Moore is perhaps a little inconsistent here. In a different section he terms AMAT a company that is not a gorilla, because they focused on a niche. AMAT is of course far bigger than almost any of these software companies. A valid objection to that is that we shouldn't compare equipment makers with software companies. And, I won't take the comparison very far. But, it's tough to accept as a gorilla a company that is 1/16th as large as its largest eventual competitor (MSFT), or 1/7th as large as its largest imminent competitor (ORCL)--especially since those companies are still growing like gangbusters.
But, another factor in my statement was Lindybill's general rule of not deeming companies gorillas if they have less than $10Bn in market cap. I don't see that as a hard and fast rule, but in any case PSFT fails on that point.
Additionally, PSFT has not been acting particularly gorilla-like. It had a miss of earnings estimates last year. It has not been increasing earnings. And, I don't get the feeling that the Vantive purchase was done from a position of strength.
All that being said, I understand your point. PSFT has a strong position (niche?) within which it can (and apparently is working to) regroup. The Vantive purchase may give it the critical mass to move strongly into a new area. And the current multiples are very attractive from a value-investor's viewpoint. But, at this point I view PSFT as an other-than-gorilla play.
And, also, I was making the point yesterday and I will reiterate--even if some companies, like PSFT, are not included in W&W, I agree that they should be followed, to give us a complete census of companies that can reasonably be argued are gorillas, kings or candidates.
Best,
John |
