Drip
Portfolio Report
Tuesday, May 26, 1998
by Jeff Fischer ([email protected])
Alexandria, VA (May 26, 1998) ---- A volatile Tuesday that ended with markets sharply lower found the Drip Port relatively flat, with Intel actually working in the Port's favor. Apparently not resting over the holiday weekend, both Intel and Campbell Soup had news to share this morning.
Campbell Soup (NYSE: CPB) announced the sale of its European-based Delacre biscuits business for $125 million in cash. Campbell has divested itself of six businesses and has spun off two major businesses since a major restructuring program was announced in September of 1996. Campbell will continue to focus on its Pepperidge Farm biscuit division, which is America's leading biscuit brand, as well as its Australian biscuit business, Arnotts. Both offer the most potential for growth. Pepperidge Farm sales have grown at double-digit rates in each of the past three years. (Subliminal message: to keep this trend going, buy more Goldfish crackers and Milano cookies.)
Campbell Soup sells some products with celery in it, while Intel (Nasdaq: INTC) sells Celeron, its new microprocessor. The companies have that in common as well as each possessing 80% market dominance in their respective industries. It's interesting to note, though, that Campbell Soup has grown earnings more than Intel has over the past year. Will this trend last? There are 200 million PCs in the world. Within ten years there could be a cool billion.
Anyway, today Intel announced that IBM (NYSE: IBM) is offering a new line of computers with Intel's Celeron chip inside. Celeron is Intel's cheapie chip for the sub-$1000 PC market. It's really an older generation Pentium -- 266 MHz, in this case. The PC will debut for $969. IBM offers consumer PCs with Intel and Advanced Micro Devices (NYSE: AMD) chips, but IBM's corporate lines of computerware only carry Intel.
Today Intel also announced what it claims to be the most advanced Fast Ethernet networking controller available. The product is "...a common solution for multiple Intel Architecture platforms -- servers, desktops, Network PCs and mobile clients." Eventually, networking and other silicon-related sales should account for something significant at Intel -- especially as the company continues to put more and more capabilities on the motherboard. Intel is in a position to essentially put many small players out of business.
The Department of Justice is busy with Microsoft (Nasdaq: MSFT) right now, but.. well, how could the DOJ force Intel to offer its motherboards with competitors' products on them? We'd probably be surprised. Let's hope that we don't enter an era of stronghand government shaking up American business following the Microsoft lawsuits. (Today it was said that the DOJ might charge Microsoft with unfair pricing practices as well.)
Meantime, Intel's stock hasn't gone anywhere for over a year. If you're looking for more reading on the company, a May 11 article in Fortune discusses Craig Barrett, Intel's new CEO, and what the company is aiming to accomplish. Also, the Washington Post had a story on the Celeron chip in March. Finally, the Intel message board is always active.
We'll close today with a reminder that our $100 for June was sent on Friday, with $70 going to Campbell and $30 to Johnson & Johnson. Why? I want to build up these two positions in relation to our Intel position. All three of our stocks are priced reasonably in my opinion. Which one is the best investment right now? Couldn't tell ya. Which one will be the best investment over the next twenty years? That'll be interesting to see! Which one am I most worried about? Gotta say, none of them right now. Which one do I have the most questions about, though? Intel, not surprisingly. That's technology for you. It's been changing rapidly since the Industrial Revolution.
Fool on...
--Jeff Fischer
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