The Motley Fool: The Boring Portfolio

Boring Portfolio Report
Monday, September 8, 1997
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (Sept.8, 1997) -- The Nasdaq extended its push into record territory Monday, as did the Boring Portfolio. The Borefolio's net asset value increased by 0.24% to $72,493 as winning holdings outnumbered losers 6 to 3.

Notable among the losers is CISCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>. The Kid slipped $2 7/16 on the bid amidst some softness in networking stocks.

Rumors persist that ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> will miss its numbers for the September quarter, and some traders may be lightening up on the networking group to avoid possible collateral damage. That said, it's not at all clear whether (a) there's any basis to the rumor or (b) even if there is, whether it reflects Ascend-specific matters or something more generalizable.

A flurry of recent press releases and related news coverage indicates that Cisco has launched its fall offensive on the Internet service provider market segment. That segment has been a stronghold for Ascend, as well as for FoolFolio holding 3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %>, which recently acquired dial-access powerhouse U.S. Robotics.

Last week, Cisco and SPRINT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FON)") else Response.Write("(NYSE: FON)") end if %> jointly announced that Candy Bergen's favorite phone company is deploying Cisco's Model 12000 gigabit switch-router, or GSR, on its Internet backbone. The GSR is slated to begin shipping in quantity next month.

But to whom? One possibility is GTE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTE)") else Response.Write("(NYSE: GTE)") end if %>. GTE acquired BBN earlier this year as part of a strategy to become a leading Internet access provider, and Cisco and GTE are partnering in building out GTE's infrastructure.

Should Cisco get its GSRs installed -- and operating successfully -- at key points in the Wide Area Network (WAN), Cisco will secure a leadership position -- and possibly the leadership position -- in a key area in which it had allowed upstarts such as Ascend to take an early advantage.

Ahead of the upcoming Networld+Interop trade show in Atlanta, Cisco followed last week's GSR news with the announcement today of Cisco's Cache Engine for managing Web traffic.

According to the press release, the Cache Engine is a carrier-class, high-speed dedicated Internet appliance that allows network operators to reduce WAN usage costs while providing accelerated Web access for users. By storing as many as 25 million Web pages in a local network cache, this Little Engine that Could handles calls for high-request pages, which can account for a large percentage of WAN usage.

To me, this sounds analogous to the local Web caches that you and I have on our desktop machines for similar purposes.

Cisco says that up to 32 cache engines can be combined to form a "cache farm." Caches are updated regularly according to the time-sensitivity of their content, and the whole thing is purportedly "100 percent transparent to the user."

The Cache Engine will ship next month, with a price tag of $30,000. Pricing on a stripped down GSR starts at $14,900, and with OC-12 line card, software, radial tires and sports suspension, the price could go way north of that.

The drop in Cisco's stock was offset partially by a $7/16 rise in shares of ORACLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %>, the Borefolio's other technology gorilla. Oracle had a couple of announcements of its own today.

First, the company has completed its acquisition of Treasury Services Corp., for $120 million. Oracle said the transaction will result in a one-time charge of $0.06 per share. Based in the People's Republic of Santa Monica (where it will remain), Treasury Services had revenues of about $40 million last year. It provides profitability- and risk-analysis software to large banks worldwide.

Oracle also announced the release of Oracle Web Publisher, a financial reporting application. Integrated with Oracle's General Ledger Desktop app, Web Publisher facilitates publishing and automatic updating of financial reports and analyses directly to a secure website on the corporate intranet. Hence the name "Web Publisher."

Hey, it's not a GSR, but it's probably a nice app for finance folks.

Drip Portfolio -- Coke ain't it? Part 2.
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Daily Double -- Doubled. Why? Learn.
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Fool Four -- 23% annualized.

(c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.

TODAY'S NUMBERS

Stock  Change    Bid
ATLS  -  1/8   28.06
BGP   +  5/16  25.38
CSL   +  1/2   43.19
CSCO  -2 7/16  75.81
GNT   +  7/16  46.69
ORCL  +  7/16  39.88
OXHP  -1 1/4   76.00
PMSI  +  5/16  13.81
TDW   +  9/16  55.81

                  Day   Month    Year  History
        BORING   +0.24%   3.61%  25.99%  44.99%
        S&P:     +0.23%   3.53%  25.71%  49.80%
        NASDAQ:  +0.59%   3.66%  27.44%  58.06%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     25.38   125.43%
  8/13/96  200 Carlisle C    26.32     43.19    64.06%
  5/24/96  100 Oxford Hea    48.02     76.00    58.25%
   2/2/96  200 Green Tree    30.39     46.69    53.64%
  6/26/96  100 Cisco Syst    53.90     75.81    40.65%
   3/8/96  400 Prime Medi    10.07     13.81    37.18%
 11/21/96  150 Oracle Cor    32.43     39.88    22.94%
   3/5/97  150 Atlas Air     23.06     28.06    21.70%
 12/23/96  100 Tidewater     46.52     55.81    19.96%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  10150.00  $5647.51
  8/13/96  200 Carlisle C  5264.99   8637.50  $3372.51
   2/2/96  200 Green Tree  6077.49   9337.50  $3260.01
  5/24/96  100 Oxford Hea  4802.49   7600.00  $2797.51
  6/26/96  100 Cisco Syst  5389.99   7581.25  $2191.26
   3/8/96  400 Prime Medi  4027.49   5525.00  $1497.51
 11/21/96  150 Oracle Cor  4864.99   5981.25  $1116.26
 12/23/96  100 Tidewater   4652.49   5581.25   $928.76
   3/5/97  150 Atlas Air   3458.74   4209.38   $750.64

                             CASH   $7890.00
                            TOTAL  $72493.13