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

To: unclewest who wrote (13357)	12/27/1999 6:15:00 PM
From: Seeker of Truth	Read Replies (2) \| Respond to of 54805

I'm not a SiC expert and obviously CREE will bloom in the short term but out of grateful affection for this group I would like to tell you about my experiences with device manufacturers. I've almost never made any money from them, though I have been investing since 1955. If you work hard and skillfully with good manual dexterity you devise a new method of growing beautiful crystals of substance X or a new amplifying device etc. But functionality of devices in my experience can always be duplicated by the patient competitor, using a different mechanism. Specially featured diodes have bloomed in every season. After a while we don't hear about them because they turn out to be too expensive to manufacture or use too much power etc. etc. Typically if a company produces a good device, the competitors will dive in and try to develop some technology that is equivalent or better as far as the user is concerned. The competitor will patent some achievements and then there may be legal fights and/or the two companies may agree to exchange patents. It is rare rare indeed for a company with a device to keep its unique place in the market. Particularly pay attention to the Japanese; they are a nation of craftspeople and they can patiently try every route to producing a given effect from a device even if they didn't originate the idea of the functionality. So what's my point here? It's that the return should be higher from a complicated system that takes many people's great brainpower to originate and is girded with a great wall of patents. Qcom is a great example. And in general it's easier to find people who are super with ultra high vacuum lines than to find people who can handle the physics of photonics. Both of them are difficult to find, to be sure but there is a difference. The advantages of a new way of obtaining wafers seem to me to be evanescent compared with the advantages tightly possessed by QCOM certainly and probably also by JDSU and GMST. Device companies are annuals, complex systems companies can be perennials. All I'm saying is that IMHO one should lightly hold CREE and not overload one's portfolio with it. I am certainly not short this stock.