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

To: unclewest who wrote (29532)	8/6/2000 10:36:08 PM
From: Juliet	Read Replies (2) \| Respond to of 54805

Gorilla Game vs. Gilder Game--a little comparison Here is a year to date Gilder port (a couple recent things are missing, like the STOR ipo, etc.)--based on closing price on 1st trading day of the year: siliconinvestor.com To compare with the Gorilla port: siliconinvestor.com hmmm... juliet@ifgildercomplainsicantakeitdown.org

To: unclewest who wrote (29532)	8/7/2000 3:05:27 PM
From: John Stichnoth	Respond to of 54805

Hi, uncle. You said a lot in that post, much of which I agree with. A couple of responses are in order, though: First, I was careful to phrase my post with "in its present incarnation." At the present rate of rollout, further recapitalization will certainly be needed. How bad the dilution will be is open, but I believe the suggestion recently on the G* thread of 25% dilution is just plain silly. I think we're looking at 4-5X shares outstanding from present levels from where we are now. Second, we're pretty clearly still marketing to the early adopters and innovators. Thus, we have not crossed the chasm according to TFM pages 21 and 25. Third, Schwartz has recently reiterated his statement that LOR will not mortgage its future on keeping G* afloat. Tie that with LOR's position as a major creditor (which would give them major ownership if debt were converted to equity in a bankruptcy reoganization), and I would say that bankruptcy is not as unlikely as many seem to think. Fourth (and I'll stop on this one), I've run some proformas. I'll repeat from my earlier post: Any proforma has to assume breakeven in time to begin construction of the second constellation. (If you can't assume that, then the rational thing to do is abandon the present constellation, since you're going to have fund the new constellation from outside sources anyway, and you're just digging yourself a deeper hole in the meantime.) My proforma got to cash flow breakeven in 2004. In getting there, I assumed different startup dates for different countries, and assumed revenue initially only from those countries that are "live". Unfortunately, the lowest number I could come up with to justify continued faith was 4.4 MM MOU's in the last quarter--and that required a real stretch in my assumptions. I still believe that G* can be a winner. But at this point investment int their Common is very speculative, and far removed from GG'ing. I may reenter later, following recapitalization and better numbers. In the meantime, LOR has been severely beaten down and may represent a better way to play this. Or, GSTRF has some bonds that can be bought at a REAL discount from face value. And bonds may have some residual value in a bankruptcy, that common stock shouldn't have. This may be a stock that reasonable people can disagree on. At this point, it's too much risk for me. Best, John