Boring Portfolio Report
ANN ARBOR, Mich. (Oct. 28) -- On Monday the markets extended last week's
losses, with major averages all losing in excess of a half-percentage point
in value. The Dow fell 34, to 5972. The S&P 500 slipped 3.6 points, while
the Nasdaq lost 6.7.
The Boring Portfolio moved in tune with the broader market, dropping 0.54%,
not including accrued interest on the cash reserve. That reserve has swollen
to 27% of the portfolio with last week's sales of TXI and the S&P Depository
Receipts. Four Borefolio holdings lost ground, while three (Carlisle, Oxford
Health, and Prime Medical) advanced.
Borders Group shares continued downhill, losing $1 3/8. A spokesman for the
company returned my call this morning and confirmed that there is absolutely
no news to account for the drop. He speculated that it might be Oprah's fault.
What he meant is that some folks may have overestimated the sales potential
of Oprah's latest book (with co-author Bob Greene). Perhaps so, although
my Sunday New York Times shows Oprah's _Make the Connection_ in the top slot
among advice and how-to books.
Oprah aside, the company remains comfortable with analysts' consensus estimates
of a 9-cent per-share loss for Q3 and EPS of $1.27 for the fiscal year ending
in January. As for next fiscal year, analysts are currently projecting something
in the neighborhood of $1.61. With a long-term CAGR of 25%, that would establish
a $40 target for the stock by summer.
Cisco continued its pull-back from a recently established all-time high of
$67. Today, the stock lost another $1 1/4. Not being psychic, I can offer
no insights into what fund managers who are lightening up on Cisco might
be thinking. Perhaps they're the same wizards who unloaded U.S. Robotics
in the $40s not long ago?
What I can tell you is that a recent report from Dataquest estimated that
the networking industry will grow at 30-50% at least through the year 2000.
Even in light of the company's comparatively large size, few industry analysts
expect Cisco to grow at less than that rate, and most are aiming toward the
high end of the range. With Cisco projected to make EPS a bit north of two
dollars for the FY ending in July, a target price of $70 for CSCO by Christmas
is certainly realistic.
Cisco's PR Department must have put in a lot of overtime over the week-end.
I spotted no fewer than seven items about the company on the wires today,
most of them having to do with announcements of new products or partnerships.
To begin, Cisco announced NetBeyond(tm), "an extended network system that
handles LAN needs for small- to medium-sized businesses, while also providing
them with remote connectivity and secure Internet access in an affordable,
easy-to-use package."
That's San Jose-speak for: Cisco has put together a system of hubs, switches,
routers, software, and such to sell to smallish businesses, with the idea
that they can start small now and add on later ("scale it") as their networking
needs grow. Sounds to me like the perfect set of Tinker Toys to give your
favorite info systems manager this holiday. It also sounds to me like Cisco
is continuing its move into the lower end of the networking market, i.e.,
3Coms's turf.
In a separate announcement Cisco unveiled its new EtherSwitch 1220 and
EtherSwitch 1420 products as part of its Netbeyond initiative. Cisco said
the switches will be available next, with estimate street prices starting
at $129 per port.
Cisco announced, too, the Cisco 1600 series of modular access routers, for
"unsurpassed WAN [wide area network] flexibility, and end-to-end security
and quality of service to customers deploying time-sensitive Internet/intranet
multimedia applications." The new router is available now with a list price
of $1,495, including software. Take two, they're small.
Want more? Well, Cisco and VideoServer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: VSVR)") else Response.Write("(NASDAQ: VSVR)") end if %> announced their joint
effort to offer real-time videoconferencing over corporate networks and the
Internet. The two companies will integrate VideoServer's gateway software
and hardware modules into a range of Cisco platforms.
Wait, there's more! Cisco also announced the signing of a memorandum of
understanding with Applied Innovation Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AINN)") else Response.Write("(Nasdaq: AINN)") end if %>. Cisco will license
Applied Innovation to integrate a Cisco router into AINN's data communication
products. At the same time, AI will appoint Cisco as a worldwide distributor
for the AI Switch product line. You can learn more about Applied Innovation
at it website: www.aiinet.com/.
And with that last item, I hereby declare a Borefolio moratorium on Cisco
product announcements until after the elections. Thank you, and good night.
Transmitted: 10/28/96
Monday, October 28, 1996
BGP -1 3/8 ...CSL + 5/8 ...CSCO -1 1/4 ...GNT - 3/8
OXHP + 1/4 ...PMSI + 1/4 ...SLR - 1/8 ...
*Scroll down or expand screen for full portfolio accounting
Day Month Year History
BORING -0.54% -4.27% 11.43% 11.43%
S&P 500 -0.53% 1.44% 12.17% 12.17%
NASDAQ -0.55% -0.90% 16.80% 16.80%
Rec'd # Security In At Now Change
2/28/96 200 Borders Gro 22.51 30.63 36.04%
2/2/96 200 Green Tree 30.39 39.00 28.34%
3/8/96 400 Prime Medic 10.07 12.88 27.87%
8/13/96 100 Carlisle Co 52.65 57.13 8.50%
6/26/96 100 Cisco Syste 53.90 57.88 7.37%
10/15/96 100 Solectron C 54.52 53.25 -2.34%
5/24/96 100 Oxford Heal 48.02 45.63 -5.00%
Rec'd # Security Cost Value Change
2/2/96 200 Green Tree 6077.49 7800.00 $1722.51
2/28/96 200 Borders Gro 4502.49 6125.00 $1622.51
3/8/96 400 Prime Medic 4027.49 5150.00 $1122.51
8/13/96 100 Carlisle Co 5264.99 5712.50 $447.51
6/26/96 100 Cisco Syste 5389.99 5787.50 $397.51
1/29/96 100 Solectron C 5452.49 5325.00 -$127.49
5/24/96 100 Oxford Heal 4802.49 4562.50 -$239.99
CASH $15252.86
TOTAL $55715.36