Fool Portfolio Report
Friday, January 10, 1997
by Jeff Fischer (MF BudFox)

ALEXANDRIA, VA., January 10, 1997 -- Baby New Year is a fiesty little devil. Ten days old and the Nasdaq is up more than three percent, while the S&P has risen 2.50%. I wouldn't be surprised to see Baby New Year sit bolt upright in bed and spin her head around and around, while shorts throw ticker tape at her and run for their lives.

Da Fool is kickin' the market after today's sharp rise, with much thanks to what many of you are using right now: America Online. (Hey, how did YOU get logged on?). The stock jumped $5 1/2 while the AOL message board searched frantically for the demons (or angels) which may have caused the jump. The media pointed the finger upon one Morgan Stanley.

AMERICA ONLINE'S (NYSE: AOL) Ted Leonsis gave a presentation at a Morgan Stanley software conference Friday. Guess Ted said some big words. Details aren't available for the Foolish masses (after-all, the masses are only investors in the company, many of them, individually or -- gasp! -- through mutual funds), but AOL is expected to surpass 8 million subscribers by the end of its first calendar quarter.

The other day a new Jupiter Study was released on AOL, looking forward to the next few years. The AOL story is interesting enough -- as always -- that I'm looking to write a special on ye olde AOL before too long. Especially on a price-to-sales ratio I think the online leader's stock is interesting -- that's just my opinion, though. I don't own any, amigo. Anyway, while the outlook for AOL is intriguing, the current situation in some regards is downright irritating. People across the country are complaining they can't get onto AOL, try, try as they might.

Beep... beep... beep... beep... Busy signal. The nightmare of a new age, the dreaded rejection of the modern world. No longer can only your love interest reject you, but your computer can, too.

AOL currently maxes out at 200,000 simultaneous users, while the service is nearing 8 million members total. The problem is obvious, and the company is working to beef up everything -- "gimme the works!," they is sayin' -- but not quickly enough for disgruntled members. AOL employees... it's Friday, yes. But nope. Sorry. You're not going home this weekend. Get back to work. You're working all weekend. (I'm sure they already are).

Meanwhile, the Foolish Four are still underperforming the market this year, but the market is as young as your first crush on your elementary teacher. Speaking of the Foolish Four and the Dow 30 in general, Investor's Business Daily gives the current price-to-earnings multiple on the Dow as 19.5. First Call gives a projected 1996 earnings multiple of 17, and a 1997 P/E multiple of 15. Fifteen is about where the thing trades on average, so perhaps the beastly Dow has been working like mad the past few months to catch up to projected 1997 earnings. Wow. Stocks move on earnings? I thought only Internet hype moved stocks?

As for stock movements, the market dropped this morning but rose sharply in the afternoon probably, at least in part, on the news that some don't see the dreaded Fed making any interest rate moves in February. Hey, the Wise can guess all they want. We're invested for the long-term. We take the good with the bad. Today was good: each indice scored a record new high, and with them CHEVRON (NYSE: CHV) and GENERAL MOTORS (NYSE: GM).

Back to the Dow: of course it's only a basket of 30 big old giants, some of which are questionable. But either way, point of interest for us with our Foolish Four: the First Call Web site (www.firstcall.com) lists in its free area all the Dow stocks and their earnings estimates and multiples for the year. They update it weekly, I believe. Print that puppy out and you have the Dow estimates going forward. Just bookmark the beast so you can update it, if you wish (though, of course, many of us don't care about such earnings, as the Foolish Four is a dream for those who don't want to worry about earnings or news, or stocks in general, but still want market-beating returns).

Moving on...

This week IOMEGA (NYSE: IOM) had a full plate of news. Check that out in IOM in Fooldom Today. Too much to write about. The stock didn't budge though. Earnings are due in two weeks, the week of January 24th. Perhaps da market awaits that event.

Next topic: at the end of December I made some Foolish predictions for 1997. Who's the king here? Who's the king? You know it! Already, barely a week into the new year, one of the predictions have come true (basically). I predicted 3M (NYSE: MMM) would have trouble with their Post-It notes. Now it's true. They're suing Microsoft over Post-Its. (My predictions are all in good (or bad) humor, folks, of course).

David wrote about 3M in his Wednesday recap, and he received quite a bit of feedback and information from a wide range of people, including Apple fans and a 3M employee. In celebration of the spirit of interactive reporting, David wanted to add his thoughts to today's recap. David, please step up:

"One thing I've since learned with our readers' help is that 3M has a software product -- has had it for a while -- that essentially lets you create Post-Its on your screen. So it wasn't just that Microsoft was bringing 3M's off-line product online... it was that Microsoft was duplicating or copying an existing 3M software product. That's the first point. The second and final point was that Apple users pointed out that Apple's operating system has included, for a few years now, a similar functionality it calls 'Stickies.' No idea whether 3M has yet to go after Apple, or doesn't think it's worth it. Interestingly, this could be a case where Microsoft is actually copying Apple (the latest in a series of historic episodes) rather than 3M!"

Speaking of being corrected, this week I was musing online with a friend about semiconductor equipment manufacturers' stocks. Talking about the big old Rhinos in the industry, I wrote her that APPLIED MATERIALS (Nasdaq: AMAT) was "the one to reckon with," more or less. She wrote back, "Actually KLA INSTRUMENTS (Nasdaq: KLAC) is better because INTEL (Nasdaq: INTC) and ADVANCED MICRO DEVICES (NYSE: AMD) use its equipment to upgrade their facilities."

As Johnny Carson would say, "I Did Not Know That." Good to know, especially as KLA is a Fool stock. It's always enlightening to learn that the world as you thought it is often not so. Right, Wise Folk out there?

Have a Foolish Weekend!!

TODAY'S NUMBERS


Stock Change Bid -------------------- AOL +5 1/4 39.63 T --- 38.75 ATCT + 3/8 14.13 CHV + 7/8 69.25 GM +1 7/8 61.13 IOM --- 17.00 KLAC --- 38.50 LU +1 3/8 51.13 MMM + 1/8 83.75 NCR -1 32.50 COMS -1 1/4 72.00
Day Month Year History FOOL +3.09% 4.64% 4.64% 179.27% S&P 500 +0.61% 2.52% 2.52% 65.67% NASDAQ: +0.44% 3.17% 3.17% 84.96% 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 39.63 444.83% 8/13/96 250 3Com Corp. 46.86 72.00 53.65% 8/11/95 125 Chevron 50.28 69.25 37.72% 8/12/96 110 Minn M&M 65.68 83.75 27.52% 8/12/96 280 Gen'l Moto 51.97 61.13 17.61% 10/1/96 42 LucentTech 47.62 51.13 7.37% 8/12/96 130 AT&T 39.58 38.75 -2.09% 1/2/97 8 NCR 33.75 32.50 -3.70% 8/24/95 130 KLA Instrm 44.71 38.50 -13.89% 10/22/96 600 ATC Comm. 22.94 14.13 -38.42% 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 26945.00 $21999.44 8/13/96 250 3Com Corp. 11714.99 18000.00 $6285.01 8/12/96 280 Gen'l Moto 14552.49 17115.00 $2562.51 8/11/95 125 Chevron 6285.61 8656.25 $2370.64 8/12/96 110 Minn M&M 7224.44 9212.50 $1988.06 10/1/96 42 LucentTech 1999.88 2147.25 $147.37 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 8475.00 -$5286.50 CASH $4600.04 TOTAL $139632.54