Fool Portfolio Report
Thursday, October 17, 1996

by Jeff Fischer (MF BudFox)

ALEXANDRIA, VA., October 17, 1996 -- With its short-term drama and pulse-rising nature, earnings season is upon us. Best to step back, look coolly at the numbers, and think long-term.

But today, let's jump right in!

After the bell, Iomega (IOMG) reported earnings above estimates. Revenues were above expectations, breaching the $300 million mark, rising all the way to $310 million (compared to a mere $84 million last year, third quarter). Expectations called for only $285 million in revenues, which would have been flat over last quarter's revenues. Earnings reached $0.09 per share, well above the consensus estimates of $0.07 per share. Both revenues and earnings were very strong, especially when the seasonality factor is considered. Most analysts, Fools, and Wall Street watchers expected much less from Iomega. As it turns out, Iomega had a great quarter. The conference call can be heard either by dialing (800) 633-8284 and putting in reservation # 2021724, or by hopping over to the Dow Jones Investor Network for a Real Audio version.

Today's news contained another surprise from Iomega: the company announced plans to move to the New York Stock Exchange within "several weeks." One can easily speculate that management wishes to remove some of the gross volatility from the stock. Also, perhaps management considers the move to the NYSE as a gain in stature. Bay Networks (BAY), and America Online (AOL) are both recent notable defects from Nasdaq to the New York Stock Exchange. The moves didn't do anything for their share prices, but neither company was completely fundamentally solid when they moved.

Randy Befumo (MF Templar) has added another insightfully concise masterpiece to his repertoire, tonight writing of Iomega in the Evening News.

And, we also have a special compiliation for Iomega's third quarter earnings. This very useful area gives background history, simplifies the search for financial information (including links to the 10-K reports), and also holds some fun writings about the company and the stock. For easy access to all things Iomega, click here.

Moving on, behemoth AT&T (T) announced earnings today as well, and the Fool has comprised a synopsis of AT&T's conference call for you to read at your leisure. The company announced that profits dropped nearly 11% in the third quarter. It said competition for long-distance customers is intensifying, and it also spent more money investing in new and rising technologies.

In the three months ended September 30th, the company earned $1.36 billion, or 84 cents per share. That's down from $1.53 billion, or 96 cents a share last year. Along with earnings, the company announced that the spin-off of computer division NCR is imminent, and will be completed by year's end. Like Superman's planet breaking up in deep space, AT&T continues to throw off huge, energized pieces of itself, arguably for the good of the company.

For the Fool, the stock is of course a Foolish Four, and was bought as a top-yielding Dow stock, which makes analysis optional at most. The stock sits in the portfolio as part of a market outperforming strategy -- the Dow Dividend approach -- which is simple and quick -- even brainless. The stock dropped 1/8th today.

Also announcing earnings today was the Fool's old friend KLA Instruments (KLAC). KLA was bought when semiconductor-related stocks were surging, and the market seemed to believe chip-related companies were going to take over the world -- or at least Asia. For example, one analyst even thought that Micron Technolgoy (MU) was going to earn $3,000 per share in 1998 (I'm kidding -- his estimate was a bit lower). Soon after, of course, the semiconductor industry took a cyclical downturn, and the related stocks have since languished. Growth, inventory levels, and pricing concerns have taken over the headlines of the chip industry. Analysts speculate constantly about when the chip industry will improve. As a Fool, I wouldn't care to guess when, but I do know it will, at some point.

The company missed estimates, reporting $0.46 per share, while 17 analysts estimated $0.49. The company is trapped in the uncertainty of the industry -- an uncertainty which makes KLA's customers hesitate, and then wait, before placing new orders. Everyone is trying to assess supply and demand in this sector.

Revenues were above the year earlier period, and KLA is faring better than many other chip-related companies, but the number was down from the prior quarter due to lower order rates. First quarter revenues were $164 million, and net income was $24 million. The company's financial position did improve again, having more cash and still no long-term debt. Very Foolish.

The company was strong to begin with, when the Fool bought it, and it is still run well, but it can't escape the industry demographics. It does seem to be faring better than many of its brethren, but it's still been a small disaster for the Fool port thus far. The stock fell $3/8 today.

Over-all, the Fool lost to the market today. Iomega shed $2 7/8, perhaps on nervousness before earnings, and 3Com (COMS) fell another $2 as the Nasdaq tumbled. Meanwhile, General Motors (GM) and America Online (AOL) rose $1/2 and $3/4 respectively.

As if all this isn't enough, the Fool Port is happy to announce a new addition to the Foolfolio! That's right, the Fool is adding another stock to the war-chest! This one is a small-cap, high-growth pickin'. The stock will be purchased for the Fool within the next five days, as is Foolish policy.

Yes, there's a full platter of good things going on here tonight!

Stay Foolish!

Today's Numbers

Stock Change Bid ------------------- AOL + 3/4 25.25 T - 1/8 39.75 CHV + 1/8 66.88 GM + 1/2 53.25 IOMG -2 7/8 22.88 KLAC - 3/8 23.25 LU - 7/8 47.63 MMM - 1/8 72.00 QDEK - 1/16 6.13 COMS -2 62.88
Day Month Year History FOOL -3.97% -3.62% 47.12% 174.72% S&P 500 +0.36% 2.86% 14.78% 54.23% NASDAQ -0.72% 1.23% 18.04% 72.45% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 22.88 808.11% 8/5/94 680 AmOnline 7.27 25.25 247.18% 8/13/96 250 3Com Corp. 46.86 62.88 34.18% 8/11/95 125 Chevron 50.28 66.88 32.99% 9/27/96 -890 Quarterdec 7.08 6.13 13.54% 8/12/96 110 Minn M&M 65.68 72.00 9.63% 8/12/96 280 Gen'l Moto 51.97 53.25 2.46% 8/12/96 130 AT&T 39.58 39.75 0.44% 10/1/96 42 LucentTech 47.62 47.63 0.02% 8/24/95 130 KLA Instrm 44.71 23.25 -48.00% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 45978.75 $40915.62 8/5/94 680 AmOnline 4945.56 17170.00 $12224.44 8/13/96 250 3Com Corp. 11714.99 15718.75 $4003.76 8/11/95 125 Chevron 6285.61 8359.38 $2073.77 9/27/96 -890 Quarterdec -6304.75 -5451.25 $853.50 8/12/96 110 Minn M&M 7224.44 7920.00 $695.56 8/12/96 280 Gen'l Moto 14552.49 14910.00 $357.51 8/12/96 130 AT&T 5145.11 5167.50 $22.39 10/1/96 42 LucentTech 1999.88 2000.25 $0.37 8/24/95 130 KLA Instrm 5812.49 3022.50 -$2789.99 CASH $22563.12 TOTAL $137359.00 Transmitted: 10/17/96