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

To: Eric L who wrote (26167)	6/12/2000 2:50:00 AM
From: gdichaz	Read Replies (2) \| Respond to of 54805

Eric L: Since data is my primary focus, I would agree that a wireless data tornado watch makes sense - right now. I would only add that the data watch has two areas worth looking at closely - wireless and fiber. In other words, the trick is to see which technologies make the connection for data by wireless means to the internet / intranet most efficient and effective. This involves many complex issues and players and will take at least two quarters to begin to evaluate with much confidence - with a year as a reasonable time for greater clarity. As of now though a couple of things seem to be emerging, CDMA has a major advantage on the wireless side when mobility is taken into account. Jury is very much out on the "fixed wireless" area. Optical is key on the wire side. Movement is very rapid right now. On your company list, Qualcomm is a natural candidate with its gorilla status in CDMA. Cisco may or may not be in the strongest position on the "wire" side (meaning fiberoptics in reality). NT may be stronger. But this is unclear. And for this thread this is a test case of whether Cisco's networking gorilla status can be moved effectively to fiber where NT is King. And what Cisco is doing in wireless. What NT is doing is easier to see and evaluate. Perhaps Uncle Frank can help with what Cisco is doing to foster the wireless to internet connection - which I see as the key to future success - i.e. working both sides of the wireless / internet. And of course the fiberoptics component equipment suppliers, JDSU and SDLI are in a strong position because they supply the major "system" providers, so they do well regardless of whether the Cisco's, NT's or LU's win relatively. Last, I would be careful with the "box" makers for phones and handhelds - question Nokia's and Ericsson's ability to maintain their relative position as leaders. I would look to Asia for the boxes and the packaging of phones and handhelds. All this is just IMO of course, but based on a bit of study and thought. The real point is that no one knows yet what will actually happen out in the real world. All just bets - educated ones hopefully. Next year at this time, choices should be easier. Best. Cha2

To: Eric L who wrote (26167)	6/12/2000 5:45:00 AM
From: Bruce Brown	Read Replies (1) \| Respond to of 54805

Eric wrote; I'm not into "baskets", but if I was, here would be my candidates, and in approximate order of what I consider to be their potential success: 1. CSCO 2. QCOM 3. LU 4. NT 5. ERICY 6. NOK These are all large companies and each are worth a look at the financial health before blindly buying. Qualcomm, due to the gorilla position it holds in the technology adoption life cycle of CDMA, is a real no brainer for gorilla gamers. The case for Lucent's financial health over the past ten quarters not being that attractive was presented here in the past week, but I simply mention it again. Nortel's numbers will be run and presented by The Motley Fool on Tuesday of this week which I will be happy to provide the link to that information when it is posted. The Cisco and Nokia 'health' are already known and pass the test for large-cap Rule Makers with flying colors. Nokia's gross margins are lower than the standard requirement of a Rule Marker, but they are trending higher. Ericsson - I have no idea about in terms of their financial health (gross margins, net margins, flow ratio, cash-to-debt, sales growth). However, when playing the royalty game, it makes sense to focus on the healthiest metrics. This would be worth a comparison between Nokia and Ericsson if a value chain handset player interests one as an addition to their portfolio. Interesting to note a couple of historic things about Nokia: fool.com Over the past decade, Nokia has transformed itself from a convoluted, confused conglomerate that manufactured everything from toilet paper to televisions into a powerhouse with a laser-beam focus on the wireless telecommunications industry. and Think about this: Early in the 1990s, Nokia's CEO put up a trial balloon to Ericcson (Nasdaq: ERICY), it's Swedish rival, to see if they would be interested in buying Nokia. No thank you, came the reply. Big mistake. Nokia controls 30% of the mobile handset market and is in danger of having itself completely marginalized in some places where handphones are known simply as "Nokias." I would treat the technology adoption life cycle of wireless handsets similar to the PC technology adoption life cycle. Looking for the OEM's with the healthiest business models and execution should be the choice for the investment dollars. I doubt if anyone would complain as to the returns a company like Dell Computer provided during the hypergrowth phase of the Internet phase of the computer and the direct model hypergrowth of Dell's business model. I wouldn't forecast a similar return for the wireless world OEM's, but certainly growth is there and will continue to be there for quite some time. Just as Intel and Microsoft were the core positions to hold before branching out into the value chain members (where plenty of money could have been made), the same theory should be applied to the wireless technology adoption life cycle. Rather than assuming all OEM's will be carried far up the beach, one might want to consider the 'healthiest' business models and execution to play that space. Interested investors could search the archives of the Rule Maker Portfolio at the Fool to see why Nokia was chosen as an investment (the same time as they chose JDS Uniphase) and review all of the metrics for Nokia's business. fool.com Here's the Valentine's Day column that announced the purchase of Nokia and JDS Uniphase for the Rule Maker Portfolio: fool.com OT side note: Interesting that I write this post just as an incoming call to our dual band GSM Nokia for my wife got dropped after 45 seconds of conversation with her friend across town. The wife had her usual choice words which broke one of the ten commandments and all I could say to her as she was waltzing across the living room with my $220 Nokia poised in fast ball position was "Europe needs CDMA". Dropped calls, network is busy and standing with a ten foot piece of tin foil is a common way of GSM life for us and has been since 1995. The top of the line Siemens phone did it and now the top of the line Nokia phone does it. That's reality and the frustration seems to never end. BB