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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Apollo who wrote (7350)10/3/1999 11:52:00 AM
From: NY Stew  Read Replies (2) of 54805
 
Apollo,

Good work. I have a few comments:

Present Earnings:

Gemstar: positive, from VCR +;
Rambus: Positive, from 1st generation RDRAM, now in Nintendo video games

45-49% (my estimate of Henry's "slightly under" comment) of Gemstar's revenues are from other than VCR+.

Switching Costs:

Gemstar: I dunno; seems like any switch is dependent on weakness in Gemstar patents; my question here to our lawyer friends would be how invulnerable Gemstar patents are. Not hard for home consumer to switch because of relative inexpense of STBs, TVs, and VCRs. Harder to switch from cable provider given present local monopoly the cable companies enjoy (at least in my area).

TVs must be considered durable goods IMO as the life is 7 years on average.

One trick pony?

Gemstar: 2-tricks; has VCR +, & Guide +; the latter has multiple possible revenue streams.

V-Chip Plus is now retail in Zentih/Inteq models. There is a demand for more intelligent and user-friendly parental controls. The demand will grow as content does IMO. This has the Good Housekeeping seal written all over it.

Big brothers:

Gemstar: none, with contractual relationships widely diversified
Rambus: Intel and Sony, then many lesser relationships

Gemstar's 17+ year exclusive IPG agreement with Microsoft must be considered. In Japan they have the IPG JV with Tokyo News and the worlds largest advertising company, Dentsu. The exclusive agreement for analog TVs and digital STBs with Sony in the US, Canada and Japan should also get some consideration.

Regards
Stew



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