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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Percival 917 who wrote (8738)	10/24/1999 8:42:00 PM
From: Mike Buckley	Read Replies (3) of 54805

Joel, Can you be more enlightening on why Sandisk building their own fab is causing you to lose interest? I don't know if I can be enlightening but I'll respond. :) An especially appealing aspect of Rambus and Sandisk for me is the fabless business model. It's not just the questionable return on investment. It's the large drain on cash flow during the periods when product adoption slows, giving management the added task of having to time their customers's needs and distracting them from the other core issues of running their enterprise. If I believed that every company could be as effective as Intel in the manuacturing process, it wouldn't be a concern. But there are more companies proving the ineffectiveness of owning their own fab than companies proving the effectiveness of it. It's nothing more than my own investing criterion, but I don't want to invest in a stock in which ownership of a fab is central to the core business. --Mike Buckley

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