Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Mike Buckley who wrote (12742)	12/13/1999 11:24:00 PM
From: William	Respond to of 54805

Mike Hey, I don't have a lot of really great calls so I have to celebrate the few (the one?) With a call like THAT ONE , you only ever need one. William

To: Mike Buckley who wrote (12742)	12/13/1999 11:35:00 PM
From: voop	Read Replies (1) \| Respond to of 54805

I give an unusual young king because it is a microcap. It is a king nonetheless by way of its 75% market share of VCOs read volume controlled oscillators for GSM base stations. But that is not the allure of this royal pebble. Company has been in business for 50 years mostly serving RF needs of the military with high margin low volume business which they are slowly exiting. The Company produces seven major product lines: 1. Signal Processing components for industrial, military and aerospace (Military/Aerospace Signal Processing, or MSP). 2. Signal Source components, primarily wide-band VCOs, for industrial, military and aerospace (Military/Aerospace Signal Source, or MSS). 3. Special Assemblies that combine MSP and MSS components (Military/Aerospace Special Assemblies, or MSA). 4. Commercial Signal Source components including PLLs and narrow- band VCOs (Commercial Signal Source, or CSS). 5. Commercial Signal Processing components, including optoelectronic components and subassemblies used in magnetic and fiberoptic products for CATV applications (Commercial Signal Processing, or CSP). 6. Subscriber product components used in hand-held telephone sets, pagers and other consumer-oriented products (Subscriber Signal Source, or SSS). Current businesses include aforementioned GSM infrastructure with whom they compete with Murata and Alps, two Japanese firms. Upgrading GSM to 3G should be lucrative. They also do PCS base stations (whew). The Company entered into an agreement to be the sole-source provider of VCOs for the construction of base station equipment in two Lucent Technologies digital wireless communications programs underway in Europe. NOw they are starting to win contracts in broadband for LMDS, one of Gilder's favorite Last Mile alternatives. Just a prince here for now. What is really interesting is another business to which there is no defined king. It is that of the subscriber, i.e. handsets and pagers. Looking at the numbers there are 350mm handsets expects next year (70 mm CDMA) which means the industry will need 700 million VCO (2 per handset). VARL has spent tha last 18 mos building production facilities to increase capacity from 2 million to 10 million and in 4 more mos could mdouble that again. the math says they will only need to capture 1.5% of market to get 9 million VCOS out of the door. They get somewhere between $1.65 -2.00 per VCO They have prefereed provider status with Nokia and do a large percent of business with Errorickson and Batwing. Yes they are actively pursuing Q. The Company entered into an agreement to be the sole-source provider with the Wireless Access group of Glenayre Technologies of a minimum of 840,000 VCOs for use in a new wireless messaging device. This agreement represents the Company's first significant, high-volume order from the subscriber marketplace. Tiny float of 6 million shares diluted, yes they make money, earnings every quarter. Institutional interest increasing, see Thomsen's. For a run down of the numbers see vari-l.com Barriers to entry. Patent protection Patent Issued Title US05982243 11/09/1999 Oscillator selectively operable with a parallel tuned or a series tuned resonant circuit US05903431 05/11/1999 Multiple single layer monolithic passive integrated circuits and method US05867069 02/02/1999 Orthogonally mounted substrate based resonators US05856769 01/05/1999 Continuously adjustable resonator US05742213 04/21/1998 Unbalanced to balanced high impedance ratio wideband transformer circuit US05675478 10/07/1997 Oscillator voltage regulator US05619172 04/08/1997 High impedance ratio wideband transformer circuit US04621241 11/04/1986 Wide range electronic oscillator US04355421 10/19/1982 Broadband mixer with coplanar balun US04125810 11/14/1978 Broadband high frequency baluns and mixer US04079415 03/14/1978 Frequency translator US04063176 12/13/1977 Broadband high frequency mixer From patents.ibm.com The Chinese governmentgranted the Company patent protection for its commercial products, clearing the way for the Company to proceed with a sales and distribution joint venture with a Chinese, State-run company. - The Company was awarded two U.S. patents covering breakthrough technology that enables lower-cost, high-volume production of advanced, high-frequency components formerly manufactured in a high- cost, labor-intensive environment. - The Company was awarded a U.S. patent for a high-impedance, wide-band transformer circuit, strengthening the Company's technological base for expanding into the fiber-optic marketplace. Switching costs? I gotta do more digging Enabling technology Value chain component of others for now, but any transmission of RF will probably use a VCO in some fashion (if I got that right, so if it takes of the value chain will form around them. Summary stolen from Yahoo board I believe that if you keep a list of top (no relation) reasons to own a stock, you are more likely to own for the long haul (and bigger return). Following is a quick summary of some of the key attractions of VARL to me (much of which is based on VARL documents/web site and Board posts): Growth in wireless internationally (developing nations in particular where legacy infrastucture is not an issue) China granted patent protection…way for sales/distribution venture now cleared Small electronics components is core competency; base for expansion into other markets (eg., fiber optics) Patented product technology, technology awards Wireless, satellite, fiberoptics Signal processing products (subsciber/commercial/industrial/military/aerospace) Use in hand-helds (phones, pagers, PCS, etc.) and broadband especially attractive Base station technology Technology requires very low input power requirements vs. competitor products Move from Defense to commercial applications (= high quality, performance & reliability standards) International in scope Is often a sole-source supplier, ensuring long-term relationships Commercial customer list reads like a Who's-Who (Lucent, Nokia, Phillips, Ericsson) Defense customer list reads like a Who's-Who (Hughes, Harris, Raytheon, Lockheed) Subscriber customer list reads like a Defense Who's-Who (Motorola, Samsung) Nokia and Motorola are "10% or larger" customers (doing well themselves) Rumors of major new contracts Low-cost, high-volume production due to patented processes Possible takeover candidate? Sales and earnings growth is rapid (potentially explosive going forward?) FY2000 earnings est = $1.50 after major contracts (Topshelfstuff estimate) Industry PE = 63.2…..so….. 63.2 x 1.50 = $95 per share Increasing backlog/demand Analyst coverage Investor Business Daily ranking -- #58 of 200 Best Tech Stocks Submitted as young king but my interest is in its princely subscriber business. I am making a big mistake posting this to Buckley. Go to bed Mike Voop

To: Mike Buckley who wrote (12742)	12/14/1999 6:55:00 AM
From: daffydog	Read Replies (1) \| Respond to of 54805

Mike, That was a great call on QCOM. I was in the Q on a Gilder recommendation, and I nearly sold it just prior to the ERICY capitulation, as I was very concerned that ERICY would win. Fortunately, my inertia prevented me from hitting the sell button. But look at the Q now. $68.88 billion market cap. P/E of 353. Is this a cheap stock? No value investor in the world would say that it is. In fact, someone recently asked incredulously on this thread, "Do you think QCOM can double or triple from here?" If the gorilla game theory is correct, doubling or tripling is just the beginning. MGG

To: Mike Buckley who wrote (12742)	12/14/1999 11:11:00 AM
From: Jean M. Gauthier	Respond to of 54805

Yep Mike, that was one (and not he only one <g>) moment of investing glory .... What about GMST, is that also "undervalued ?"... Just curious... BTW, mine was SUNW, I have been touting it with a clear head since 1998, when they became the... 1- "dot in dot com", as in Intel inside and Cisco powered network.... 2- When I saw that almost ALL websites are using SUN hardware and that the telecoms are buying Netra servers in their telephone central offices (CLECS & CO's) take care Jean