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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: JRH who wrote (631)3/3/1999 11:07:00 PM
From: Mike Buckley  Read Replies (3) of 54805
 
Justin,

Thanks for the nod toward Siebel. :)

You also might want to reconsider Gemstar (GMST). There's no question in my mind that Gemstar is a potential gorilla. You may not get a second nomination for this stock because it is not well known even though its market cap is already $3 billion.

When I mentioned it earlier, your portfolio was built around so-called Internet stocks. In that brief write-up one of my initial comments was that you had to beleive in the convergence of television and computers to accept Gemstar as an Internet play. Now that you have removed the Internet criterion, I believe it's a great fit.

From a recent article:

"The excitement for Gemstar is clearly in the advertising potential for the electronic
guide. Gould estimates that in its next fiscal year, Gemstar will generate just $3
million in advertising revenues. But he believes that will balloon to $25 million in
2001. And he concedes that his estimates are likely very conservative. By 2001, there should be about 7.5 million
televisions with Gemstar's guide in it so $25 million in revenues works out to only about $3 in advertising revenue
per set.

And once you get past the excitement of the potential for huge gains in advertising revenue and take a look at the
company's financials, you have even more to be happy about. Gemstar has no debt, return on equity of 56% and
net margins of 43%. Earnings for fiscal 1999 (ending March) are expected to be 33% higher than fiscal 1998. And
analysts are predicting earnings growth of 27% in fiscal 2000."

--Mike Buckley

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