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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Apollo who wrote (4820)	8/12/1999 7:46:00 PM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

Stan, but you neglect to mention [Moore's] continued vision of Rambus as holding IP rights on the next DRAM standard thru Intel's mandate. The reason I didn't mention it is because that comment is one of the clues for me that Moore still doesn't fully get it. Being an owner of Citrix which has the same dependence on Microsoft's sucess as Rambus depends on Intel's success, I think I fully understand Moore's reference to Rambus. Understanding that,, I see no comparisons of Rambus with Qualcomm in that context. Qualcomm doesn't depend on another company as do Rambus and Citrix. [Regarding Gemstar, resolution of litigation with TVGuide and with Set-top manufacturers, and need widespread use of TV as internet access tool (ala AOL and use of dial up modem access)......MIke, when do you think the earliest will be that these two events take place? Stew tells me the conference call revealed that a decision in the General Instrument arbitration might come as early as a few weeks away. If you're waiting for widespread use of the TV to access the Net, I don't think you'll invest in the near future. I think that's years away. What I don't understand is why that would be an investing criterion. Gemstar already has advertising revenue coming in (albeit in tiny amounts) using their EPG strictly for television broadcasting, with no interaction on the Net. When two-way interactivity on televisions is available in 2001 as Gemstar thinks will happen, advertising will explode, again with no dependence on the Net. Maybe Stew has reaction to my ideas. Ain't this fun? :) --Mike Buckley

To: Apollo who wrote (4820)	8/14/1999 1:19:00 AM
From: Tom Ardnij	Read Replies (2) \| Respond to of 54805

Snas, With regard to the valuation for JDS Uniphase (JDSU). I thought you might appreciate Salomon Smith Barney's comments on it's valuation as of July 27. I might note that at the time they felt that both JDSU and INTC were undervalued relative to the tech sector. VALUATION We are warming to the notion that this company should trade at a multiple beyond its long-term earnings growth rate for several reasons: 1. Estimates will likely increase because of new design-wins that we believe will multiply the growth of this already fast growing market. 2. JDS Uniphase is unique--there is no company in the component area with its scale and breadth, and it is one of the few pure ways to play fiber-optics outside of the service providers. It's also a superb technology company, collaborating on a design level with many systems OEMs, and necessary to their efforts in optics. 3. The company has outstanding operating profit margins of about 32%, which look sustainable in the near and intermediate term based on the growth of the market and the high barriers to entry. JDS Uniphase should have a strong position in anything optical, a technology crucial for today's and tomorrow's telecommunications. The combined company not only has the resources of both Uniphase and JDS Fitel at its disposal, but a high-growth revenue base over which to leverage a continued high level of investment and a high-multiple currency with which to make acquisitions. The current 59 multiple on our new calendar 2000 estimate of $1.34 is slightly below the company's current revenue growth rate and considerably above a long-term growth rate of 40%-50%. That's a little rich, but given the strong visibility on the market and JDS Uniphase's solid position in it, we believe that the shares will go higher still, retaining this type of multiple on strong growth. Assuming nearly 50% growth in FY2001, we think that in 18 months the stock can go to nearly $125. Our intermediate-term target (12 months) is $108, based on weighting calendar 2000 and calendar 2001 as we approach the point where we would be using 2001 as our target year. ---------------------------------------------------------------------------- I think they are underestimating the room for price growth. JDSU owns it's segment and Lucent and Nortel buying from JDSU to support growth in the WDM arena. If you read the analyst's comments carefully you can't help but hear terms like high barriers to entry and control of unique technology. Sounds like Simian genes in an exploding field to me. The merger of JDS and Uniphase has formed an early Cisco like company in a very new field. Check out the chart and performance from the W&W portfolio. I think that JDSU will be one of our future nominees for Gorillahood. It's growth is sooooo consistent. Best Regards, Tom