Ground Control to Fool Port
Wednesday, May 20, 1998
by Jeff Fischer
ALEXANDRIA, VA (May 20, 1998) -- The first thing that many people heard on the radio this morning was the story that a $250 million satellite was malfunctioning, and as a result pagers were silent across the country. This was the initial news that I heard upon waking, but I didn't think that it would impact us at Fool HQ, or the public at large. But it did. Several news-feeds were down, making it more difficult to obtain stock news and quotes; not to mention the fact that several radio and TV stations went dead as well -- all because one little satellite lost track of Earth.
The silver technology that circles our blue and white globe is much more important in our daily lives than we might think. Losing just one satellite has made the day hectic and confused for almost everyone in the news business, while causing lost revenue for dozens of TV and radio stations. It also meant that hundreds of thousands of workers (doctors, nurses, moms) who depend on pagers during the day had to quickly remember how to live without pagers again -- something that was probably quite a hassle.
The satellite malfunction also made crazy things happen. For instance, the S&P rose sharply today, while the Nasdaq moved the same amount but in the opposite direction -- down, like a Soviet rocket launched in the 1960s. The malfunction also caused the Fool Port to decline. Finally, it will also make this column very short because usually, when I write it, the column is relayed to me by a direct satellite feed into my head. Very little of it is my original thought.
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Okay, let's move forward.
The Fool Port lost 0.48% because two of its stocks, America Online (NYSE: AOL) and Amazon.com (Nasdaq: AMZN), fell closer to Earth. Bears believe that both of these stocks have actually lost track of Earth altogether, having risen to valuations that pierce the ozone layer. We believe, however, that the Internet -- though harboring risks -- represents a great long-term opportunity, perhaps one of the best opportunities in our lifetimes.
Just as Henry Ford's assembly line changed how products are assembled, the Internet will change how products are distributed, and as a result the Internet will change how companies and the entire economy is run (just as the invention of assembly lines did). The assembly line re-wrote the book on business and eventually resulted in a booming economy. The Internet is going to rewrite the rules as well. As for the actual stock valuations, I've got to say that I think America Online and Amazon are each worth, respectively, exactly...
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...and if you disagree with my valuations, that's your problem!
Next up is 3Dfx. With a lack of fresh news to relay, it serves to share yesterday's news that coverage of 3Dfx Interactive (Nasdaq: TDFX) was initiated at DLJ Securities. The firm rated the stock a "buy" and gave it a 12-month price target of $40 -- or 81% above today's closing price. The analyst stated that the stock's fair valuation is about 17 times the 1999 earnings estimate. First Call estimates are $1.92 in earnings per share for 1999. The stock is currently priced at 11 times that estimate.
Today KLA-Tencor (Nasdaq: KLAC) introduced the first ever ultraviolet-based automated inspection system for reticles used in DUV lithography. That's the actual headline on the press release. I'll now explain exactly what that means, in laymen's terms. First, DUV stands for deep ultraviolet-based --
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Wow, see! The UV delivers the sensitivity needed to inspect today's extremely complex reticles. It's that easy! Now we all understand it. As for the actual stock, KLA-Tencor trades at 21 times the 1999 earnings estimate -- an estimate that's flat with 1998. We likely need to find a better place to park our money for the coming years. KLA is a great company, but far from the greatest investment over the past three years, and the industry tends to limit the valuation granted (this fact might also be infecting 3Dfx).
Also in the news, America Online (NYSE: AOL) is launching some versions of its NetFind product on AOL.Japan and AOL.Canada. The product is powered by Excite (Nadaq: XCIT).
Finally, tonight the Drip Port summarizes what it's doing and what it has done in the past ten months, before looking ahead at what it'll be investing in down the road. If you've missed it so far, give it a look now. You might be wealthy and overloaded with shares of stock, but that doesn't mean that your 14-year-old child is. To get them interested in learning how to save and invest right now, consider a dividend reinvestment plan (DRP). Also, share Foolishness with your family and friends who are still counting on that giant Powerball Lottery for retirement.
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"Hello Mr. Governor... of course the lottery is rigged tonight. Tonight's winning seven numbers will be 24, 31, 12, 8, 42, 2, and 9, and the winning ticket has already gone to a 94-year-old man with no family..."
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Day Month Year History FOOL -0.48% -0.13% 21.39% 307.37% S&P: +0.86% 0.66% 15.32% 144.12% NASDAQ: -0.76% -1.96% 16.65% 154.35% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 86.50 2278.70% 5/17/95 1960 Iomega Cor 1.28 6.88 436.94% 10/1/96 84 LucentTech 23.81 71.63 200.84% 9/9/97 290 Amazon.com 38.22 88.63 131.87% 8/12/96 130 AT&T 39.58 58.75 48.44% 2/20/98 215 DuPont 59.83 82.75 38.30% 1/8/98 115 S&P Depos. 95.91 112.31 17.11% 2/20/98 200 Exxon 64.09 71.25 11.17% 2/20/98 270 Int'l Pape 47.69 52.88 10.87% 4/30/97 -1170*Trump* 8.47 8.88 -4.80% 1/8/98 425 3Dfx 25.67 22.31 -13.07% 8/24/95 130 KLA-Tencor 44.71 37.75 -15.57% 6/26/97 325 Innovex 27.71 22.13 -20.15% 8/13/96 250 3Com Corp. 46.86 29.81 -36.39% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 61415.00 $58833.13 9/9/97 290 Amazon.com 11084.24 25701.25 $14617.01 5/17/95 1960 Iomega Cor 2509.60 13475.00 $10965.40 2/20/98 215 DuPont 12864.25 17791.25 $4927.00 10/1/96 84 LucentTech 1999.88 6016.50 $4016.62 8/12/96 130 AT&T 5145.11 7637.50 $2492.39 1/8/98 115 S&P Depos. 11029.25 12915.94 $1886.69 2/20/98 200 Exxon 12818.00 14250.00 $1432.00 2/20/98 270 Int'l Pape 12876.75 14276.25 $1399.50 4/30/97 -1170*Trump* -9908.50 -10383.75 -$475.25 8/24/95 130 KLA-Tencor 5812.49 4907.50 -$904.99 1/8/98 425 3Dfx 10908.63 9482.81 -$1425.81 6/26/97 325 Innovex 9005.62 7190.63 -$1815.00 8/13/96 250 3Com Corp. 11715.99 7453.13 -$4262.87 CASH $11558.06 TOTAL $203687.06