P:     -0.26%  -0.54%  10.44%  10.44% 
         NASDAQ:  -0.82%  -1.97%  10.81%  10.81% 
 Cash-King Stocks 
     Rec'd    #  Security     In At       Now    Change 
     2/3/98   22 Pfizer        82.30    110.69    34.49% 
    2/27/98   27 Coca-Cola     69.11     77.44    12.05% 
     2/3/98   24 Microsoft     78.27     86.00     9.88% 
     2/6/98   56 T. Rowe Pr    33.67     35.38     5.05% 
     5/1/98   37 Gap Inc.      51.09     52.94     3.62% 
    2/13/98   22 Intel         84.67     79.31    -6.33% 
 Foolish Four Stocks 
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Exxon         64.34     72.56    12.79% 
    3/12/98   20 Eastman Ko    63.15     70.50    11.64% 
    3/12/98   17 General Mo    72.41     73.63     1.68% 
    3/12/98   15 Chevron       83.34     82.69    -0.79% 
 Cash-King Stocks 
     Rec'd    #  Security     In At     Value    Change 
     2/3/98   22 Pfizer      1810.58   2435.13   $624.55 
    2/27/98   27 Coca-Cola   1865.89   2090.81   $224.92 
     2/3/98   24 Microsoft   1878.45   2064.00   $185.55 
     2/6/98   56 T. Rowe Pr  1885.70   1981.00    $95.30 
     5/1/98   37 Gap Inc.    1890.33   1958.69    $68.36 
    2/13/98   22 Intel       1862.83   1744.88  -$117.96 
 Foolish Four Stocks 
     Rec'd    #  Security     In At     Value    Change 
    3/12/98   20 Exxon       1286.70   1451.25   $164.55 
    3/12/98   20 Eastman Ko  1262.95   1410.00   $147.05 
    3/12/98   17 General Mo  1230.89   1251.63    $20.73 
    3/12/98   15 Chevron     1250.14   1240.31    -$9.83 
                               CASH   $3910.83 
                              TOTAL  $21538.52 
 *The year for the S&P and Nasdaq will be as of 02/03/98