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

To: Sunny who wrote (25142)	5/22/2000 12:13:00 PM
From: Seeker of Truth	Respond to of 54805

Contract/temporary workers skew the figures. That's a very good point you made. In analyzing gorillas we are usually looking at a qualitative matter, i.e. the nature of the proprietary architecture, how the customers are locked in, how the architecture becomes indispensable. But numbers also enhance this picture. As you say, net profit margin is an excellent number. Return on equity becomes dubious these days as in the information age what constitutes equity is uncertain. Conventional accounting based only on tangible assets is surely inadequate. As for profit per employee, if there are not many contract workers then I think it might have some predictive power. In the case of QCOM, their profit per employee will surely rise sharply this year because of the divestment of the cell phone manufacturing business to Kyocera. With the increased relative focus on R&D, there should be an acceleration of growth. Profit margin increase should also happen, of course.