Gorilla and King Portfolio Candidates Message Board

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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Uncle Frank who wrote ()	1/9/2000 5:01:00 PM
From: Robert Jacobs	Read Replies (1) of 54805

Funny that there is now a discussion as to whether cree should be now considered a gorilla after i finished the chapter on what makes a gorilla in moore's book "gorilla game". I didn't see a reference to market cap...the definition had more to do with dominance in a discontinuous technology where pragmatists get behind a standard which they adopt in order to more efficiently address the explosive growth experienced in the "tornado". the tornado in this case is formed from the mainstream adoption discontinuous new technology (LED's) which allow miniaturization of high brite illumination permitting low energy and heat in a low cost minature package suitable for computer/cellphone displays (cree got designed into Nokia's phone...and should start displacing green LED's)interactive hi-brite outdoor/indoor large scale displays and general illumination that will displace tungsten, halogen and at some point perhaps, fluorescent. then there is microwave and power conversion chips which will reduce the cost and energy consumption (both from a generation and ambient cooling standpoint) as separate lines of business...and lasers which are a subset of LED's being made to lase. The cree ceo postulated that LED devices could save 5% of the world's energy consumption!!! A reason that the tornado is not perhaps as evident here as with other technologies is the design-in time required for adoption. it takes 2-3 years for the auto industry to grant a design win that can be adopted in manufacturing...cree has design proposals in the works in a variety of industries (witness Nokia recently) which are just bearing fruit as production technology and knowhow is allowing a steep ramp up (witness a 12x production expansion from new plant and increased yields). In cree's case, the leading edge of the tornado is just months away...as LED production ramp up takes effect. While the company will take another year to enter the eye of the tornado when microwave transmission chips, power conversion chips and lasers kick in, the standard adoption has already been made by the very fact they have IP protection on SiC...the standard does not need to be granted...it has been obtained and protected by legal patents and their head start. cree may look like a chimp at first glance, but for those of us who have had the benefit of regular meetings with management and hearing their vision of the future (along with Strategies Unlimited's vision of the market potential), it is really a very young gorilla who will grow very rapidly to a mature one within one or two years. that is why it is now my biggest holding as a year from now the price of the stock will be 2 - 3x as it's gorilla qualities become better understood.

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