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

To: tekboy who wrote (29167)	8/1/2000 6:52:24 AM
From: gdichaz	Respond to of 54805

tekboy: Hey, look at the bright side. You own some stocks that are doing very very well, no? Just a small reminder, Cisco is an example that is well worth careful study. As Mike has done a very illuminating comparison of the Cisco roller coaster ride to date with Qualcomm with specific regard to tornados and the possible potential of Qualcomm, it would be instructive to do the same with regard to your current favorites. Great companies, even gorillas and perhaps even particularly gorillas, grow in spurts in the real world and spawn new tornadoes and/or modify and strengthen the ones they are in, and their stocks are particularly vulnerable to "fashion" and emotion - the most powerful short term determinants of stock prices. Why? Because the underlying strength of the gorilla is so great that those who understand that, tend to buy and hold and sell with considerable reluctance. Yet these very strengths drive stock prices up strongly when "fashionable" and rapidly and in large moves down when "unfashionable" - and this reflects the herd - espcially the mutual fund managers who kow tow to such stuff as "windowdressing". And those who do not understand, sadly the vast majority, sell if the fashion changes also. Remember, this happened several times in Cisco's short history - a time span of only 10 years or so. Suggest this be kept in mind when judging what action to take now, today, on gorillas such as Qualcomm - or even a strong king/prince combination such as JDSU/SDLI. And clearly that applies to Cisco (and I would suggest, its primary competition in fiberoptics at least, Nortel Networks). Best. Cha2

To: tekboy who wrote (29167)	8/1/2000 7:05:45 AM
From: Apollo	Read Replies (1) \| Respond to of 54805

Tek: What, in other words, have you learned from this debacle, and what should the takeaway be for the rest of us? that was a Cool Post, and you asked a Cool Question. Looking forward to reading the answer. Apollo

To: tekboy who wrote (29167)	8/1/2000 7:36:53 AM
From: gdichaz	Respond to of 54805

tekboy: Suggest Living on the Fault Line has considerable real world application for investors, even though written for managers. The trick is to find real world examples. Cisco is one par excellence. Been there, done that, and continues to do it, and even accelerates its mastery. For example where Cisco puts its emphasis is in R&D (supplemented by aggressive purchases and successful integration of cutting edge start ups) and very very importantly a world class driving sales emphasis. And Cisco uses internet/computer skills for both external (sales and service) and internal (tight management controls) in a very very major way (again as Geof Moore covers in LOTFL). In the areas I follow, there are two others: Qualcomm and Nortel. Both are fascinating examples of concentrating on core and shedding context. Since most here are very familiar with Qualcomm, suggest that those who might like another example check this out: To: Gary who wrote (6374) From: Kenneth E. Phillipps Monday, Jul 31, 2000 10:12 PM ET Respond to Post # 6375 of 6383 Nortel Races On As Lucent Struggles To Catch Up cnetinvestor.com. Nortel Races On As Lucent Struggles To Catch Up By: Steven Syre And Charles Stein 7/31/00 Source: NY Times It turns out you can teach some old dogs new tricks. And in the new economy, the dog that learns the new tricks gets the bone; the one that doesn't gets treated like a dog on Wall Street. Two old dogs - Nortel Networks and Lucent Technologies - reported their earnings last week. Both companies have been around for a while, albeit under different names, and both have become behemoths selling equipment to the world's big telephone carriers. But that is where the similarities end. Lucent reported disappointing earnings and warned that it would struggle for the next two quarters at least. Nortel had terrific earnings and promised more of the same for the rest of the year. Nortel stock is up almost fivefold since the beginning of 1999 and now commands a market value of $235 billion. Lucent's stock is down 40 percent from its 1999 high; its market value is $156 billion, even though its sales are greater. Why the divergence? The simple answer is that Nortel figured out which way the world was heading and got their first. Lucent started late and hasn't yet found a way to catch up. The race between the two giants is of more than passing interest. Lucent has a large work force in Massachusetts and just last week spent $1.3 billion to acquire Spring Tide Networks, a Maynard, Mass. start-up. Nortel said last week it wanted to hire 1,800 people to work at its Massachusetts facilities. The telecom business is facing what Harvard Business School professor Clayton Christensen calls ``disruptive change.'' The rise of the Internet and the demand for systems that can carry data as well as voice has created a need for a whole new generation of telecommunications gear. The traditional voice equipment that Lucent and Nortel make has become a mature market. The action has shifted to the new stuff - fiber-optic products. Nortel recognized that tilt in late 1997. ``It became really clear that we needed to make a big shift and I mean big shift,'' chief executive John Roth explained in an interview with the Wall Street Journal. Nortel's radar may have been keener because some of its customers were the newer, more forward-thinking carriers. ``These guys were building networks from the ground up and they wanted the latest and greatest stuff,'' said Richard Crable, an analyst with Loomis Sayles. Lucent, by contrast, sold mainly to the established carriers, AT&T and the Baby Bells, and that group anticipated a much slower transition to the new world. In this case the future came sooner rather than later and Nortel was ready for it. In the most recent quarter Nortel sold an estimated $1.5 billion to $2 billion worth of new-generation gear, according to Crable. Lucent sales of comparable products was only $192 million. But anticipation is only half the battle. The other half is execution. Here, too, differences have emerged between the two rivals. Both companies have relied on acquisitions to speed their entrance into new markets. (On Friday, Nortel agreed to buy San Jose's Alteon WebSystems, a maker of Web switches, for $7.8 billion in stock.) Nortel spent $7 billion to buy Bay Networks of California two years ago. Soon after Lucent spent $20 billion to buy Ascend Communications, a California company that previously had acquired Cascade Communications, a hot Massachusetts firm. Analysts say Nortel has successfully integrated Bay. The integration of Ascend has not gone as smoothly. ``People have bailed out of Ascend like men going overboard,'' said Howard Anderson, senior managing director of YankeeTek Ventures in Cambridge, Mass. Many of those bailing out started their own telecom companies, becoming Lucent rivals in the process. In 1999 Lucent paid $900 million for Nexabit Networks, a Marlborough, Mass. company that was developing a new-generation router. ``The Nexabit router was widely perceived to be a neat product but we haven't seen any volume shipment yet,'' said Andrew Cray, an analyst with the Aberdeen Group in Boston. Recently Nexabit's founder left Lucent and set up a competing firm across the street. Nortel and Lucent have plenty of company in the telecom business. A host of young pups, including Sycamore Networks in Massachusetts and Juniper Networks in Silicon Valley, are challenging the old dogs. A group of European gear makers are trying to sell into the same market. For now, however, Nortel is well-positioned in the race to the future. Asked what would have happened to his company had it not moved quickly enough, Nortel's Roth told the Journal: ``We would have looked like some our competitors . . . not as interesting.'' PS This is the flip side of learning from difficulties - temporary or otherwise. And perhaps less often done, finding and learning from examples of success. A major strength of Geof Moore's writing BTW - just IMO of course.

