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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Uncle Frank who wrote ()1/8/2000 11:48:00 AM
From: Seeker of Truth  Read Replies (1) of 54805
 
Here's the CREE bear again. You'd think I was short the stock! I certainly am not and never will be. Short sellers are racing against time and I hate that. I might make a small scale exception if a company obviously had nothing going for it. That's not the case with CREE, from all accounts a fine company. It's the area they are in that I don't like.
Once upon a time a pharmaceutical company decided to get into the manufacture of a newish material which was going, everyone correctly thought, to be ubiquitous in electronic equipment. They worked out the technology to make the stuff ultra pure etc., gathering patents of course. Though the newish material was not a pharmaceutical, it was made by chemical methods so it was more or less up their alley. It indeed became profitable for them but not tremendously so and they wound up selling the business. The company was Merck and the material was silicon. Well that doesn't prove anything of course.
Another point, please remember that many materials have quite interesting physical properties but are too expensive for the purpose.
What I do want to stress is the difficulty with patents. Typically if a competitor wants to get into the field, he will spend the bucks, do research, develop the technology and take out his own patent. Then there will be suits and countersuits. The fact is that something is patentable only if it is not obvious to a good practitioner of the field. So in court there will be lots of discussion about the obviousness of each other's inventions. The opinion of the court may not be that of the patent examiners. Often such battles wind up with crosslicensing. Or crosslicensing plus a small payment.
Maybe I'm talking somebody out of a small fortune here. I'm not saying nobody should buy CREE. It just seems to me quite likely that it will be a prince in a domain with no king. I'm saying that QCOM,NTAP,GMST,JDSU look like better investments.
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