Fool Portfolio Report
Thursday, January 9, 1997
ALEXANDRIA, VA., January 9, 1997 -- The Fool Portfolio gained 0.45%, edging out the Nasdaq by a single one-hundredth of a percentage point---hafflenhufflenstuffel!
But we trailed the S&P 500, which gained 0.86% on the day. As we approach the end of the first full week of trading in 1997, The Fool Portfolio is trailing both our established performance benchmarks.
Nasdaq: + 2.72% S&P 500: + 1.90% Fool Port: + 1.50%
There wasn't much juice out there from our companies today. General Motors (NYSE: GM) announced that Volkswagen has agreed to a settlement regarding the alleged illegal transfer of manufacturing secrets by former GM executive, Jose Lopez, to his new employer, VW.
Movie rights have not been optioned yet.
The settlement between the two multinational car giants is interesting. It includes an "arrangement" under which VW will pay General Motors $100 million and will agree to buy GM parts worth $1 billion over a period of seven years. Ladies and gents, a small slice of crow was consumed this day. And we can scratch another mark in the win column for those who hold that the truth will always out.
Let's be real, though, we're not talking about any meaningful capital gain for our giant automaker. If we assume 5% margins on the parts contracts, GM will earn a total of $150 million between now and 2004. During this time, General Motors overall will earn something like $50 billion. Far and away then, the greater emphasis here is placed on principle, not profit -- crow feathers, not chickenfeed. GM rose $1/8, to $59 1/4.
Iomega (NYSE: IOM) offered important news after market close yesterday, but the stock didn't budge this morning... indicating that the marketplace already knew that what came was a-comin'. The storage-drive maker announced that Compaq Computer (NYSE: CPQ) expects to begin offering the internal Iomega Zip drive as a feature on its new Presario 4784 mini-tower computer in the second quarter of 1997.
The Standard Examiner delivered an interesting report on the Compaq deal this morning. What news organization is that? Well, here's one of the reasons to just love the communications revolution. The Standard Examiner, explains its Web site, has been serving Northern Utah since 1888. How else but through my personal computer would I -- with no news-hounding supercomputer in my garage -- ever have gained access to a story from Northern Utah, a place far closer to this Company's headquarters than downtown Manhattan?
Here's the article:
Compaq Adding Zip to Presario
For those of you who'd rather not click out there, here's an interesting quotation from the piece:"The consumer is telling us that they have a demand for another type of floppy drive, and that they don't need the backwards compatability," [said] Compaq's Rebecca Nahas. "And the Zip has gained so much attention and so much interest because it's been on shelves for people to buy. We haven't had that situation for LS-120 until now."
I note this explanation from a spokesperson at Compaq because these are points that Fools have been making in our Iomega folder on AOL for the past year -- that backwards compatibility is not an issue and that Compaq's LS-120 drive was running a very distant second (or third) to the consumer market.
And to these concerns, I would add that we oughtn't expect any broad consumer acceptance of technology products named the XG-343, or the SKGFK-6. Iomega's focus on focus groups served them well by serving them up the Zip and the Jaz. But, today's flat performance by Iomega stock shows that the market already knew this, even if the national media had missed it.
Today again Iomega had news after the bell. Gateway 2000 (Nasdaq: GATE) announced that Zip drives will be available for all models in its desktop, portable and Destination product lines running Windows95.
There really was not much other news out there. I'll end with a few squibs:
ATC Communications (Nasdaq: ATCT) hasn't spoken to the wires since November 14th....The most interesting news I could find on AT&T (NYSE: T) came via one of its employees today in our AT&T message folder -- AOL users, check it out.... Meanwhile, Jupiter Communications released a report on the complex nature of America Online's (NYSE: AOL) business partnerships. Given the volume of calls into our office from other media organizations today, I expect Jupiter's review will be much scrutinized.... 3Com (Nasdaq: COMS) bounced back $1 1/4, but is still 10% off its all-time highs after its outstanding last earnings report.... And KLA Instruments (Nasdaq: KLAC) is the next company in our portfolio slated to announce earnings, tagged for January 16. Estimates are for 40 cents. Get those earnings scorecards out!
In fact, my New Year's Investment Resolution is to concentrate even more intensely on earnings announcements and on reviewing financial statements. If you're investing in stocks, you probably want to have an earnings scorecard prepared -- through which you can stack business performance (sales, earnings, EPS, balance sheet items, and cashflows) against your expectation of quarterly business performance. It won't take more than a few hours a year... unless you have fifty-eight stocks in your portfolio, and we hope you don't.
Onward to long-term growth in savings!
Tom Gardner, Fool
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Stock Change Bid -------------------- AOL - 1/4 34.38 T + 1/4 38.75 ATCT + 1/8 13.75 CHV +1 5/8 68.38 GM + 1/8 59.25 IOM --- 17.00 KLAC + 1/8 38.50 LU +1 3/4 49.75 MMM - 1/8 83.63 NCR -1 33.38 COMS +1 1/4 73.25 Day Month Year History FOOL +0.45% 1.50% 1.50% 170.89% S&P 500 +0.86% 1.90% 1.90% 64.67% NASDAQ: +0.44% 2.72% 2.72% 84.15% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 17.00 574.88% 8/5/94 680 AmOnline 7.27 34.38 372.65% 8/13/96 250 3Com Corp. 46.86 73.25 56.32% 8/11/95 125 Chevron 50.28 68.38 35.98% 8/12/96 110 Minn M&M 65.68 83.63 27.33% 8/12/96 280 Gen'l Moto 51.97 59.25 14.00% 10/1/96 42 LucentTech 47.62 49.75 4.48% 1/2/97 8 NCR 33.75 33.38 -1.11% 8/12/96 130 AT&T 39.58 38.75 -2.09% 8/24/95 130 KLA Instrm 44.71 38.50 -13.89% 10/22/96 600 ATC Comm. 22.94 13.75 -40.05% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 34170.00 $29106.87 8/5/94 680 AmOnline 4945.56 23375.00 $18429.44 8/13/96 250 3Com Corp. 11714.99 18312.50 $6597.51 8/11/95 125 Chevron 6285.61 8546.88 $2261.27 8/12/96 280 Gen'l Moto 14552.49 16590.00 $2037.51 8/12/96 110 Minn M&M 7224.44 9198.75 $1974.31 10/1/96 42 LucentTech 1999.88 2089.50 $89.62 1/2/97 8 NCR 269.00 269.00 $0.00 8/12/96 130 AT&T 5145.11 5037.50 -$107.61 8/24/95 130 KLA Instrm 5812.49 5005.00 -$807.49 10/22/96 600 ATC Comm. 13761.50 8250.00 -$5511.50 CASH $4600.04 TOTAL $135444.17 Transmitted: 1/9/97