Fool Portfolio Report
Friday, October 4, 1996
by David Gardner
ALEXANDRIA, VA, October 4, 1996 -- Icky.
Seven stocks our way, three stocks the other, but the Fool Portfolio goes down to the canvas Friday, and the ref counts us out. October so far has been a solid market knockout. Oooomph.
We have now lost to both market averages four solid days in a row, and Tysonlike, almost none of these bouts has been any contest. Today's contest was similarly, well, icky... we lost 0.5% of value while the market ran to record highs, gaining more than 1%. America Online dropped another point, Iomega lost a fraction, and General Motors, still embroiled in strike talks, surrendered $5/8.
It just so happens that America Online, Iomega, and General Motors are our three biggest holdings... that's the way you can lose money even when only 30% of your holdings declined. The first two are the most shorted stocks in United States, while the third is in the midst of protracted negotiations with striking members of the Canadian Auto Workers union. Call it bad karma all 'round.
No news in AOLville today, other than a late-breaking mention on our message boards that some AOL members are getting test-marketed a $19.95 flat fee for Internet service over AOL. AOL always tests a number of different pricing plans well before it releases them... this may be the latest, though the company has given no official confirmation. Go to the AOL folder in our Stock Boards over the weekend for more details, if you're interested in following this development.
No news from Iomega. IOMG had announced the shipping of its 3 millionth Zip drive earlier this week, an announcement which may have disappointed the market insofar as the stock has dropped each day since. (Our AOL readers can find a graph of IOMG's past one-month of price movements by hitting the Search button at the bottom of many of our screens and selecting the Historical Quotes option.) Expectations earlier this year were for 6 million drives to be shipped during 1996... a more realistic likelihood may now be 4.5 to 5 million. (It is primarily the sales disappointment that hurt IOMG stock this summer, I think.)
In a message included in today's IOMG in Fooldom Today, MF Ben recalled each of the company's Zip drive shipping date landmarks:
1 millionth drive, 2/96: took 11 months
2 millionth drive, 6/96: took 4 months
3 millionth drive, 9/96: took 3 months
With its manufacturing partner Epson, Iomega has accelerated shipping and sales of its product with each million. And with a 4Q '96 marketing push, and its new additional manufacturing partner Matushita on board, the company could make a run at 5 million. Six million seems very remote this year, a reality I believe is already factored into the stock price (now about 60% off its highs). The market is going to start looking forward to 1997, whatever it holds.
Ben reminds us that Matsushita's future manufacturing contributions will not be to Iomega's top line, because our company will receive only the licensing income for the drives, money which goes straight to the bottom line. In his fine posting "The Matsushita Factor," Benjamin openly wondered just how much or how little Matsushita would produce this fourth quarter. That's a big question mark, one that our readers and staff are currently hard-pressed to know. And in keeping with its tight-lipped corporate communications, Iomega is highly unlikely to communicate this to shareholders. The company has left its followers (and part owners) guessing about all manner of things for the past year, this being just the latest.
We'll all find out eventually how significant the Matsushita Factor will be. It's a shame Iomega so frequently leaves even the people who follow it most closely almost completely in the dark on questions like this.
On the bright side of life, 3Com has been doing an outstanding job of communicating. To its customers, in this case. Computerworld magazine, in a 9/16 survey entitled "It's your network... do you trust your vendor?" revealed 3Com's customer satisfaction was blowing away its competitors'. There was, in the magazine's words, "a noticeable gap between it and the next-best vendor, Cabletron." More than half of all surveyed customers gave Trois Com the highest mark available for overall customer satisfaction.
3Com closed up $2 today, to an all-time closing high bid of $65.
Speaking of all-time highs, 1996 Foolish Four entrant Chevron also hit one this afternoon, perched at $64 1/2 on a 38-cent rise. The company is due to report earnings per share (EPS) in the fourth week of October. Analysts show EPS consensus estimates of 95 cents, vs. $0.81 per share in the September quarter a year ago.
Then there's Quarterdeck. The stock got decked another quarter today, closing at an ask of $6 1/2... its lowest point in three weeks. The Foolfolio's current return of 8.24% represents a fine one-week gain. We'll continue to hope the market agrees with our assessment, as we shoot for a return of 20%+ on this investment.
One of our Web site readers, Randy Schmidt, wrote a kind note earlier this week that ended: "Would it be possible for the Fools to set up a portfolio tracking device that would track, for instance, my Beating the Dow account? If I could create a portfolio on line, with all the initial information in it, I would be able to see every day how I've been doing." Notes like Randy's always remind me how difficult it is for our readers to find all the Foolish stuff that's out there. Because for several weeks, we've offered the popular Foolish Portfolio Tracker (PortTrak) spreadsheet product in FoolMart, designed by our own MF Sargon. This easy-to-use contraption enables you to track your portfolio's returns, whether you're long or short, selling or covering, receiving dividends or paying interest.
For AOL users, the Foolish Portfolio Tracker imports stock quotes directly from AOL, making it extremely easy to remain up-to-date. As the product was only recently released, we initially geared it to AOLers, but you can expect us in the coming months to make it fully Internet-ready (for Web readers) as well.
Finally, and I think perhaps most importantly, once you've purchased PortTrak you can get all the technical support you need from our online Technical Support area (keyword FOOLTECH on AOL, or Internet readers can e-mail email@example.com). I understand that our customer satisfaction rates show a "noticeable gap" way, way over 3Com's. (Computerworld just wouldn't let us in on its survey of computer networking companies, the blackguards.) Anyway, for those of us who enjoy tracking our returns with full, educated, Foolish accountability, PortTrak is an excellent, inexpensive option.
To close, it is my earnest belief that at some point next week, we'll actually beat the market. How many times in a row can a Foolish coin flip wind up tails?
Till then, Fool on.
--- David Gardner, October 4, 1996
Day Month Year History FOOL -0.56% -4.85% 45.25% 171.21% S&P 500 +1.25% 2.06% 13.89% 53.02% NASDAQ +1.17% 1.68% 18.57% 73.23% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 21.63 758.49% 8/5/94 680 AmOnline 7.27 29.25 302.18% 8/13/96 250 3Com Corp. 46.86 65.00 38.71% 8/11/95 125 Chevron 50.28 64.50 28.27% 9/27/96-890 Quarterdck 7.08 6.50 8.24% 8/12/96 110 Minn M&M 65.68 70.38 7.15% 8/12/96 130 AT&T 39.58 39.75 0.44% 8/12/96 280 Gen'l Moto 51.97 49.00 -5.72% 10/1/96 42 LucentTech 47.62 43.25 -9.17% 8/24/95 130 KLA Instrm 44.71 20.88 -53.31% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 43466.25 $38403.12 8/5/94 680 AmOnline 4945.56 19890.00 $14944.44 8/11/95 125 Chevron 6285.61 8062.50 $1776.89 9/27/96-890 Quarterdck -6304.75 -5785.00 $519.75 8/12/96 110 Minn M&M 7224.44 7741.25 $516.81 8/12/96 130 AT&T 5145.11 5167.50 $22.39 10/1/96 42 LucentTech 1999.88 1816.50 -$183.38 8/11/95 280 Gen'l Moto 14552.49 13720.00 -$832.49 8/24/95 130 KLA Instrm 5812.49 2713.75 -$3098.74 8/13/96 250 3Com Corp. 11714.99 16250.00 $4535.01 CASH $22563.12 TOTAL $135605.87 Transmitted: 10/4/96