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Technology Stocks : Gorilla Game
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To: Big Sky who wrote (241)7/13/1998 9:23:00 PM
From: Shane M  Read Replies (1) of 387
 
Steve,

I think we have to look at all of the factors together. For software companies in the tornado phase I'm thinking something below 5X sales for a legitimate gorilla candidate is definite buying territory. 10X is probably getting up into the stratosphere. (I'm thinking in terms of I2 right here). MANU should justifiably have a lower PS multiple than I2 becuase of the slower revenue growth rate I think. I'm still hashing all this out, but would be interested in opinions. I really wonder if gorilla candidates will get to 2X sales in today's climates. An example today might be CLFY or VNTV, but I'm unsure if these are companies I want to invest in at all.

INTC's figures, because of the heavy capital spending should be judged differently I think.

FWIW, I think CSCO's growth is slowing and its stock price will at least level for a while. MSFT seems to be in front of itself also. But then again both of these companies are the Gorilla of Gorillas, so maybe they deserve stratospheric valuations.

Thing is that the book really says buy and hold gorillas forever no matter what the stock price. But I'm thinking we need to be able to assign stock values at which these kinds of stocks should trade since everybody is thinking of gorillas now.

Shane
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