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

To: Percival 917 who wrote (8670)	10/23/1999 11:27:00 PM
From: Mike Buckley	Read Replies (5) \| Respond to of 54805

Wow! You folks have been having a lot of fun while I've been away. I saw posts about the G&K reunion, bikinis and a couple of other hot topics. :) Thanks to Bruce and Dave for keeping everyone informed about the two biggest news items in my Front Office Gorilla Game -- both occurring while I was away. Nortel announced the purchase of Clarify and PeopleSoft announced the purchase of Vantive. I'd like to see what others think, but I believe these acquisisitions help clear the way for Siebel, especially in light of their earnings report (also while I was away) stating that Oracle showed up at only 5% of their competitive situations. PeopleSoft is a lot weaker than it used to be and I've never seen a weak company particularly strengthed by buying another weak company. Nortel's buy-out of Clarify seems to make more sense to me though I gather the analysts don't see it that way. In any event, I think there is going to be some trepidation on the part of the customers to buy Clarify and Vantive products until they see the new fit with their parent companies. That will give Siebel another six to nine months to continue dominating the space. On a side note, it was interesting to see that the market didn't punish Siebel's stock when PeopleSoft annouced the Vantive acquisition. In prior days, PeopleSoft had representation on Vantive's board. When PeopleSoft realized they needed a strong partnership with Siebel, they pulled the board member from Vantive, allowing a strong relationship with both. The PeopleSoft announcement would imply that they will no longer be partnering with Siebel but Siebel's stock didn't show any indication of it in these past two weeks. Looking at Clarify's buy-out value at the time of the announcement, Nortel is paying about 10 times sales. Compare that with Siebel's current price of 17 times sales. You get to decide about the ramifications, but comparisons are tough because Siebel is so much stronger than Clarify. (Don't bother comparing the paltry 2.4 times sales PeopleSoft paid for Vantive because Vantive is a company in relatively sad shape, having missed analysts' estimates in four of the last five quarters and not making any money.) On the subject of acquisitions, I'd sure hate to see Siebel being bought. The likely buyers in my mind would be Cisco, now that they are going more and more after call center stuff, and Lucent, who already is a reseller of Siebel products. That might be heresy to the folks who think the likely candidates to buy Siebel are the ERP giants. Baan is in terrible shape and their purchase of Aurum (a leading front office company at the time) a few years ago didn't help. SAP probably would be better off having Siebel's products, but I think the mix of corporate cultures would probably be a disaster. PeopleSoft already made their commitment to Vantive so I don't see Siebel buying PeopleSoft. :) That leaves Oracle, which would really be funny! All of this activity along with a continued strong showing in Siebel's stock has advanced our Front Office Gorilla Game 35% so far this month. (Still looking poor compared to Chaz's JDSU, QCOM and SFE, but respectable! :) I'll "sell" all of the Vantive and Clarify stock this weekend, but I sure wish I had been in town to sell Vantive at much higher prices. Oh well. By the way, Siebel's market cap passed the venerable $10 billion mark while I was away. I hope my friends who join me in following the company will agree that we should wait until it gets to $13 billion or so before we petition Justin to relinquish the stock from his W&W portfolio. I'm sure Uncle Frank can wait to add it to the G&K portfolio. I'd like to see the stock strongly above a $10 billion market cap so we don't hear any huge complaints if it has anouther 40% or 50% sell-off. Thoughts about that? --Mike Buckley

To: Percival 917 who wrote (8670)	10/24/1999 9:55:00 AM
From: Eric L	Read Replies (3) \| Respond to of 54805

Hi Joel, << Your comparison of Q with AOL ... If you can elaborate more, I'd love to hear it >> Another poster commented on this in a PM to me. Best I explain, since I perhaps should have qualified it better initially. The comment was made by MSN columnist Jon Markman in the article I quoted... not by me. The article called "Give Us Your Top 5 Stocks For The Next Decade" was about the 5 best performing stocks of our current decade (AOL #3). The article opens with this quotation: "Four months to go now before the millennium. Have you thought about the three or four stocks that you'd like to hold for its first decade?" Now if I were answering that I would respond with: CSCO, QCOM, JDSU, MSFT, INTC These are and will be my Top 5 holdings going into the next decade. Four Gorillas and a King. Backed up by a King and a Prince and a couple of prospective Gorillas. ... back to the article, which transitions into an update to "SuperModels Labor Day Special '99" and includes Qualcomm as one of the "10 stocks balanced among momentum, growth and value styles". Of these stocks Q (+ 12.3%) is #3 in performance since 8/31 (AOL = = 31.3%, Sun + 13.21%). The author then adds, "I'm wary of Qualcomm's parabolic advance in the past six months" .... "any hint of bad news (earnings slowdown, international trouble or general market malaise) could send Qualcomm -- up an astounding 800% in the past year -- tumbling toward first support around $140, and then $100". Please note that the article is dated 9/1. I suspect that today (although I'm TA clueless) that "first support" is somewhere in the 180's. In the short term, I don't know what to expect from year end earnings that will post 11/2 or how the financial community will react. As for the long term, I fully expect Q to be in the Top 10 of the decade at the end of 2009. Good to chat. - Eric -