Fool Portfolio Report
Tuesday, October 7, 1997
by Jeff Fischer ([email protected])

ALEXANDRIA, VA (Oct. 7, 1997) -- -- A walk through a quiet wooded park, the trees reaching high into the sky; a relaxing swim in a tropical sea, the saltwater keeping you easily afloat; a quiet morning spent overlooking a landscape of mountains, the cliff peaks tall and majestic; a baseball hitting you in the face, knocking out your front teeth.

Which one describes the Fool Portfolio today?

Actually, it wasn't as bad as a baseball in the mouth, but descending 0.66% while the S&P added over one percent is at best like a stroll through the junkyard. Make that, a stroll through the junkyard while looking for your lost dog. Now make that dog a puppy. Now make that puppy your eight-year-old daughter's birthday present. Finally, imagine the junkyard owner yelling at you to beat it, telling you that the junkyard is closed. Now we have an accurate description of how it felt to be the Fool Portfolio today.

Despite a strong performance from America Online, 3Com, and our Foolish Four stocks, the portfolio fell into a grave dug by Iomega's shovel and Trump Hotel's pick. The news? None. On the IOMEGA (NYSE: IOM) message board Bighat2 posted that he heard rumors from Prudential that Iomega was having some trouble with Zip Plus vendors, and also that the laptop Zip drive might be delayed (translation: short-term concerns). And MBIKA posted that French company Nomai is now exhibiting its competing (read: illegally cloned) Zip disks at Comdex in Paris.

For whatever reason, the stock fell $2 1/4 to just under $23, losing nearly $300 million in market cap and settling at a price of $2.98 billion -- or two times trailing sales of $1.46 billion. The company will announce third quarter results next Thursday, October 16th. Earnings are expected to rise 122% from last year as the current First Call estimate is twenty cents per share.

Iomega has trailing earnings per share -- by quarter -- of $0.09, $0.15, $0.17 and $0.19, for a total of $0.60. (That's sixty cents, in legible English.) Eliminate the old nine cent quarter and add twenty cents (assuming IOM makes the estimate) and we have trailing earnings of seventy-one cents, and a $23 stock that would trade at 32 times earnings. In the most recent quarter Iomega earned a record $400 million in revenue, with 9.9% operating margins and 6.5% net margins. Margins have improved consistently over the past two years, and the stock has returned 94% annually over the past five years. Iomega has actually been one of the best performing stocks of any over the past ten years, ranking right up there with Microsoft, Intel, Oracle, and Nike. We'll cover Iomega's earnings announcement next week. Today was a blip.

Our second storage technology stock took it on the chin yesterday, most likely for reasons that David stated in yesterday's recap. There's some uneasiness surrounding the stock which, being someone who has followed INNOVEX (Nasdaq: INVX) for three years, is common every now and again. Innovex's technology is always being threatened in the eyes of some investors, and certainly there's merit in that concern with most technology intensive companies. However, Innovex's new technology is said to be less expensive and more easily adapted than the coming technology from HUTCHINSON (Nasdaq: HTCH), a corporation that has been attempting to take away some of Innovex's business for at least the past few years. At $29, Innovex trades at 12.5 times estimates for the year that just ended in September, the results of which will be announced around November Sixth.

Finally, TRUMP HOTELS (NYSE: DJT) rose without news, but the rise itself should perhaps make headlines. The stock had fallen seven of the last eight days. Trump should announce results from its third quarter around Halloween, and earnings per share are expected to decline 79% from last year.

So... a batch of hot buttered popcorn and a movie; a cup of chocolate milk and an OREO cookie; the Foolish Four for twenty-five years with 23% annual returns; paying two thousand dollars for a short investment seminar that talks about options. Which item doesn't belong in the world of Fools? For interesting reading, please see the Fool's collection on Wade Cook, reviewing his books and his aggressive and expensive investment advice.

Fool on!

Drip Portfolio -- Healthcare decision.
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 -- Good business?
Daily Trouble -- Cut in half! A good deal?
Fribble -- A fun lesson from readers.

TODAY'S NUMBERS
Stock  Change    Bid
----------------
AMZN  -  3/8   48.63
AOL   +1 15/16 79.63
T     +1 1/2   45.44
ATCT    ---    3.94
CHV   +  7/8   88.69
DJT   +  9/16  10.19
GM    -  1/16  68.44
INVX  +  1/2   29.00
IOM   -2 1/4   22.94
KLAC  +  7/8   67.50
LU    +2 3/4   88.81
MMM   +2 7/8   98.88
COMS  +  11/16 55.00



      
    
    
                  Day   Month    Year  History
        FOOL     -0.66%   0.22%  26.15% 236.68%
        S&P:     +1.07%   3.78%  32.72% 114.47%
        NASDAQ:  +0.89%   3.06%  34.56% 141.23%


    Rec'd    #  Security     In At       Now    Change
   8/5/94   355 AmOnline       7.27     79.63   994.82%
  5/17/95   980 Iomega Cor     2.52     22.94   810.22%
  10/1/96    42 LucentTech    47.62     88.81    86.52%
  8/11/95   125 Chevron       50.28     88.69    76.37%
  8/24/95   130 KLA-Tencor    44.71     67.50    50.97%
  8/12/96   110 Minn M&M      65.68     98.88    50.55%
  8/12/96   280 Gen'l Moto    51.97     68.44    31.68%
   9/9/97   290 Amazon.com    38.22     48.63    27.22%
  8/13/96   250 3Com Corp.    46.86     55.00    17.37%
  8/12/96   130 AT&T          39.58     45.44    14.81%
  6/26/97   325 Innovex       27.71     29.00     4.66%
  4/30/97 -1170 *Trump*        8.47     10.19   -20.29%
 10/22/96   600 ATC Comm.     22.94      3.94   -82.83%

    Rec'd    #  Security     In At     Value    Change
   8/5/94   355 AmOnline    2581.87  28266.88 $25685.01
  5/17/95   980 Iomega Cor  2509.60  22478.75 $19969.15
  8/11/95   125 Chevron     6285.61  11085.94  $4800.33
  8/12/96   280 Gen'l Moto 14552.49  19162.50  $4610.01
  8/12/96   110 Minn M&M    7224.44  10876.25  $3651.81
   9/9/97   290 Amazon.com 11084.24  14101.25  $3017.01
  8/24/95   130 KLA-Tencor  5812.49   8775.00  $2962.51
  8/13/96   250 3Com Corp. 11714.99  13750.00  $2035.01
  10/1/96    42 LucentTech  1999.88   3730.13  $1730.25
  8/12/96   130 AT&T        5145.11   5906.88   $761.77
  6/26/97   325 Innovex     9005.62   9425.00   $419.38
  4/30/97 -1170*Trump*     -9908.50 -11919.38 -$2010.88
 10/22/96   600 ATC Comm.  13761.50   2362.50-$11399.00

                              CASH  $30338.06
                             TOTAL $168339.75