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

To: Mike Buckley who wrote (26046)	6/8/2000 10:30:00 AM
From: Paul Berliner	Respond to of 54805

T/A laughs: theonion.com

To: Mike Buckley who wrote (26046)	6/8/2000 1:11:00 PM
From: John Stichnoth	Respond to of 54805

shareholder equity, it has nothing to do with the company's market cap. They are being loose with the term, but I think they are using it in the sense of market cap = expected enterprise value = net present value of all future earnings plus today's net worth. Theoretically, there should be some relationship between shareholder equity and market cap. For instance market cap should be equivalent to the (risk adjusted) net present value of ultimate shareholder equity. It seems they are saying the $10Bn is the shareholders' loss in the value of their equity holdings, as measured by market cap. But, maybe you're making a slightly different point? E.g., MSFT's market cap has certainly gone down a lot more than $10 Bn during the lawsuit period, and much (most?) of the decline is attributable to the antitrust suit. Kind of related to that--I had a thought last night about Paul Johnson's CAP/GAP model. He shows that the Gorilla's CAP is bigger and lasts longer than the chimps' CAP. He references that specifically to the Gorilla's sector--for instance Intel with semiconductors. Here's my thought: That bigger, longer CAP has a multiplicative effect on the Gorilla's opportunities to establish dominant positions in other areas. They have more money, and more time, to come up with a success in another area. This applies equally to areas that are NOT adjacent to the Gorilla's realm. For instance, MSFT gets a lot more shots at domnating other sectors than any chimp would get. This "more chances" result is in addition to, or besides, the advantage conferred by the Gorilla network effect. [Maybe that's all obvious, and has been stated, but this is a slight variant on Gorilla power as I've been thinking about it.]