Drip
Portfolio Report
Thursday, March 12, 1998
by Jeff Fischer
([email protected])
ALEXANDRIA, VA (March 12, 1998) -- By necessity, today's column will first cover a few topics that need to be updated before we jump into a closer look at Saatchi & Saatchi... er... I mean, Johnson & Johnson.
Intel Purchase. Yesterday in the mail I received the March statement for our Intel investment. On March 2, we purchased 0.5565 shares at $89.853, and we also received a $0.22 dividend payment that went to buy 0.0024 more shares. We now own 8.625 shares of Intel at a cost-basis just above $80 per share. As announced yesterday, this month we'll send $30 to buy more Intel. Harris Trust needs to receive the money by March 27.
Secondly, the Harris Trust website for Intel shareholders' electronic voting registration is apparently buggy using Netscape or Microsoft browsers. Somewhat ironically, the site works well through an AOL browser. This Harris Trust website is merely to register for electronic voting rights and to accept an electronic only annual report from Intel. You might actually want the hardcopy report for study at your leisure. (When out at the kid's soccer game or swim meet. Or at the dinner table. Or when visiting the mother-in-law.) I know that I'm going to allow one hardcopy to be mailed to me.
Anyway, the web page for the electronic registering is at: https://www.harrisbank.com/shareholders/proxy/proxyhome.html.
Good luck.
Campbell Soup Purchase. Thank you to those who informed me of a needed clarification regarding Campbell Soup. I mentioned that the record date for the spin-off was March 9, and that the spin-off of Vlasic Foods would actually happen on March 30. But that March 9 record date doesn't mean much. It's a formality -- much like the record date of a stock split. So, any person owning Campbell stock starting as late as even March 29 will receive the spun-off Vlasic shares.
For the Drip Port, that isn't a concern anymore. We'll send our money to the Moneypaper and they'll buy our first share in early April.
But if you do own Campbell already, it's not a big deal. If you only own a few shares of Campbell, you'll probably be given cash rather than Vlasic shares. And if you own a boatload of Campbell, you might actually want the Vlasic shares in your portfolio that you do receive. (Campbell shareholders get one share of Vlasic for every ten shares of Campbell owned.) We wanted to avoid the spin-off because we wouldn't have owned more than one share of Campbell anyway, so we would have received cash instead of a 1/10th share of Vlasic and this would have made our cost-basis and tax situation for Campbell a bit more confusing. Not much, but a bit.
Anyway... realize that if you purchase Campbell anytime between now and March 30, you'll receive some Vlasic shares as well on the March 30 spin-off date. We'll be sending our form and check for the initial Campbell share this weekend, knowing that it will be bought in April.
Johnson & Johnson's 1997. The long awaited look at Johnson & Johnson (NYSE: JNJ) may prove to be a short look. Next month the company will already announce first quarter 1998 results. For the year-ended in December, though, the healthcare giant grew earnings per share 13.8% on a 4.7% increase in revenue. The revenue gain is almost impressive -- almost -- considering the currency battle that the company was fighting in almost all of its international markets.
Worldwide the company's sales grew 8.7% in local currency, despite increased competition and zero pricing power on most consumer products. (Prices on consumer products were virtually unchanged over the year, unlike at Campbell, a company that has been increasing it prices slightly every year.)
Worldwide pharmaceutical sales grew 7.1% (11.7% before currency translations) to $7.7 billion. Worldwide consumer product sales totaled $6.5 billion, up 2.1% -- but again, up 5.6% before a currency adjustment. While sales of professional products grew 4.5% to $8.4 billion before any currency considerations. Sales growth was again higher in local currency.
The company achieved total sales of $11.7 billion domestically and $10.8 billion worldwide, perhaps intimating how much room for growth there is in international markets. Total sales topped $22.6 billion.
As early as Monday I planned to surrender the column to Dale Wettlaufer (TMF Ralegh), so that he can begin to study banking stocks for us. (By the way, Dale is updating his list of bank stocks based in part on your suggestions). But we might use Monday to look closer at J&J. No promises. I'm supposed to hit the road for a few weeks, actually, and work on a project, so Dale might very well be in this seat by Monday. If so, not to worry -- we have years over which to learn much more about J&J.
Visit the message boards if you have comments, questions, or thoughts to share on the next industry we're covering -- anything! The message boards are linked at the top right of this page.
Fool on!
--Jeff Fischer
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