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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (31619)9/14/2000 3:20:41 PM
From: Eric Jacobson  Read Replies (2) of 54805
 
It would be interesting to identify the by-the-book investable gorilla candidates (enablers in the tornado and apps companies in the bowling alley) that are not profitable.

It would be interesting, especially since the list of "by-the-book" investable gorilla candidates is a fairly short one. This doesn't answer the question exactly, but seven of the 14 stocks in the W&W portfolio are showing trailing losses. Granted, most of these companies are in royalty markets. But don't most folks think ELON and PHCM are in gorilla games? Both are showing losses in the most recent quarter, and at least ELON gets a lot of attention here as a potential gorilla.

I guess it also depends upon what you consider "profitable" to be. JDSU is in the G&K Index and it reported a loss last quarter and is carrying a loss on a trailing annual basis. Granted, it is based on one-time charges due to acquisitions. But it's still a loss, and there hasn't been a movement to boot JDSU out of the index (and rightfully so). If we're going to make exceptions for one time charges, then how about deferred revenue? Or how about a business model that indicates there will be boatload of revenue in a year or two even though the company currently is showing a loss?

There's just lots of grey area when talking about profitability. Companies report profits and losses for lots of reasons that have nothing to do with Gorilla Gaming. This was my main point. The issue of profitability is just more complicated than a flat out statement that either gorilla gaming or this thread exclusively focus on companies that are profitable. It just ain't so.

I agree with the notion that there is greater risk the earlier along a company is in the product adoption life cycle. You made this point very nicely.
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