Fool Portfolio Report
Thursday, October 16, 1997
by David Forrest (DavidF@fool.com)
ALEXANDRIA, VA (Oct. 16, 1997) -- Hi again folks, TMF Bogey sitting in for the portfolio crew as Tom and Dave Gardner trek their way across California and Jeff writes elsewhere about IOMEGA (NYSE: IOM). That company's shareholders were holding their breaths up until a few minutes ago when Iomega reported earnings of $0.22 per share for the third quarter. This beat estimates of $0.20 and was a 135% rise over last year's $0.09 per share.
Taking a quick look at Iomega's numbers we see a company with $0.73 in trailing earnings and $1.59 billion in trailing revenue. With the holiday season approaching and computer sales conceivably having another huge Christmas, it stands to reason that Iomega will have a great fourth quarter as well. If it keeps pace with revenue growth from this quarter, Iomega will do somewhere near $550 million in revenue for the fourth quarter, putting the company at over $1.7 billion in revenue this year. At a consistent rate of 7% net margins, Iomega should be able to do between $0.28-$0.30 per share for the fourth quarter.
Where does this leave us for a valuation of Iomega? Well, if all goes as planned, at the end of the year it will have over $1.7 billion in revenue and trailing earnings of $0.88. Can it maintain its pre-earnings multiple of 40 times earnings? I'm not sure, but if it can, the stock is worth at least $36 based on expected numbers for the coming quarter. That's approximately 50% better than today's close of $24 3/16.
The Iomega message folder has been buzzing lately with all the guesses and analysis that come with each earnings report. As many of you know, the heart of all Iomega discussion has always been the Fool's message boards. With almost 110,000 messages in our Iomega folders, the community that has developed here is arguably the largest and most incredible in cyber-history.
Once upon a time, folks like ChirosPark, BLBREW, Kevinfurr, The Logman, Benjamin70, and JockHockey led us in the discussion there. The names have changed and more people have come into our little corner of the universe, but Iomega continues to be the strongest community of people online... anywhere. So, to Charles, Kevin, the Barrys and all of the original folk, I hope you're reading. You knew. You researched. You uncovered what all the high-paid Wall Street wisemen couldn't and boy did it upset them to no end!! Heck, the only reason the Fool Portfolio owns Iomega is because our readers did such incredible work and pointed it out to us. That folder and the people who have participated there have scored one of, if not THE biggest victories of the interactive world. Where else would individuals be able to come together and do that? Nowhere. My hat's off to you.
In other news...
TRUMP HOTELS AND CASINO RESORTS (NYSE: DJT) -- The "Donald" reported earnings of $0.13 per share in the third quarter. This was in line with Zacks and better than First Call's estimate $0.11 per share. Summer is traditionally the best quarter for Trump because people are on vacation and enjoying their leisure in Donald's vice-ridden houses of hell :) [To Donald's lawyers: That was a joke.] Still, First Call estimates a $0.69 loss for the December quarter and a loss for all of next year. We continue to believe that with Trump's debt-service requirements and its dismal business model, our short position will reward us. Some folks on the Trump message board feel different though. Check out some of the comments by Bluepogo who points to Mario Gabelli's investment as a reason to be long shares of DJT.
The Market - The Dow fell more than 119 points today sending many individual shares along with it. AMAZON.COM (Nasdaq: AMZN) fell $3 5/16, KLA-TENCOR (Nasdaq: KLAC) dropped $4 1/8, INNOVEX (Nasdaq: INVX) retreated $1 5/16, and Dow heavyweight AT&T (NYSE: T) fell $1 3/8, all helping the Fool Portfolio to an ugly 2.44% down day. Will this be the first calendar year that the Fool doesn't beat the market averages? With about 50 trading days left in the year it's likely to be a dogfight. Make sure you tune in each day to watch the battle!
Finally tonight, I'd like to point you all to one of our favorite features: The Family Fool. This week's issue talks about uncovering scams. For those of you who have never checked out our Family Fool, it's very cool. It's one of the few features that we have that keeps everyone in your family in mind. So, for the men in the audience (you know who you are) who always hog the computer at home and whose wives always complain that you don't spend time with them anymore, call in the bride and share with her the glory of the Family Fool. For you women, well, you're doing just fine. Carry on.
Take care Fools,
Drip Portfolio --
Valuing mutual fund businesses.
Fool Message Boards -- Speak your mind!
Boring Portfolio -- Boring beating Fool, barely.
Fool Four Portfolio -- 23% annually, historically.
Market News -- All the News, early.
Port Tracker -- Update your portfolio daily.
Daily Double -- Good business?
Daily Trouble -- What went wrong? Learn from it.
Fribble -- A fun lesson from readers.
Stock Change Bid ---------------- AMZN -3 5/16 43.44 AOL -2 5/8 84.50 T -1 3/8 43.50 CHV - 11/16 86.00 DJT + 1/16 10.06 GM - 7/16 70.00 INVX -1 5/16 29.44 IOM - 1/16 24.50 KLAC -4 1/8 62.25 LU - 5/16 87.69 MMM -2 1/16 95.56 COMS -2 5/16 51.00Day Month Year History FOOL -2.44% -0.05% 25.81% 235.76% S&P: -1.08% 0.84% 28.96% 108.39% NASDAQ: -1.38% 0.83% 31.65% 136.00% Rec'd # Security In At Now Change 8/5/94 355 AmOnline 7.27 84.50 1061.85% 5/17/95 980 Iomega Cor 2.52 24.50 872.22% 10/1/96 42 LucentTech 47.62 87.69 84.15% 8/11/95 125 Chevron 50.28 86.00 71.03% 8/12/96 110 Minn M&M 65.68 95.56 45.50% 8/24/95 130 KLA-Tencor 44.71 62.25 39.23% 8/12/96 280 Gen'l Moto 51.97 70.00 34.68% 9/9/97 290 Amazon.com 38.22 43.44 13.65% 8/12/96 130 AT&T 39.58 43.50 9.91% 8/13/96 250 3Com Corp. 46.86 51.00 8.83% 6/26/97 325 Innovex 27.71 29.44 6.24% 4/30/97 -1170 *Trump* 8.47 10.06 -18.82% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 29997.50 $27415.63 5/17/95 980 Iomega Cor 2509.60 24010.00 $21500.40 8/12/96 280 Gen'l Moto 14552.49 19600.00 $5047.51 8/11/95 125 Chevron 6285.61 10750.00 $4464.39 8/12/96 110 Minn M&M 7224.44 10511.88 $3287.44 8/24/95 130 KLA-Tencor 5812.49 8092.50 $2280.01 10/1/96 42 LucentTech 1999.88 3682.88 $1683.00 9/9/97 290 Amazon.com 11084.24 12596.88 $1512.64 6/26/97 325 Innovex 9005.62 9567.19 $561.57 8/12/96 130 AT&T 5145.11 5655.00 $509.89 4/30/97 -1170*Trump* -9908.50 -11773.13 -$1864.63 8/13/96 250 3Com Corp. 11714.99 12750.00 $1035.01 CASH $32438.81 TOTAL $167879.50