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

To: Uncle Frank who wrote (5278)	8/24/1999 11:23:00 AM
From: Devil's Advocate	Respond to of 54805

Might read it during my October vacation. Thanks for the tip.

To: Uncle Frank who wrote (5278)	8/24/1999 11:50:00 AM
From: Bruce Brown	Read Replies (3) \| Respond to of 54805

It's not that Compaq was so bad as the 'King' of PC makers. It's just that a better business model came along in Dell which has unseated the King from the throne and ascended Dell to take a seat. The Dell business model was no secret for the past 5 years, it's just that's how impossible it was to change the way Compaq was doing business in such a large organization throughout the globe. This past quarter and the next quarter or two will complete the switch of Kings in the PC business. Frank, I worried an awful lot about that line in "The Gorilla Game" manual - as everyone seems to call it here - that advised to hold Princes and Kings lightly. I worried because I invested in Dell back in early 1995 for the very simple matter that the business model of selling direct made perfect sense to me for an Internet junkie who orders on the net all too frequently. Gateway and Dell were the new, young champions of that business model and I liked the chances. Geez, I woke up 4 years later and couldn't believe the booty of shares and value that had accumulated in my portfolio by holding these two 'Princes'. Then I read the manual and started pacing at night because of that line 'hold them lightly'. Then the February nightmare of of my Dell stock dropping from 110 to the 70's and the bears screaming "the PC era is over, out and finished". Thank God I was skiing in the Alps and literally toasted my modem on the hotel's line trying to connect to my Fidelity account! Since then, I've calmed down, I don't pace at night and I admire the chutzpah of the bears who are still claiming the world has no need for PC's that cost money. The same list that produced Gorilla candidate Siebel as the number one fastest growing company in America also produced Dell in the top 20 for this year. True, Dell is not a gorilla. It's always been in the royalty structure. Interesting how the term gorilla is used outside of those who have read the manual though. As a growth investor, as well as gorilla investor, the value chain theory makes a lot of sense to me. Those that perform the best in the value chain get some of my money. I only gave Dell a little back in 1995, but they have given me back a heck of a lot more. Now, I'm daring Qualcomm to meet or beat the return over the next five years. In regards to that value chain concept, that's why the Rambus, Intel, Dell, Compaq and all memory chip makers as well as PC makers possible shift to the faster memory standard makes sense to me. Whether the world needs the new speed of the Rambus and processors or not - the industry is creating it and causing us to 'need' it every few years. After all - they've got to make money don't they? BB

To: Uncle Frank who wrote (5278)	8/24/1999 3:43:00 PM
From: Jean M. Gauthier	Read Replies (3) \| Respond to of 54805

Hi people.. I want to talk about Dell today... Now I am not a fanatic dell person, or a "dellhead", but I think we are evaluating Dell in the wrong way... I read the Book too.. I disagree that Dell is a 'prince with attitude". Why ? Here goes: Dell is not really a boxmaker, as their super-efficient Commerce model is a different creature altogether. 1- Their R&D is Intel & MSFT/maybe Linux now too. 2- Their ROE / ROI is out of this world. They hold the cash from sales before paying suppliers , sort of like AMEX travellers cheques (where they make money on money they keep" They are a "Cash-King", a really different creature than has been seen before. Name other companies that have this cash on hand for a long time before the "float" has to be repaid. 3- The E-commerce powerhouse factor, now at 40% Sales & rising, I don' know how to evaulate this but it is a incredible business model. People talk of Amazon as an e-commerce powerhouse, but Dell is one also. 4- They are leveraging this "special e-commerce model",to sell more technology, SAN's, partnerships, you name it. It's much more than a boxmaker. It's really a new kind of company, not a prince, or other boxmaker. What is it ? A King at least, a E-Commerce King or maybe even a possible E-Commerce Electronics primate ? Or Primate -to-be ? What other company is even close to doing the same thing as Dell is. I know about the barriers to entry. What other company can sacrifice their Dealer network and "Go fully direct" They are like a super-efficient "Keiretsu" where they sell direct, have their JIT suppliers close by, and rake in unbelievable amounts of ROE Cash, that they do not really need to run their business. Hey guys, look at their financials....... Also, they're model is very, very scalable, as it is not Boxes or the boxmaking that is the business of the company, but the "direct-internet" model , with their SCM implementation (proprietary?) that enables them to dominate the expanding markets it is in, and getting into.. What do you guys think ? Take care Jean