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

To: LindyBill who wrote (10278)	11/13/1999 6:31:00 PM
From: Ruffian	Respond to of 54805

Lindy You Are Famous Again> From the November 15, 1999, issue of Wireless Week Microsoft Decision Stays Confined By Monica Alleven Harsh words by U.S. District Judge Thomas Penfield Jackson in the government's controversial antitrust case against Microsoft barely fazed technology-related wireless stocks--or the software giant itself. Microsoft's stock rebounded in heavy trading last Monday after Jackson blasted the software maker in his findings of fact, saying the company has monopoly power and tried to use its dominance in the personal computer industry to stifle competition. His comments appeared to have little spillover effect on wireless companies that do business with Microsoft. But it did raise renewed questions about antitrust concerns for Microsoft partner Qualcomm Inc., whose ascent to the top hasn't been totally dissimilar to Microsoft's. Some analysts say they expected little or no effect on wireless stocks from the long-winded Microsoft case because the firm still is considered a bit player in wireless. Microsoft gradually has made inroads in wireless through various deals with Nextel Communications Inc., British Telecommunications plc and, most recently, Teligent Inc. But the deal that garnered the most publicity, its Wireless Knowledge LLC venture with Qualcomm, has yet to emerge with a commercial service for businesses since it launched a year ago. Meanwhile, competitors have criticized Qualcomm for its hard-line negotiations and fierce defense of intellectual property rights. Qualcomm's technology is at the core of CDMA products, and as the standard grows throughout the world and third-generation CDMA-based technologies emerge, Qualcomm is likely to make loads of money on fees and royalties. In the computer industry, competitors also accused Microsoft of using bullying tactics to take over the operating systems market. So when the decision on Microsoft was announced, it was not surprising to see antitrust considerations on the minds of some Qualcomm investors, including the "Quillionaires" who've made a bundle off Qualcomm's stock this year. A Qualcomm spokeswoman was unavailable for comment, but many "Qualcommite" investors communicating on Internet message boards were confident the chip maker wouldn't run into any problems. "If the highly successful CDMA technology achieves industry standard status approaching that of Microsoft's Windows, then QCOM may have to face antitrust considerations," writes "vanya_k" on a Yahoo! board. "Remember, the MSFT Window OS was never awarded the luxury of multicontinental licensing rights as was QCOM." Other industry insiders were glad to see Microsoft publicly reprimanded, particularly those who have long feared the company would take over the wireless data industry. In fact, Microsoft's inability to firmly penetrate the wireless market is, in part, a result of industry players keeping their doors less than wide open, says Andrew Cole, a principal at the Renaissance Worldwide consulting firm. Both wireless carriers and manufacturers whisper fears that Microsoft will step in and take away their business. But that's not the only reason the firm has failed to command a large leadership position in wireless. The company "came to the market with a certain arrogance about [its] ability," soon learning wireless data delivery was not as easy as originally perceived, Cole says. Still, smaller wireless companies are finding it doesn't hurt to hook up with Microsoft--as long as the computer software giant's ownership is limited. The mood was upbeat last week at Teligent, which just the week prior had landed $200 million in financing from Microsoft and an estimated 4.5 percent ownership by the company. Teligent executives already are talking about ways to expand their relationship with Microsoft, from joint marketing to operational partnering. "We're delighted with Microsoft's decision to invest in Teligent," says Teligent spokesman Robert Stewart. As long as Microsoft shares its wealth and keeps a lid on its ownership stakes, smaller wireless companies are likely to welcome the brand name for years to come--whether it's pieces of Microsoft or the whole thing.

To: LindyBill who wrote (10278)	11/14/1999 12:45:00 AM
From: tekboy	Respond to of 54805

OT Doing the Lindy Inspired by Dancelot's recent rant, I decided to respond more vigorously to my "value investor" friends' skepticism about our little simian hobby. A buddy (let's call him "X") to whom I gave a copy of TRFM last week sent me an article today from theStreet.com casting aspersions on some of our G&K faves. So I shot back as follows: In a message dated 11/13/99 9:48:06 PM, [X] writes: << Ours is not to doubt the veracity or sanity of recent gains, but to ask those who do -- specifically regarding the head-spinning gains registered by seemingly anything and everything having to do with Internet infrastructure, optical networking, or business-to-business e-commerce. Qualcomm (QCOM:Nasdaq), up another 9.4% today to 378 after J.P. Morgan upped its 12-month price target to 460 from 315, is fast becoming the poster-child for this phenomenon.... "It's all justifiable," said Scott Bleier, chief investment strategist at Prime Charter, based on expectations the Internet will rule the world in ways Napoleon, Caesar or even Michael Jackson could only imagine. But "these are wholesale bets on industries and groups," Bleier continued. "Your risk is not only the macro issue of whether the technology is not going to be what everybody thinks it will, but in the micro-sense, are these companies going to be able to execute?" That's sometimes known as "investment risk," which, according to Bleier, is not something many investors are even remotely cognizant of these days.>> [X], [X], [X]-- I see you haven't yet done your reading! :0) I can tell, because if you had, you would understand that, pace Mr. po-faced idiot Bleier, the management of "investment risk" is precisely what the Gorilla Game is all about. Examine, for example, his statement quoted above that the current (and even far higher) valuations are "justifiable," but only if the companies can execute well and retain a large share of markets in these hot sectors well down the road. This is certainly true on its face, and this is why most people who play the internutz could get burned eventually--because while the sector is going to be hot, most of the companies in it will not be able to fend off competitors. But Qualcomm is an enabling technology gorilla, and as Moore et al. say (p. 173), "The amount of wealth generated by an enabling technology tornado that creates a true gorilla dwarfs any other investment returns on the planet." Qualcomm developed and retains proprietary rights to the CDMA standard, which simply put will be at the center of nearly all 3G wireless activity. They will collect royalties up the wazoo, and barely need to execute at all at this point to make obscene profits for years to come. (The more they can continue to execute well and continue to innovate, of course, the greater still the returns will be, and there is little reason to think this will not happen.) JDSU, on the other hand--another of my favorites and another company whose name was taken lightly in the Street.com piece--is only a King. It has a dominant market position in the optoelectronic components sector, which is currently early in its own tornado, and should also grow hugely in value over the next several years. Still, a King does not have a lock the way a Gorilla does (Gorilla and Royalty games are distinct; see the manual), and JDSU will have to continue to execute well in order to maintain its position. I encourage you to read the manual and join the discussion (www.siliconinvestor.com, "Gorilla & King Portfolio Candidates" subject). Like [Y], you may at this point choose to remain a lurker rather than a regular poster, as I am (under the nom de thread "tekboy"). But the sooner you come on board, the sooner [X's children] will join [Y's child] in the "Richie Rich Preschool." Yours in Q, [tekboy]