Boring Portfolio Report
Wednesday, September 17, 1997
by Greg Markus (TMFBoring)

ANN ARBOR, Mich. (Sept. 17, 1997) - Benchmark stock indices eased back a bit on Wednesday after racking up some of the biggest gains of the year the day before.

The Boring Portfolio eased back, as well, slipping 0.66%. Most of today's losses are attributable to a $3 3/8 fall in ORACLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> on Nasdaq-leading volume in excess of 27 million shares. A slew of brokerages either trimmed their earnings estimates for Oracle, downgraded the stock, or both following the company's release of results for its fiscal first quarter.

On the surface -- and even perhaps below the surface, as well -- the negative reaction to the earnings report appears unjustified. After all, Oracle met analysts' expectations in reporting operating earnings of $0.15 per share. That represented a solid 36% increase over last year's $0.11 per share. Oracle's 30% increase in revenues, to $1.37 billion, was basically in line with analysts' expectations, as well.

As intimated in last night's Borefolio recap, what has analysts concerned was unexpectedly slow growth in sales of Oracle's core database server software. That growth statistic was notable by its absence from the company's press release, issued after the market had closed on Tuesday. In the follow-up conference call, however, Oracle management said that server revenues for the August quarter increased only 6% relative to the same period a year ago -- and this despite the hoopla surrounding the debut of Oracle8.

As noted in our summary of last night's conference call, Oracle attributed the slow growth to a tough comparison with last year's unusually strong first quarter, the negative impact of translating sales denominated in local currencies into the strong dollar, and some loss of momentum owing to a recent reorganization of the sales force.

Management said that, other than the possibility of a somewhat greater than anticipated exchange-rate hit, they see no reason to alter their optimistic outlook for the balance of the new fiscal year, which ends next May. For the time being at least, I'm inclined to go along with that. After all, Oracle's track record is something beyond formidable.

The contrarian case is not to be dismissed out of hand, however. The sharp growth in sales of Oracle products based on MICROSOFT's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> Windows NT platform brings with it lower margins. Also, Oracle's market penetration in its database biz is such that it's increasingly difficult to continue to rack up impressive year-over-year growth. And the so-called Year-2000 problem may cause some customers to shift their budgets toward fixing their Y2K problem rather than buying new database software and apps.

Also, as is perhaps evident, I'm less than ecstatic about the way Oracle dribbles out key information to the investing public, preferring to save some of the important details for discussions with analysts in closed conferences.

For now, the Borefolio continues to hold Oracle. we certainly see no cause for panic selling. But we'll continue to watch and assess the situation -- as we do with all our holdings, for that matter.

Elsewhere in the Borefolio, GREEN TREE FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GNT)") else Response.Write("(NYSE: GNT)") end if %> lost $1/2 of yesterday's $1/34 gain. A cloud of black smoke emanating from THE MONEY STORE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MONE)") else Response.Write("(Nasdaq: MONE)") end if %> may be the problem. Shares of the pitchman Jim Palmer's favorite consumer lender dropped 10% after the company reported higher than anticipated losses in its auto finance unit. Green Tree, of course, does no auto financing.

CISCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> eased $1/4. Yesterday, Cisco CEO John Chambers spoke at the Cowen & Company technology conference in Boston. Today, Cowen and Datamation magazine released findings of their 20th annual networked computing, server and PC user survey.

According to the study, "spending plans for data networking are on the rise, driven by a robust new product cycle." The best opportunities for growth are in bandwidth expansion via switching, network extension via remote office, multi-service networks, and network management.

The study notes that "Cisco Systems continues to dominate with end-to-end solutions and a new product cycle starting to kick in." BAY NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAY)") else Response.Write("(NYSE: BAY)") end if %> could benefit from its new product cycle, as well, according to Cowen and Datamation.

On the upside in the Borefolio, CARLISLE COMPANIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSL)") else Response.Write("(NYSE: CSL)") end if %> tacked on $1/4 to extend its push into record territory, BORDERS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGP)") else Response.Write("(NYSE: BGP)") end if %> added $9/16, and TIDEWATER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDW)") else Response.Write("(NYSE: TDW)") end if %> rose $3/16.

Drip Portfolio -- Message boards.
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Stock  Change    Bid
ATLS  -  1/16  27.44
BGP   +  9/16  26.94
CSL   +  1/4   45.69
CSCO  -  1/4   74.25
GNT   -  1/2   46.44
ORCL  -3 3/8   36.13
OXHP  -1 1/8   76.75
PMSI  -  1/16  14.38
TDW   +  3/16  58.50

                   Day   Month    Year  History
        BORING   -0.66%   4.80%  27.44%  46.65%
        S&P:     -0.28%   4.84%  27.31%  51.70%
        NASDAQ:  -0.13%   4.99%  29.08%  60.09%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     26.94   139.31%
  8/13/96  200 Carlisle C    26.32     45.69    73.55%
  5/24/96  100 Oxford Hea    48.02     76.75    59.81%
   2/2/96  200 Green Tree    30.39     46.44    52.82%
   3/8/96  400 Prime Medi    10.07     14.38    42.77%
  6/26/96  100 Cisco Syst    53.90     74.25    37.76%
 12/23/96  100 Tidewater     46.52     58.50    25.74%
   3/5/97  150 Atlas Air     23.06     27.44    18.99%
 11/21/96  150 Oracle Cor    32.43     36.13    11.38%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  10775.00  $6272.51
  8/13/96  200 Carlisle C  5264.99   9137.50  $3872.51
   2/2/96  200 Green Tree  6077.49   9287.50  $3210.01
  5/24/96  100 Oxford Hea  4802.49   7675.00  $2872.51
  6/26/96  100 Cisco Syst  5389.99   7425.00  $2035.01
   3/8/96  400 Prime Medi  4027.49   5750.00  $1722.51
 12/23/96  100 Tidewater   4652.49   5850.00  $1197.51
   3/5/97  150 Atlas Air   3458.74   4115.63   $656.89
 11/21/96  150 Oracle Cor  4864.99   5418.75   $553.76

                             CASH   $7890.00
                            TOTAL  $73324.38