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

To: LindyBill who wrote (12089)	12/5/1999 3:14:00 PM
From: Mike Buckley	Read Replies (3) \| Respond to of 54805

Bill, I maintain that the so-called Internet computers and Network computers were not discontinuous innovations, merely cheap PCs! I gather that you're saying they are continuous innovations. To highlight my disagreement with you, the discontinuous aspects of those products are as follows: 1) Requires that end users not have the ability to maintain program software of their choice on their personal hard disks. Other personal-choice issues are denied. 2) Requires that the IT department deploy and maintain fat server-thin client configurations instead of continuing with the status quo of networked fat PCs. 3) Requires that entirely new value chains be developed with regard to bandwidth, dump pipes, smart pipes, and virtually everyting associated with getting the apps from the server to the end user. If that's not discontinuous, what is? --Mike Buckley

To: LindyBill who wrote (12089)	12/5/1999 3:52:00 PM
From: Thomas Tam	Read Replies (3) \| Respond to of 54805

When I look at a chart of JDSU, it appears that the stock took off in Sep of '98, and the stock accelerated when Gilder put out a report early this year. We need to hear from some of the followers of this stock to fill us in on where the entry points should have been for us, and how we would have known them at the time. A couple of points, Gilder focused on Uniphase in May of 98 with the title "The Intel of the Telecosm", this reflected his opinion of the future of Uniphase's technology to increase the bandwidth on existing fiber-optic systems allowing additional data to be transmitted at the fraction of the cost. The discontinuous innovation was the erbium doped fiber amplifier, which finally crossed the chasm when MCI was convinced to try this technology on their fiber backbone. Uniphase made the laser to send the signals and JDS Fitel, a Canadian based company (really!), created the majority of the filters (gratings) to extract the individual wavelengths of light and direct them to the appropriate segments along the circuit. JDS's product had also crossed the chasm and was a discontinuous innovation to complement the amplifier of Uniphase's. Their earnings were increasing at 100% per annum, very gorilla like earnings. When JDS and Uniphase decided to merge, that created the ultimate King/Gorilla. As the two most important technologies at the time were being melded together within one company to bring economies to scale and to minimizes compatibility problems. This being announced back in November I think, with the transaction being completed in June/July, creating the juggernaut we have now. In October of 1998, everything in technology was going down the tube from a valuation standpoint because of hedge/LTCM fiasco where Greenspan actually saved us from disaster there. At the time Cisco even lost 50% of its value over the short stretch. And JDS was being downgraded by some Canadian mutual company (heaven forbid owning that fund). The price was hovering between $13-15 Canadian. After consolidation with the merger and subsequent split $15-->$370, that is 2400% returns in just over one year. An entry time could have been when JDS and Uniphase announced their merger. If I had known about this thread in October 1998, I would have probably bought and held and be able to retire, but what was I doing, trying to figure how to get rich quick with a bunch of shiny pebbles. Hope this helps someone. Later

To: LindyBill who wrote (12089)	12/5/1999 4:02:00 PM
From: jmanvegas	Read Replies (3) \| Respond to of 54805

LindyBill: I bought my first shares of JDSU when the company was UNPH at $40 post split - sold them shortly thereafter for a quick profit - shouldn't have done that in hindsight. But I bought back at $82-86 dollars post split when several major events were going on with JDSU at that time and all at once. The split was occurring - the merger had just been completed between UNPH and JDS Fitel - a secondary of about $700M net to the company was ongoing which brought the stock down from $90 post split to about $79-82 post split. (Reminds me of the secondary QCOM did which dropped their stock price temporarily but strengthened the company's financials dramatically.) At that time SSB came out with a major strong buy recommendation and their analysts were pounding the table including almost 2-3 times per week on CNBC. JDSU ran to the $110-120 area and sat for about 6-8 weeks consolidating a tremendous advance. The breakthrough that congestion area has led us to the current prices. But the buy IMHO should have been between the $80-110 area for early followers of JDSU and definitely the breakout of the $120 area as shown very clearly on the charts. I hope this helps in your question about where one should have known to enter JDSU. (Again, in hindsight, when I first made my purchase of UNPH was when an aggressive growth manager appeared on CNBC and touted photonics as 1 of 5 of the most important investment themes going forward for the foreseeable future.) My question is at what market cap does JDSU become considered a gorilla candidate as opposed to a King? If they pursue their ambitious acquisition trend could they end up looking like a CSCO? Could they consolidate the major aspects of the photonics industry quickly enough including last mile solutions under their umbrella with their huge stock currency and eventually become a $150-200B company? And if not, JDSU should remain a King for the next decade, unless, of course, some more advanced technology replaces JDSU's offerings. But couldn't that theoretically happen to QCOM? jmanvegas

To: LindyBill who wrote (12089)	12/5/1999 4:03:00 PM
From: Jill	Read Replies (2) \| Respond to of 54805

