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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (18406)2/22/2000 7:46:00 PM
From: gdichaz  Read Replies (1) of 54805
 
Mike: Your post reminded me of when I bought the shiny pebble Cisco in the summer of 1990 as part of a basket of WAN networking stocks.

For some time, another stock in that basket, Wellfleet, seemed to be ahead in WAN networking technology and in rapid quarter to quarter sales and earnings growth. I was delighted of course since both were selling their products like hotcakes. But two things changed all that.

Wellfleet made a disastrous decision to link up with Synoptics Com (a LAN supplier) to be more of a "full service" provider. Just about everything that could go wrong did with that merger.

And Cisco just kept plugging along, using its routers' software as a quality of service advantage. Not the routers themselves so much, but what we eventually recognized as Cisco's primary advantage and the real making of Cisco into the gorilla we know and have loved all these many years - the entire software system surrounding Cisco's routers - so that even Cisco's competitors began to be forced to offer it and it developed into a de facto standard.

Fortunately there was an opportunity to see all this in time to move toward Cisco to ride its next wave up.

Not sure that this is a full example, because Cisco was the larger company compared to Wellfleet and even though Wellfleet seemed to be pulling ahead relatively, this may have been more illusion than fact.

It is all so long ago and my memory of it is so blurred now that I am not sure this is a valid example. But I think it may be close.

I doubt that Wellfleet was "way ahead" and Cisco "way behind", but the market and most observers thought that Wellfleet was at least "ahead" and certainly Cisco showed the Wellfleet/Synoptics combination its dust.

For the historians among you, Wellfleet/Synoptics became Bay Networks which was then absorbed into Nortel.

I know of no other in my experience.

Best.

Cha2
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