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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (6649)9/19/1999 11:50:00 PM
From: Mike Buckley  Read Replies (1) of 54805
 
It became apparent today in a PM with our Uncle Frank that I might have indavertantly mislead some people about my comparison of Qualcomm's stock with Cisco's stock. I'm referring to my "watch" of Qualcomm's stock during the first nine years of its tornado compared with Cisco's stock in the first nine years of their tornado.

To make it very clear, it's a lot of fun to compare the two stocks but that's where it ends. There's nothing serious about it and there are certainly no serious conclusions to draw.

It's not a serious comparison because there are so many reasons NOT to make the comparisons. I'll take a serious approach to show why I don't think the comparison is a serious one. :)

#1: The two companies don't have the same business model.

#2: In the first nine years, the networking business went through several tornados (documented in the manual) but the CDMA business might only go through one. Time will tell.

#3: Part of Cisco's success was the result of a soaring stock market. Not only did they use a dramatically increasing stock price to make strategic acquisitions that might not have been possible at the same rate in an overall bear market, but the soaring stock market helped the economy move along at a healthy pace without recessions. We don't know if Qualcomm is the beneficiary of such a robust stock market and healthy economy for nine years.

#4: It is only in recent years, long after Cisco's tornado began, that the growth of the Internet inured to the benefit of Cisco. The growth of the Internet was already well underway when Qualcomm's tornado began.

#5: Cisco's product is relatively expensive. Qualcomm's product is relatively inexpensive, though I'm not ignoring that the infrastructure-based products are expensive.

#6: Cisco's customers are primarily businesses. Qualcomm's customers are any person on the planet who is at least eight years old. It's unimportant in my mind that many of those end users will have the product paid for by their employer. Again, I'm not ignoring that the infrastructure-based products will be bought only by businesses.

I'm sure there are other reasons not to compare the two but I'm pooped.

Having said all that, I think the comparison is fun and I'm going to keep doing it! Not to be unkind, but if you don't have as much fun with it as I do, I won't be offended if you use that little "next" thingy. :)

And for those who forgot, we're looking to see if Qualcomm's stock gets to about $8000 by April 1, 2007.

Actually, it's $8400. But who's counting? :)

--Mike Buckley
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