Fool Portfolio Report
Thursday, May 16, 1996

by by Keith Pelczarski (MF Czar)

ALEXANDRIA, Va., May 16 -- The Fool Portfolio fell 0.78% today, trailing the S&P (-0.09%) and the Nasdaq Composite (+0.46%). The biggest Foolish news today was a downward revision of Fiscal 1997 estimates for America Online, which pushed AMER down $1 7/8, to close at $55 5/8 on the bid side.

Merrill Lynch lowered their fiscal 1997 estimate from $1.15 per share to $1.00, but retained their rankings of "short-term accumulate" and "long-term buy." No particular reason was cited for the downward adjustment, but Randy Befumo (MF Templar) hypothesized that the revision was due to comments near the end of the AMER conference call, when analysts were guided to keep their numbers for next year where they are. Also announced on that call was America Online's plan to shift its focus from growth to operations for the near future, which may very well have contributed to the rejiggering.

Since many investors value AMER based on its subscribership, it's easy to see why this might cause some concern. Personally, I think the focus on operations and the new pricing plan will really help reduce the churn rate. Beyond that, it will encourage customers to use the service more, as it will be a friendlier, less frustrating experience. But that's just my two rubles (a ludicrously small amount of currency -- $0.0004 U.S.)

Last week, Tom Gardner wrote at great length about the prospects for AOL. If you missed it the first time, you can find it by clicking on the "Past Reports" button in the lower right-hand corner of this screen. It's the report from 5/9/96: "Valuing America Online."

America Online also announced deals to help bolster their plans for security and electronic commerce. The report stated that AOL licensed technologies from CyberCash, IBM Infomarket, RSA Data Security, Terisa Systems and Verisign.

In other news, The Gap reported first quarter earnings of $0.28 vs. a consensus estimate of $0.26. Despite announcing record numbers, the stock sold off $1/2 to close at $33 3/8. The Fool's coverage of the conference call can be found by either clicking the button on the main Fool screen, or by checking the FoolWire section of the Stock Research area.

The biggest mover today in the Fool Portfolio was Medicis, up $2 3/4 to a bid of $28 1/8. I have no idea why, and the news wires don't seem to either.

Moving from a mystery to a riddle, here's a little trivia from one of our readers, Tom Ewald:

"What stock has performed better since 1/1/96, Woolworth or America Online?"

Tick, tock, tick, tock, tick, tock, BZZZZT! Time's up.

If you guessed Woolworth, you made the right call. Let's go to the video:

1/1/96 Today %


Woolworth $13 $20 1/2 57.69%

America Online $37 1/2 $55 5/8 48.33%

Yowza! Woolworth just released earnings yesterday, reporting a loss of $0.17 for the first quarter, vs. a $0.60 loss in the first quarter of last year. The $0.17 loss was also much better than the -$0.30 consensus estimate. For more on Woolworth, check out the FoolWire section of Stock Research, right here in the Fool.

Woolworth's recent strength just goes to show that impressive gains can be found not only with high-flyers like Iomega (down $5/8 to $66 today), but also with the multi-billion dollar behemoths in the Dow 30.

The Foolish Four Dow Dividend approach was spotlighted today in Investor's Business Daily. For your convenience, we've put a link to the story in the listbox to the right. It describes the Foolish method, and also explores some other opinions on the matter.

If you haven't yet found the Dow Dividend Approach area here in the Fool, I'd like to invite you to check it out -- just click the "Getting Started Investing" button on the main Fool screen.

So how did the Foolish Dow stocks do today? Chevron was the goat of the bunch, down $5/8 to $58 3/8. The only news about Chevron to cross the wire today reported further pacts for Chevron in China -- apparently nothing earth-shaking (though the story did mention seismic tests).

The other two Foolish Dow stocks, Sears and GE, shared a news story today, as Sears awarded General Electric the 1995 Source of the Year award. It was bestowed on GE for the performance of the GE Parts division. The honor was given because of major improvements in GE's service to Sears: parts availability increased, 27% growth in parts and accessories, the new GE Partsmaster program, the quality of GE's products, and the formation of a dedicated support team. It's this type of commitment to greatness that has kept GE beating the pack for over 100 years. Sears was up $1/4 to $50 3/8.

Sears wasn't the only source of praise for GE, though. Appliance Manufacturer magazine named the GE Profile Washer as the winner of the "Excellence in Design" award in the major appliance category. It seems that Appliance Manufacturer magazine has a lot of pull on the street, as GE stock rose $1 to $79 3/4.

When you can obtain market-beating returns on multi-billion dollar businesses like these, why would you settle for anything less. Dump your underperforming mutual funds and learn the joy of investing for yourself. It's not just interesting and fun, it's also very Foolish.

Fool on!

TODAY'S OTHER FOOLISH THING: David Gardner, a.k.a. MotleyFool, turned 30 today, so hoist a glass for him tonight.

Transmitted: 5/16/96

Today's Numbers

Day Month Year History

FOOL -0.78% 4.64% 75.78% 228.22%

S&P 500 -0.09% 1.63% 7.94% 45.04%

NASDAQ +0.46% 4.09% 17.78% 72.07%

*Scroll down or expand screen for full portfolio accounting

AMER -1 7/8 ...CHV - 5/8 ...GE +1...GPS - 1/2 ... IOMG - 5/8 ...KLAC ---...MDRX +2 3/4 ...S + 3/8 ...

Rec'd # Security In At Now Change

5/17/95 1005 Iomega Cor 5.04 66.00 1210.06%

8/5/94 680 AmOnline 7.27 55.63 664.83%

4/20/95 310 The Gap 16.28 33.38 105.07%

8/5/94 165 Sears 28.93 50.38 74.16%

8/11/95 95 GenElec 57.91 79.75 37.70%

8/11/95 110 Chevron 49.00 58.38 19.13%

1/29/96 250 Medicis Ph 27.86 28.13 0.95%

8/24/95 130 KLA Instrm 44.71 29.50 -34.02%

Rec'd # Security Cost Value Change

5/17/95 1005 Iomega Cor 5063.13 66330.00 $61266.87

8/5/94 680 AmOnline 4945.56 37825.00 $32879.44

4/20/95 310 The Gap 5045.25 10346.25 $5301.00

8/11/95 95 GenElec 5501.87 7576.25 $2074.38

8/11/95 110 Chevron 5389.99 6421.25 $1031.26

1/29/96 250 Medicis Ph 6964.99 7031.25 $66.26

8/24/95 130 KLA Instrm 5812.49 3835.00 -$1977.49

8/5/94 165 Sears 4772.65 8311.88 $3539.23

CASH $16434.53

TOTAL $164111.41