Fool
Portfolio Report
Thursday, November 06, 1997
by David Forrest
([email protected])
ALEXANDRIA, VA (Nov. 6, 1997) -- America Online (NYSE: AOL) reported earnings of $0.16 after the close today. This was $0.04 better than analysts' estimates of $0.12. After the report, I received a somewhat disappointing e-mail from a fellow Fool that said: "What a kick in the pants. AOL reports great earnings and the after-hours market whacks them down to $80!" My response was pretty simple: "I guess yesterday's $6 rise was in anticipation of the great numbers and when AOL delivered on the numbers, traders decided to sell." It was then that I realized what a moron I was. The short-term swings in stock prices can be a pretty weird thing to understand and nobody can ever be sure exactly why a stock moves the way it does over the short-term. Many traders will speculate as to why, but trying to figure it all out can be very difficult.
What I'm sure of is the fact that when you purchase ownership of a company, you are investing in the long-term growth of a business. You aren't buying a ticker symbol or a fancy stock certificate, you're buying a part of a business. That business is run by real live people who brush their teeth, rent movies, wrestle with the dog, and read the Family Fool. I wonder if Steve Case owns a dog? Ya think he uses Aquafresh or Colgate? The point of all this, in case you're scratching your head, is that I don't really care that AOL fell $5 in after-hours trading, and you shouldn't either. Is the business still strong? Does management know what's going on? Are they in a thriving industry?
We think so.
For a much closer look at AOL's earnings, check out our comprehensive coverage. Also, Don't forget to swing by the AOL message board. There have been some incredibly insightful people posting about the company's prospects and you don't want to miss it.
3Com Corp. (Nasdaq: COMS) has been taking a beating lately as rumors of funky accounting coupled with Ascend's price cuts have hurt this networking leader. (If you get a chance, check out the Post of the Day titled " s there hope for Ascend" in the Fool Cafe.) The 3Com rumors have to do with some tricky language in 3Com's 10-Q filing with the SEC. Randy Befumo explains things in greater detail in tonight's Evening News, but the bottom line is that 3Com was swimming in modem inventory from the US Robotics acquisition and they took a pretty hefty charge for it without making it blatantly obvious what they were doing. The air of impropriety is enough to scare a lot of people away. Granted, 3Com did nothing illegal, but they could have been much more forthright and that's disappointing. Regardless, the proof will be in the virtual pudding when 3Com releases their next earnings report. We'll be watching very closely. For those of you who always wondered why US Robotics initiated the acquisition and why they went for such a cheap price, things are becoming more clear now. Are you bothered by this or do you not see it as a big deal in the grand scheme of things? Let us know on the 3Com message board.
Well folks, the rest of the day was pretty sleepy unless you consider GM's announcement that their Corvette will be the pace car in next year's Indy 500 exciting. ZZZZZzzzzzzzzzzzzzzzzzzzz......
Goodnight sweet Fools,
David Forrest
TODAY'S
NUMBERS
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Day Month Year History FOOL -1.99% 2.52% 27.21% 239.50% S&P: -0.50% 2.56% 26.63% 104.63% NASDAQ: -0.85% 1.87% 25.75% 125.42% Rec'd # Security In At Now Change 5/17/95 980 Iomega Cor 2.52 29.00 1050.79% 8/5/94 355 AmOnline 7.27 80.00 999.98% 10/1/96 42 LucentTech 47.62 84.81 78.12% 8/11/95 125 Chevron 50.28 84.25 67.55% 9/9/97 290 Amazon.com 38.22 55.75 45.86% 8/12/96 110 Minn M&M 65.68 93.25 41.98% 8/12/96 280 Gen'l Moto 51.97 66.50 27.95% 8/12/96 130 AT&T 39.58 47.94 21.12% 8/24/95 130 KLA-Tencor 44.71 49.13 9.87% 6/26/97 325 Innovex 27.71 28.06 1.27% 4/30/97 -1170 *Trump* 8.47 9.06 -7.01% 8/13/96 250 3Com Corp. 46.86 40.88 -12.77% Rec'd # Security In At Value Change 5/17/95 980 Iomega Cor 2509.60 28420.00 $25910.40 8/5/94 355 AmOnline 2581.87 28400.00 $25818.13 9/9/97 290 Amazon.com 11084.24 16167.50 $5083.26 8/11/95 125 Chevron 6285.61 10531.25 $4245.64 8/12/96 280 Gen'l Moto 14552.49 18620.00 $4067.51 8/12/96 110 Minn M&M 7224.44 10257.50 $3033.06 10/1/96 42 LucentTech 1999.88 3562.13 $1562.25 8/12/96 130 AT&T 5145.11 6231.88 $1086.77 8/24/95 130 KLA-Tencor 5812.49 6386.25 $573.76 6/26/97 325 Innovex 9005.62 9120.31 $114.69 4/30/97 -1170*Trump* -9908.50 -10603.13 -$694.63 8/13/96 250 3Com Corp. 11714.99 10218.75 -$1496.24 CASH $32438.81 TOTAL $169751.25
