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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Uncle Frank who wrote (49264)11/30/2001 10:30:09 AM
From: areokat  Read Replies (1) of 54805
 
>>would seem to favor companies that don't find it necessary to add infrastructure to support anticipated growth. I'm not sure this is a reasonable way to evaluate growth companies. <<

This article from Wired has some bearing on your observation. Although it starts out about Microsoft and the implications of the X-box, the main thrust of the article is the farming out the manufacturing process. The capex expenditures would not show up on softie's financials.

wired.com
<snip>
"Without Flextronics, there would be no Xbox - only the idea of it. "Microsoft has a ton of money, but if they had to build factories, they wouldn't have done this project," says Flextronics chair and CEO Michael Marks. "If guys like us didn't exist, guys like Microsoft wouldn't do a hardware product. The risk would be too high."

This isn't the full article. The paper version talked about how Flextronics was able to reduce supply costs below levels that someone like softie could only achieve.

Kat
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