Software giant Microsoft Corp. is likely to maintain momentum

Answering the Mail

March 18, 1992|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Q. What are your thoughts on Microsoft Corp.? My investment adviser is always pushing this stock.

A. There are definite reasons why Microsoft Corp. chairman Bill Gates is so rich.

Buy shares of Microsoft (around $118 a share, over the counter), the computer software giant, for it's enjoying considerable success with its MS-DOS 5.0 upgraded operating system, said Betty Liter, analyst with Montgomery Securities.

After getting off to a great start thanks to its relationship with IBM, Microsoft's image dimmed a bit in 1990 when that relationship soured. To his credit, Mr. Gates is not only surviving, but prospering. His company appears set to maintain its momentum.

"Not only is Microsoft's 5.0 popular, but so is its easy-to-use Windows user interface program," explained Ms. Liter. "Such proven success required time and energy for research and development, which is why we're confident about continued success."

While its hold on personal computer operating systems is being challenged by an alliance between Apple and IBM, Microsoft is expected to maintain its pre-eminence.

Q. My wife and I are considering investing in Boise Cascade, based on a friend's friendly advice. However, this guy has been wrong in the past. What is your opinion?

A. Beware friends bearing stock tips.

Don't rush into buying shares of Boise Cascade (around $23, NYSE), the paper and wood producer, advised Larry Ross, analyst with PaineWebber Inc.

Paper companies were hurt by the recession and Boise Cascade's losses reflect that. But its situation is worse than most, since it produces products such as newsprint and the newspaper industry is under pressure, Mr. Ross said.

It has been selling timberlands in Oregon and shifting production emphasis toward the Southeast.

"I would hold if you're already an investor, but I give Boise Cascade only a 'neutral' rating," said Mr. Ross. "There are other paper companies that aren't as vulnerable as Boise Cascade and are faring better."

Q. As I am getting ready to make my annual visit to my local H&R Block Inc. office, I am wondering whether this company's stock is a worthy investment.

A. As perverse as the concept may be, taxes are a growing business. Buy shares of H&R Block Inc. (around $33, NYSE), the famous tax preparation, data base and personal services firm, for it has a history of good earnings and solid return, said Robert Hedrick, analyst with Eppler, Guerin & Turner Inc.

Block looks good as a long-term investment, since it doesn't have a major competitor. Block's aggressive advertising campaigns and office locations in well-trafficked areas have paid off in the company's bottom line. Electronic filing revenues grew 77 percent in fiscal 1990 and growth should be substantial this year.

"As more and more tax issues are debated, H&R Block reaps the reward from the lack of clarity in taxes," said Mr. Hedrick. "It has name brand recognition in the tax service business, and the competition lags far behind."

Q. I recently found a stock certificate from 1971 for 100 shares of Airlift International Inc. I would like to know if this find has any value, or should I toss it in the fireplace?

A. The fireplace wins. Airlift International Inc., incorporated in Florida in 1964, filed for bankruptcy in 1981 and its reorganization under Chapter 11 was approved in 1989.

Airlift has no stockholder equity and your shares, unfortunately, have no value, according to Robert Fisher, vice president of the New York-based R.M. Smythe & Co. stock search firm.

Q. At one time not so long ago, I was the proud owner of an antique sailboat. The boat capsized and I received a $25,000 check from my insurer. However, this money is more than I paid for it. I don't know if this money must be listed on my tax return.

A. If the $25,000 check you receive from the loss of the insured item exceeds the cost basis (what you paid for it), you must report a taxable capital gain on your tax return, said Barbara Pope, tax partner with Price Waterhouse.

"However, if you buy a replacement boat within two years after the end of the year in which you received the money, you won't have to pay any capital gains or report the insurance money," added Ms. Pope.

Q. My broker highly recommended that I buy several hundred shares of Chips & Technology. Now the stock is selling for around half of what I bought it for. What are its prospects?

A. Hold your shares of Chips & Technologies (around $11, OTC), manufacturer of large-scale integrated circuits for IBM compatibles, advised Sharon Conway, based in Chicago with A.G. Edwards & Sons.

Earlier this year, the company began a restructuring plan to cut its work force by 20 percent, boost inventory reserves and unload a product line. C&T suffered a loss for its 1991 fiscal year because of lower sales, price competition and a slowdown in personal computer market growth. It had a loss for the first half of the 1992 fiscal year due to an inventory reserve and restructuring charge, and a loss is expected for the entire year.

Intel Corp. recently filed a suit in which it alleges patent infringements by C&T. C&T rejected the suit and it is now to be settled.

"Chips & Technologies is not happy with its results and is reviewing all aspects of operations, but it will take some time to implement the changes," said Ms. Conway.

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