Fool Portfolio Report
Friday, September 19, 1997
by Jeff Fischer (JeffF@fool.com)


ALEXANDRIA, VA (Sept. 19, 1997) -- Since May 17th, 1995, Iomega has returned 1,035% for the Fool Portfolio, while the S&P has gained 80%. Iomega grew sales ten-fold over that time, so it isn't too surprising that the stock has been a ten-bagger, too. On the inconspicuous day of the Iomega purchase, David Gardner wrote of NBC Online's departure from America Online after news of an exclusive deal between Microsoft Network and NBC. That 1995 press release sent AOL's stock down $7 in two days.

Rather than discuss the Iomega purchase on that spring day, the Fool argued that AOL wasn't losing much of anything with NBC's departure, and that the news was hardly indication of Microsoft poising itself to delete the online leader. Back then, David Gardner wrote, "We think (AOL) right here is an excellent buying opportunity. And we'll suggest to you that over time the Wise may just eventually realize that content generators on old media have little to offer new media." Because I wasn't the person around back then arguing these points vehemently, I can brag for Tom and David now, and say, well, it appears that they were right.

This isn't to brag for them, though. In retrospect, it's merely interesting to remember how often -- and to what degree -- the market has been wrong about America Online. Every large swoon in AOL's price was, of course, the result of sellers dumping the stock -- dumping an investment that has compounded 86% annually over the past five years. Also, over those years, the stock was one of the most Wisely and heavily shorted on the market. Many folks thought it was outrageously priced. With $52 million in 1993 sales, AOL traded at a market cap of $800 million in 1994, or fifteen times sales. The stock has returned 1000% since then.

This week AMERICA ONLINE (NYSE: AOL) announced a content deal with Microsoft. A channel on Microsoft's Explorer 4.0 will bring users directly to AOL content.

In other "Internet-related" news, the most recent Fool purchase -- AMAZON.COM (Nasdaq: AMZN) -- surged $7 7/8 on Friday. The stock booked a new high after Morgan Stanley started coverage of the online retailer with an "outperform" rating. It's significant to note that Morgan Stanley was not part of the underwriting team for the company's recent IPO. Mary Meeker, an Internet analyst at Morgan Stanley, has been covering America Online and other industry leaders for the past years, and co-authored the book titled the Internet Report.

When the Fool was preparing to buy Amazon, it traded at eleven times sales. It was purchased at fifteen times sales, and now trades at nineteen times the trailing sales of $56.5 million. More relevantly, Amazon trades at 9.9 times the company's run-rate of $112 million (revenue of $28 million in the most recent quarter, multiplied by four). Of course, that doesn't account for any growth in revenue going forward, and we have just an inkling of a suspicion that the holiday fourth quarter could be... let's say, larger than the third quarter; while the third quarter should be larger than the recent second quarter, as the company has been on a marketing blitz.

After a dismal four days, the Fool Port gained 3.54% on Friday thanks to Amazon, and also due to strong moves in Iomega and Innovex. For the week, the S&P gained 2.88% on favorable economic (or Wise-onomic) figures that showed strong growth coupled with low inflation.

3COM (Nasdaq: COMS) will announce earnings next week, on the 23rd, and $0.48 per share is expected. ATC COMMUNICATIONS (Nasdaq: ATCT) should be announcing earnings as well, and two cents per share is the number anticipated. The company was the featured Daily Trouble issue on Friday. GENERAL MOTORS (NYSE: GM) powered to a new high on Friday, as our Foolish Four stocks enjoyed a strong week. All those GM employees, and Fools alike, have a Foolish weekend...

Drip Portfolio -- KSU
Fool Message Boards -- Speak your mind!
Boring Portfolio -- Boring holds Cisco, Oracle.
Fool Four Portfolio -- 23% annually, historically.
Market News -- All the news, early.
Port Tracker -- Update your portfolio daily.
Daily Double -- Learn what makes good business. Maybe.
Daily Trouble -- Cut in half! A good deal?
Fribble -- A fun lesson from readers.


TODAY'S NUMBERS
Stock Change Bid ---------------- AMZN +7 7/8 47.25 AOL + 7/8 74.81 T - 13/16 44.00 ATCT + 1/4 5.06 CHV -1 3/16 87.31 DJT - 1/4 11.38 GM + 7/8 69.56 INVX +115/16 32.38 IOM +2 28.63 KLAC -1 1/16 69.81 LU +111/16 82.44 MMM - 13/16 86.69 COMS +1 3/16 47.81
Day Month Year History FOOL +3.54% 8.03% 26.08% 236.49% S&P: +0.34% 5.67% 28.32% 107.35% NASDAQ: +0.62% 5.86% 30.16% 133.33% Rec'd # Security In At Now Change 5/17/95 980 Iomega Cor 2.52 28.63 1035.91% 8/5/94 355 AmOnline 7.27 74.81 928.65% 8/11/95 125 Chevron 50.28 87.31 73.64% 10/1/96 42 LucentTech 47.62 82.44 73.13% 8/24/95 130 KLA-Tencor 44.71 69.81 56.14% 8/12/96 280 Gen'l Moto 51.97 69.56 33.84% 8/12/96 110 Minn M&M 65.68 86.69 31.99% 9/9/97 290 Amazon.com 38.22 47.25 23.62% 6/26/97 325 Innovex 27.71 32.38 16.84% 8/12/96 130 AT&T 39.58 44.00 11.17% 8/13/96 250 3Com Corp. 46.86 47.81 2.03% 4/30/97 -1170 *Trump* 8.47 11.38 -34.32% 10/22/96 600 ATC Comm. 22.94 5.06 -77.93% Rec'd # Security In At Value Change 5/17/95 980 Iomega Cor 2594.53 28052.50 $25457.97 8/5/94 355 AmOnline 2581.87 26558.44 $23976.57 8/12/96 280 Gen'l Moto 14552.49 19477.50 $4925.01 8/11/95 125 Chevron 6285.61 10914.06 $4628.45 8/24/95 130 KLA-Tencor 5812.49 9075.63 $3263.14 9/9/97 290 Amazon.com 11084.24 13702.50 $2618.26 8/12/96 110 Minn M&M 7224.44 9535.63 $2311.19 6/26/97 325 Innovex 9005.62 10521.88 $1516.26 10/1/96 42 LucentTech 1999.88 3462.38 $1462.50 8/12/96 130 AT&T 5145.11 5720.00 $574.89 8/13/96 250 3Com Corp. 11714.99 11953.13 $238.14 4/30/97 -1170*Trump* -9908.50 -13308.75 -$3400.25 10/22/96 600 ATC Comm. 13761.50 3037.50-$10724.00 CASH $29541.35 TOTAL $168243.73