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

To: spiral3 who wrote (18801)	2/26/2000 10:46:00 AM
From: gdichaz	Read Replies (1) \| Respond to of 54805

spiral3: Open Fund. Never heard of the fund before, but this is within a Barron's interview and contains comments on several companies which are of interest to those here. For what it may be worth to some. The link to Ruffian's post: Message 12981429 An excerpt: (warning it is long, but I for one found it has an interesting viewpoint and useful information) Looking at your portfolio online we see that your big moves have been in names like JDS Uniphase, Qualcomm, PE Celera Genomics. Tell us about Uniphase. Why do you like it? Luskin: Qualcomm and Uniphase are the Intel and Microsoft of this next phase of the New Economy. Qualcomm is the Microsoft because it controls the operating system for wireless. I am almost embarrassed to talk about Qualcomm, because it has become so well known in the last three or four months. But it is the Microsoft of the next decade. More than half the people alive on this planet today have never made a phone call. When they finally do, it will be on a wireless phone and that wireless phone will be running CDMA, or "code division multiple access," which is the Microsoft Windows of wireless and Qualcomm's all over it. JDS Uniphase is the Intel of the bandwidth revolution, because it makes all the ugly little things that live inside the networks of the future and that have really driven the collapse of bandwidth. They're one of the pioneers of "dense wave division multiplexing"; they make the pump lasers, the add-drop multiplexers that are going to lead in the next couple of years to all-optical networks. Nadig: Celera has been at the front of the wave that we're calling the "biocosm revolution." They're the ones competing with the Human Genome Project, trying to beat the government at its own self-declared race. By all accounts it seems to be doing it handily. More than just mapping it out, they've built a business model that's really an information-distribution business model. It's not so reliant on coming up with a specific therapy that solves a specific problem; rather, they've recognized that the information itself and how it's used and how researchers interact with it -- that's where the value's going to be in that part of the game. Q: Globalstar Telecommunications. Is that a Don Luskin position? Luskin: Yeah. Yeah. All I can tell you is that the sheer scope and ambition and brazenness of the Globalstar dream, I believe, qualifies it for being one of those stocks that behave like an option. The downside on this isn't much anymore -- I wish it were more. But the upside is virtually infinite, if they can realize the dream. Q: What are their hurdles that we should look for them to overcome, to know that they're going to realize that upside? Luskin: I think they need to have a vivid demonstration of the product in action. Right now it's just a dream. They're just at the very edge of being able to demonstrate their product. And people are very concerned that it's going to die the death of Iridium. People don't understand that it's built on an entirely different business model, an entirely different technology, generations ahead. And if they make it, it's going to be dominant. Nadig: Their business model involves working with partner-carriers to pick up dead service areas. Q: Terayon Communications has been a great stock for you. Does it still have some good upside? Luskin: It's been a great stock and it's certainly had its ride in the last couple of days. Terayon is in some sense a complement to Qualcomm. Qualcomm dominates CDMA on the wireless side, and Terayon dominates CDMA on the wired side. Right now, cable television is sort of the poor man's fiber. It's the only form of really high bandwidth physical connection in any visible portion of American homes. And Terayon has been all about retrofitting cable networks for broadband using CDMA, without having to actually go in and replace the cable. So you've been able to wring huge costs out of converting the system and basically allowing the owners to unlock option value for infrastructure that they never dreamed of when they paid the costs. Q: What does Wave Systems Corp. do? Nadig: Wave Systems manufactures silicon solutions for metering data. In the process of metering and decrypting data, they can do it on a person-by-person basis. It's basically like a postage meter. They dominate the Cyber-COMM solution, which is a mandated European Union standard for conducting e-commerce. Q: And Wave sells-what? Nadig: Wave manufactures the chip that's in there. And they also run the back-office system for encrypted data streams that might come down that pipe. An example might be running something like Sun Microsystems' StarOffice, in which you're paying for software per-use or paying by time. Another example would be music. They represent an interesting solution to the music problem of how do you know when somebody's downloaded something and they've listened to it so many times and how many times have they paid for it? Because the Wave System works in real time to decrypt, based on a particular person's chip, they can track, meter and allow the content provider to get paid. Q: Any other stocks? Werdegar: A company that's intriguing to us and represents one of the interesting sector rotations that's occurred over the last few months is called Electric Fuel. They make this thing called a Zinc-Air battery, which is a disposable battery that shows three to five times longer battery life than traditional cell-phone batteries. There are also applications of this new energy system in transportation. Q: Which of these companies are making money or are cash-flow positive? Luskin: We just don't think in those terms. That's the green-eyeshade work that we just don't think is important to do. Statements like that sometimes get turned in the press: "Mr. Luskin said it doesn't matter whether these companies are making any money or not." Q: That's why you're lucky that this is a transcribed interview. Luskin: Of course it matters whether you're making money or not, but the real question in these companies is "When?" For a lot of these companies, the stupidest thing they could be doing right now would be to try to make money. What they really need to be doing is investing in the future to make a lot more money later. Now, yeah, that's riskier. But it's risky to interrupt your career and go back to business school. All the things that people do to invest instead of consume are risky. Did Chrysler make money in the first couple of years when it introduced the minivan? It sank billions into it. If that had been a separate public company, everyone would've been carping about, "Oh God, this little minivan company just can't make any money. It's worse than Amazon.com!" But because it's happening inside Chrysler, it's diversified away by a thousand other things they're doing. We live in a world where capital markets are so evolved, investors are so empowered, that they have the privilege of buying these young risky companies that haven't made money yet. That is a very very good thing. Q: Very good indeed. Thank you.