like Cisco (P/E 72), EMC (P/E 71), Sun (P/E 42), Microsoft (P/E 32), Intel (P/E 22), Oracle (P/E 22), etc... due to the issue of having to pay a premium in share price for owning the franchise. I'm not interested in looking at how they compare to the 'average' S&P multiple because the franchise premium is a reality both in tech stocks and non tech stocks which we are all well aware.
So, I would look at some dominant franchise names like Halliburton (P/E 104), Pfizer (P/E 76), Enron (P/E 72), Coke (P/E 68), Disney (P/E 56), Schwab (P/E 48), General Electric (P/E 36), Harley Davidson (P/E 40), Home Depot (P/E 40), Wal-Mart (P/E 38), Southwest Airlines (P/E 26), Boeing (P/E 25), Citigroup (P/E 22) and Tyco (P/E 22) from the S&P. Gee - Pfizer, Enron and Halliburton alone carry a higher P/E ratio than all the G&K's I listed above.
And I would bet that most of the above non-G&K companies are growing slower than the G&K. Hey, but perception is perception.
Speaking of G&K, I now understand the resistance to BRCD as an actual gorilla and only a candidate due to the rapidly changing nature of I/O technologies. However, after jumping in full boat (as I tend to never take a half boat) I have feverishly looked for this danger with BRCD. Certainly I can't rule it out. However, what I see is BRCD working with CSCO on IP, ONIS and others on DWDM, BRCD became lead sponsor of the infiniband organization {forget their exact name}, BRCD working with NTAP, whom would be the leader of the gigabet ethernet crowd one would think, etc. This company is fully aware of those problems. I wonder if Cisco had similar difficulties in its young days from rumored alternative technologies? Any Cisco veterans here?
But in G&K fashion I did the following analysis:
(1) Market certainly in tornado.
(2) MArket cap of BRCD, even after its stock crash is still more than the cumulative total of its competitors which I list as follows McData, Qlogic, Gadzooks, Vixel, Inrange (I did not think Emulex a competitor). Market certainly thinks its a powerful gorilla.
(3) Have also read analyst reports stating that the fiber-channel market is probably best as a "natural monopoly."
(4) 90% fiber-channel market share, 56% system architecture marketshare (whatever that means).
Hmmmm, would seem to me that this is a gorilla, but a gorilla in a technology market that is so unsettled that it is subject to rapid discontinuities. I guess that would make it a very excitable gorilla with a hot foot.
Well, until I see some more discontinuities, like DS, I'll just continue to hold. Everything else screams POGNOID! Which is why I guess it is in the G&K portfolio.
Tinker |
