Fool Portfolio Report
Monday, January 20, 1997
by David Gardner
ALEXANDRIA, VA, January 20, 1997-- Just across the river from Washington DC's cold Monday fanfare, the Fool did a little number of its own, trotting out a 1.23% gain. This put the Foolfolio back over the S&P 500 for the year (there may it stay), as the S&P had a weak day (up 0.07%). The Nasdaq turned in a comparable Monday gain of 1.13%, and is now ahead for the year by a fraction.
It was a good day for technology stocks. That may have been due to Microsoft's strong after-market earnings report Friday, stating that its December quarter earnings rose an estimate-beating 29%. MSFT shares ascended $3 5/8 today.
Another significant piece of news for technology stocks was the initial (and partial) implementation of SEC rules creating a new system for limit orders (applying most meaningfully to Nasdaq stocks). The new system applies to the Nasdaq's most heavily traded issues. Limit orders placed in between these stocks' bid and asked prices (in between "the spread") are now prominently displayed on the computer terminals of market makers, enabling any of them to fill that order. The result is that individual investors should notice better prices and quicker executions for their limit orders than ever before. The full system, which will eventually apply to all Nasdaq stocks, will roll out by the end of this year.
Closer to home, strong performances out of our computer hardware companies propelled today's portfolio.
Top price-per-share riser for Monday was 3Com (Nasdaq: COMS), which rose $1 3/4 to $73 1/4. Our company today announced the new 3Com Network Ready program, teaming with an exhaustive list of PC manufacturers to create PCs preconfigured with 3Com networking "solutions." This offers a quick solution at a cheaper price, since the Network Ready line eliminates the cost of installation and configuration. And the completed installation of these computers includes rigorous testing to make sure it works in every customer's environment.
What you have here is the company inking a spate of OEM deals to provide its top-selling products to American businesses at a cheaper price than ever before. That's what Iomega has been working on over the last half year, and it's a good model for creating an industry standard.
3Com also today announced that it is the first networker to provide Latin American customers with guaranteed 24-hour equipment replacement, as COMS opened five new customer service centers in the region. We're talkin' Argentina, Chile, Colombia, Peru, and Venezuela... and we were already talkin' Mexico and Brazil. Just so we all make sure we're not getting soft, let's conduct a brief review of our Latin capitals (please place your right hand over your monitor to block out the righthand side of our list, the answers):
New Countries Capitals Argentina ..... Buenos Aires Chile ..... Santiago Colombia ..... Bogota Peru ..... Lima Venezuela ..... Caracas
Now that you know the capitals, you know where 3Com's new centers are located, because that's where they put them. The centers give customers a local spot they can drop off any product requiring warranty replacement.
Given regular announcements like these, it's little wonder the stock is up 56% since our August purchase.
Good days as well for Iomega (NYSE: IOM) (up $7/8) and Lucent Technologies (NYSE: LU) (up $1 3/8). No particular news on Iomega, which announces earnings January 28. Lucent Tech, on the other hand, got a nice writeup from Reuter today. The writer pointed out that its overseas business is still only one-third of the overall. And further, the ongoing upgrades that US phone companies will need to make to their telecom networks with the popularity of Internet access will continue to drive LU's business. Lucent is scheduled to announce earnings on Thursday. Consensus estimates are for $1.32 per share, vs. $1.30 per share for the same period last year. For the present year, estimates currently settle at $2.03 a share, 23% growth over last year's $1.65.
Speaking of earnings, here's a quick table put together by our guy MF BudFox of upcoming earnings dates for Fool stocks:Stock Date EPS* T Jan 22 $0.79 CHV Jan.23 $0.98 LU Jan. 23 $1.32 IOM Jan. 28 $0.18 GM wk/Jan 27 $0.48 MMM Jan 28 $0.88 ATCT wk/Jan 30 $0.10 AOL wk/Feb 3 (- 0.58) NCR ??? $0.20 COMS wk/Mar 25 $0.62 KLAC wk/April 15 $0.40 *estimated, of course
To close today, hey, you gotta love KLAC. The KLAC Attack continues, as shares of KLA Instruments (Nasdaq: KLAC) continue to pound the barricades, rising in rebellion from their high-teens summer lows. A year and a half ago, we purchased this beleaguered stock at almost the all-time tippy-top: $44 5/8. We watched them sink, sink some more, die a little bit, wilt, and founder, then touch down in the $17's just a few months ago. Today, we're as close as we've been in months to breakeven. If KLAC stock, up $1/2 today to bid of $42 7/8, can one day soon cross our purchase price, it'll make for a gallant, champagne-splashing tribute to long-term patience.
OK, sure sure, we'll still only be breakeven, and way behind where the market has taken many other stocks over the past 18 months. But we could have made the mistake of despairing, and selling at a loss... or worse, at the bottom. As we've Foolishly stuck with this stock, we'll take whatever tiniest excuse we can to celebrate -- though we don't need an excuse to celebrate long-term investing. In the long-term, though, we would expect that it'll beat the market... our initial expectation with any of our investments.
--- David Gardner, January 20, 1997
Stock Change Bid -------------------- AOL - 3/4 40.25 T --- 38.25 ATCT - 1/4 12.25 CHV - 1/8 67.25 GM + 5/8 60.75 IOM + 7/8 17.25 KLAC + 1/2 42.88 LU +1 3/8 53.00 MMM -1 84.88 NCR - 3/8 35.63 COMS +1 3/4 73.25 Day Month Year History FOOL +1.23% 5.00% 5.00% 180.23% S&P 500 +0.07% 4.85% 4.85% 69.44% NASDAQ: +1.13% 5.68% 5.68% 89.44% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 17.25 584.80% 8/5/94 680 AmOnline 7.27 40.25 453.43% 8/13/96 250 3Com Corp. 46.86 73.25 56.32% 8/11/95 125 Chevron 50.28 67.25 33.74% 8/12/96 110 Minn M&M 65.68 84.88 29.23% 8/12/96 280 Gen'l Moto 51.97 60.75 16.89% 10/1/96 42 LucentTech 47.62 53.00 11.31% 1/2/97 8 NCR 33.63 35.63 5.95% 8/12/96 130 AT&T 39.58 38.25 -3.35% 8/24/95 130 KLA Instrm 44.71 42.88 -4.11% 10/22/96 600 ATC Comm. 22.94 12.25 -46.59% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 34672.50 $29609.37 8/5/94 680 AmOnline 4945.56 27370.00 $22424.44 8/13/96 250 3Com Corp. 11714.99 18312.50 $6597.51 8/12/96 280 Gen'l Moto 14552.49 17010.00 $2457.51 8/11/95 125 Chevron 6285.61 8406.25 $2120.64 8/12/96 110 Minn M&M 7224.44 9336.25 $2111.81 10/1/96 42 LucentTech 1999.88 2226.00 $226.12 1/2/97 8 NCR 269.00 285.00 $16.00 8/12/96 130 AT&T 5145.11 4972.50 -$172.61 8/24/95 130 KLA Instrm 5812.49 5573.75 -$238.74 10/22/96 600 ATC Comm. 13761.50 7350.00 -$6411.50 CASH $4600.04 TOTAL $140114.79 Transmitted: 1/20/97