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

To: Uncle Frank who wrote (12872)	12/16/1999 9:58:00 AM
From: Mike Buckley	Read Replies (1) \| Respond to of 54805

There's a lot of talk this morning about waiting until a company posts a profit. There's much more to limiting risk than posting a profit. Look very, very carefully at operating cash flow and the quality of the balance sheet even if the company is posting a profit. Look at the greatest of all gorillas and invest in companies whose financial statements emulate them -- lots of operating cash flow, no debt, and massive margins. Moore & Gang didn't discuss that mostly because those are the typical symptoms of gorillas and leading wannabe gorillas. By necessity, companies in royalty games rarely have the same quality in the financial statements that the leading gorilla players have, and that is one of the reasons the royalty stocks pose far greater risk. Please folks! Heed Frank's comments about the current market. The Naz is on a tear. This is a market in which it appears that it is really difficult to do wrong. When the market turns, the investing mistakes will be brought to light and the companies with the weakest financial statements will likely fall far and rapidly. --Mike Buckley

To: Uncle Frank who wrote (12872)	12/16/1999 2:06:00 PM
From: Apollo	Read Replies (1) \| Respond to of 54805

Thanx to 100, UF, LB and MB for the counterweight to my enthusiasm in Exodus....... When I posted my portfolio last month, I think EXDS comprised < 1%. EXDS is a godzilla play (mentioned in RFM in godzilla chapter), and not even a godzilla candidate. I think it will do well as a pure-play web hoster in Y2K because: 1. post Y2K fears, 2. raging e-commerce 3. dominant in its category 4. more than double the IDC sq. footage 5. adding to sales force by 1/3 6. added 25% of present customers just in last qtr. 7. I think David Levy from H & Q has grossly underestimated revenues next year, at $630 million. 8. European focus on Internet access; EXDS in London now, and adding to IDCs in Amsterdam, Paris and elsewhere. 9. Asian recovery; EXDS in Japan now. The only impediment I see for next year is political or military upheaval with Red China. I took Mike Buckley's advice and reconstructed conservative and aggressive estimates of EXDS revenues in FY2000, as stated below. Interested in the thread's comments. The original estimates: Message 12281266 New range of revenue estimates: FY 2000 low, intermediate and high estimates Assuming conservative 4Q-'99 at 40% Sequential Growth (SG) = revs of $94.6 million; SG in FY 2000 for Q1, Q2, Q3, Q4; Annual Revs, @ 40% SG: 132.5, 185.5, 259.7, 363.6; $941.3 @ 45% SG: 137.2, 198.9, 288.4, 418.2; $1042.7 @ 50% SG: 141.3, 212, 317.9, 476.9; $1148.1 Analysts say they would think this company is fairly valued at a PSR of 25; PSR = 25 = Market cap/revenues = price X # shares/revenues = 25 x revenues/# shares = 25 x Revs./170 = Estimated FY 2000 price: @ 40% SG = $138; @ 45% SG = $153; @ 50% SG = $169; Worst case scenario, @ PSR 20, & 40% SG = $111/share; Present price, about $84/share. I think it will very likely double over the next 12 months. I think it would be an outrageous buy during a dip into the low $70s. Apollo@pseudoanalyst.com