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

To: Uncle Frank who wrote (20395)	3/17/2000 8:46:00 PM
From: JRH	Read Replies (5) \| Respond to of 54805

Frank and thread: Buy the Gorilla and hold it until it is threatened by a discontinuous innovation. You should be able to see something like that coming months ahead of any real damage to your holdings. I'm still catching up on the 150 new posts that I've missed out on in the last few days as I was out of town visiting the folks up north. During my time up there, I began reading the RFM (I hope to get the whole thing read this week) and when I read the very comment you made above yesterday, it made me think about my position in Cisco. Is the optical switching/networking technology an outside technology that has caught Cisco by surprise? In some ways, I think it has. First of all, as a disclaimer to all, Cisco is my largest holding (because of the stock's growth during the 3.5 years I've had it!!) and I have never, ever questioned or second guessed management! That team gets an A+ in my book and I can't imagine a better group of talent. But the question begs an answer. It seems to me that Cisco was so focused on Voice/Video/Data and then optical got real hot real quick and growth just exploded in this arena. Of course, they have purchased some optical companies, but I don't think they have really publicly addressed (with a purchase or a new product) the threat that optical switching represents to their bread-and-butter electronic routers. The craze right now is bypassing electronics all the way and using optics instead. The RFM states on page 14, "You will hear grumblings about these threats long before they affect the gorilla's revenue or earnings, and you will have plenty of time to get out safely". Is optics the threat? Or is it another "Layer-3 switching" threat that faced Cisco a few years back that they promptly dealt with and conquered. The difference, IMO, is that optical switching is discontinuous and Layer-3 isn't. Anyway, that is some food for thought for us holders. Any comments? Justin