That's a great analysis, Bruce. As a Recovering Dellhead who was caught with tons of February calls, which became valueless after the earnings announcement, I can appreciate your panic earlier this year. I still love Dell's business model, which Chuzzlewit helped all of us to understand and admire, but began unwinding my dell positions in March once I realized that the Street was going to reduce their valuation models for box makers. Dancelot (LindyBill) was much lighter on his feet, as you would expect from an expert swing dancer.
I personally doubt that Dell will be able to become King of the Boxmakers. Gaining 2X market share over their nearest rival is a pretty daunting task, even for Michael, in a fragmented sector, particularly when you factor in the white boxes.
The whole point of the Gorilla Game, which many of the non-initiated miss entirely, is to find stocks with an extraordinary ratios of reward to risk. The Dells and ScanDisks may grow much faster than a Gorilla, but they can turn sour much faster, which is witnessed by our sad experiences in the computer sector.
I wish you success with your Rambus play. I have two perceptions that make me shy away from it:
* I am very familiar with the semiconductor business model, having worked in the field for over 30 years, and feel the capital costs are excessive in the world of >$2B fabs.
* I feel Rambus is a Construct Gorilla, dependent on an artificial Tornado that Intel is trying to create.
Best regards, Bruce. My wife and I visited Vienna last year, and you live in one of the most wonderful cities in the world. Too bad we didn't get a chance to hear you perform.
Frank |
