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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Uncle Frank who wrote (48620)11/6/2001 10:28:59 PM
From: Judith Williams  Read Replies (4) of 54805
 
A perplexed Qcom investor.

It’s been axiomatic on the thread that gorillas are rare. And only a rare breed of executives can keep gorillas in bananas. IJ & Co. enjoyed membership in this elite, but some of their yellow fruit turned squishy during this afternoon’s cc.

In the past, Qcom has been valued not only for its technology, but for IJ’s leadership. It’s not just that the revenue growth wasn’t there or that the projections for next quarter don’t look so hot. The new accounting regs came out in July and Tony Thornley said they would have no material impact on earnings during the last cc (in the Q&A, if memory serves). Clearly they did at some point become material, yet nothing was said. Same thing for Pegaso.

The day after BEA closed its books, Alfred had a cc to warn—even before they had a chance to analyze the data. And then there is that memorable cc when Tom Siebel took up the issue of visibility. There’s plenty of visibility, says he; just not the kind you want to see. Candor like this may not be good news, but it is welcome news.

The really bad news from Q was not the missing 2 cents or the dismal guidance. It was the sneaking suspicion that IJ & Co. are less than candid and certainly less than adept in managing expectations (or investments, for that matter).

Sell when fundamentals change. Well a management group one no longer trusts quite so much is one hell of a change.

Judith
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