To: tekboy who wrote (29167)	8/1/2000 10:08:36 AM
From: StockHawk	Respond to of 54805

>>CRDS...Remembering...back in February<< Wow, when Buck mentioned CRDS the stock had just closed at $90. Five trading days later it had breached $180 and five days after that briefly spiked over $200. It had previously traded in the $70 range since October 1999. Last week it would have made a fine short candidate at $15. Today it is a "penny stock", trading under $5. Must be a lesson here about avoiding pebbles, holding lightly and using stop orders. StockHawk/Plutus

To: tekboy who wrote (29167)	8/1/2000 10:34:15 AM
From: TigerPaw	Read Replies (1) \| Respond to of 54805

What, in other words, have you learned from this debacle, Change the names and I have several stocks with similar stories, (CREE, VIGN, & QCOM). What I learned is don't put all your eggs in one basket. Each of these stocks represent a fairly small part of my portfolio, why? because all my stocks start out as a small percentage. My big holdings, EMCS, CSCO, DELL, & JDSU started out as small holdings and grew into big holdings. In other words 2 out of 3 picks I make are mediocre or bad, so I don't put my whole future into each pick. If you land upon a really good pick it will become a major piece all by itself. It's too tempting to go for the big win. TP

To: tekboy who wrote (29167)	8/1/2000 10:54:18 AM
From: buck	Read Replies (1) \| Respond to of 54805

I realize this may touch a sore spot Ouch. It's definitely a sore spot. More like a 6-month old sucking chest wound. in a fit of masochism Since you didn't buy any, it seems a touch more sadistic at this end... <g> CRDS, the last of the four, is the one I haven't owned and am least familiar with. I know there has been an earnings disaster, some insider shenanigans, and a shareholder lawsuit; it sounds to me like CTXS only worse. You got that right! Remembering your presentation of it back in February (the post to which this is a reply), I would be interested in hearing what you think went wrong. Gosh, I wish I could say. I've been utterly shocked at their latest fall, from the 40s to practically the pink sheets. Of course, the earnings warning that came out a week ago explains a lot. Missing estimates by two-thirds tends to cause some, um, loss of confidence. A stop-ship on the product clearly slows sales. Losing one of your biggest customers ain't too good, either. From a technology standpoint, I am shrugging my shoulders. The product that they are selling should be a no-brainer out in the market. There are some things happening in that market, though, that are possibly putting the brakes on. First is the Brocade/Cisco partnership, that will combine BRCD Fibre Channel switch capability into Cisco's product line. Second is the Cisco acquisition of a company called NuSpeed, who is working on an Storage over IP product. Knowing the power of gorillas, I can just see buyers across the country saying "Whoa! Now that Cisco's getting in the game, let's see what they do before we commit to anything." Can you guess I'm sitting here scratching my head over what went wrong? Also, in retrospect, were the problems at all predictable? Not by me... What, in other words, have you learned from this debacle, and what should the takeaway be for the rest of us? I've learned never, ever, ever to post anything of substance here as regards a company. Your research skills are just too damn good, and too damn embarassing. <g> I've learned I'm much better off just reading the wisdom of the Microphone Buckleys and the UFs and the Tekboys and the Apollos of this world, and occasionally posting about a technology that I may have some clue about. Your lesson, and it's one you know, is don't listen to a newbie who just finished the book for the first time and is all hopped up about the Game, and is eagerly searching for Shiny Pebbles that could be a gorilla, and runs into camp yelling about his new find. in the tradition of Apollo's brilliant self-flagellations Mine certainly isn't brilliant, but it's about as self-flagellant as I can get. Now, quit picking on me. Sheesh...one over-eager post and you have to drag it out in front of the whole world. <G> buck, still looking at tractors