Considering this weekend's discussion of G&K and JDSU, thought the thread would enjoy this interview last month with the CEO of JDSU; if Lindy is right that Intel was not a gorilla, Gilder compared king JDSU to Intel...I've highlighted some phrases in bold KEVIN N. KALKHOVEN - JDS UNIPHASE CORPORATION (JDSU) CEO Interview - published 11/04/1999 CEO INTERVIEW: KEVIN KALKHOVEN, JDS UNIPHASE CORPORATION (JDSU) THE WALL STREET TRANSCRIPT CORPORATION (HAU230) KEVIN N. KALKHOVEN is co-chairman and CEO of JDS Uniphase Corporation. Mr. Kalkhoven joined Uniphase in January 1992 and has been a member of the board of directors since February 1992. Mr. Kalkhoven was responsible for positioning Uniphase into the telecommunications marketplace in 1994 and for the acquisitions of the world renown research and manufacturing facilities: United Technologies Photonics, IBM Laser Enterprise and Philips Optoelectronics. Under his management Uniphase has become a recognized leader in the fiber optics components industry for telecommunications and cable TV and was called by George Gilder, 'The Intel of the Telecosm.' Prior to joining Uniphase, Mr. Kalkhoven held executive positions at a variety of software companies. He served as president and CEO of Demax Software and as president and CEO of AIDA Corporation. Previously, he was vice president of marketing for the European division of Comshare Corporation and group vice president for the U.S. company. SECTOR: communications equipment TWST: Give us a brief overview of the JDS Uniphase Corporation? Mr. Kalkhoven: JDS Uniphase was actually formed by the merger of JDS FITEL in Canada and Uniphase Corporation of the United States, both of which were leaders in their own fields of fiber- optic components for the telecommunications and cable television industry. Uniphase was the leader in what are called active components. These consist of the semiconductor laser technology that is necessary to provide the light in a fiberoptic network. JDS was the leader in what are called passive components which is a technology that's necessary to guide and control the light in a fiberoptic network. The combination of the two gave us the broadest product range of technology in the industry and allowed us to move one step further to the creation of what we call our module strategy or the integration of these components into solutions for our customers. As a company, we are 50% bigger than all our competitors combined and growing 50% faster. TWST: What are the most significant trends, developments or changes you anticipate in your marketplace over the next several years? Mr. Kalkhoven: Clearly, the trend is for more and more bandwidth. Our customers are the telecommunications equipment manufacturers who in turn have the network services providers as their customers, such as AT&T or MCI WorldCom and others. The customers, of course, for the network guys are you and I, and all of us are demanding more and more bandwidth, whether it's in our cable television systems or our telecommunication systems. So the biggest market trend is the demand for higher speed bandwidth. We are moving from a computer-centric world to a bandwidth- centric world. This trend means that the network services companies have to provide more and more bandwidth to their customers which in turn means they require more and more complex equipment from the telecommunications equipment companies who in turn come to us as the components companies and ask us to provide higher and higher speed bandwidth. It's all one trend. TWST: What are the greatest opportunities for JDS Uniphase over the next several years? Mr. Kalkhoven: Clearly, the opportunity is to be the market leader. George Gilder described us as the 'Intel of the tele-coms' and that is the opportunity we have which is to become the definitive supplier of optics technology to the telecommunications equipment manufacturers. TWST: Does anything keep you awake at night about the company? Any major concerns? Mr. Kalkhoven: Ramping up production. We're a billion dollar company that's having to sort of double every year. TWST: Any opportunities for improvement of JDS Uniphase? Any weaknesses of the company? Mr. Kalkhoven: We clearly need to provide greater levels of automation and manufacturing for our customers. The industry is still pretty much in its infancy. We have to have very high reliability devices that are still on the edge of technology. So we are evolving through the same kind of processes that the semiconductor industry did. TWST: How do you think your R&D expenditures will change in the future both in terms of amount and emphasis? Mr. Kalkhoven: We allocate about 8% to 9% of our revenue dollar to R&D and of course the main thing about that is when your company is doubling in size every year, it means your R&D budgets are doubling in size every year. So R&D budgets are increasing very rapidly and we're putting them in to a combination of new optics technology and also manufacturing technology to enable the cost to be driven down. TWST: What are your sales and marketing approaches? Mr. Kalkhoven: We basically have only about 120 customers worldwide. I mean there just aren't that many telecommunications equipment manufacturers, so our approach is very much one of account management and designing. Our engineers typically will be degreed engineers or PhDs working with our customers' engineers to design specific solutions. TWST: How do you feel about your current stock price? Mr. Kalkhoven: You know, I know a lot about optics. I don't know a lot about Wall Street. TWST: If you were sitting there now with a group of professional long- term investors, what reasons would you give them to invest in JDS Uniphase? Mr. Kalkhoven: Simply that bandwidth is going to be...or the Telecosm as it's sometimes called, is the next big, revolution in technology. In the 70s and 80s, we had the computer revolution, while in the 2000 and beyond, it's the telecommunications revolution bringing it all closer together, and clearly an example of that is the Internet. We are the leading supplier of very complex fiberoptic technology to this industry and we believe that it is going to be as significant or more important in time than the silicon industry. END INTERVIEW So, if JDSU is a king, it looks like it might be even more kingly than Dell once was. As for entry points, how about now? Jill