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

To: Eric Jacobson who wrote (30250)	8/21/2000 9:31:52 PM
From: Sunny	Respond to of 54805

Eric, I think you have very accurately and succinctly summarized Cree's business model in GG metrics. (The fact that I happen to agree with your assessment 100% is of small consequence.) It is the power of the material properties and the lock or the "way big" headstart on the manufacturing process that helps me value Cree much more highly that a maker of lights. I say, Here here! Sunny

To: Eric Jacobson who wrote (30250)	8/22/2000 10:54:25 AM
From: mtnlady	Respond to of 54805

"Such a substitution threat means CREE may never achieve King status in a relatively simple market such as LEDs" My understanding is that CREE's patents involving the mfg. process of SiC are such that CREE can produce SiC at a fraction of the price and at a higher quality than other SiC producers. This low price and high quality enabled CREE to enter, and then dominate, the blue LED market (blue is by far the highest margin LED market and the color of blue is instrumental to other CREE SiC objectives) in a very short period of time. CREE is already the undisputed king of the blue LED arena (something like a 90%+ market share if I am not mistaken) and is moving into other colors as well. In short, while yes there is a substitution threat from other LED makers. CREE's ability to grow SiC so cheaply and with such high yields means they can drastically undercut any price out there. If they can continue to undercut the prices in other LED colors then customers do have relatively high switching costs because, literally, the price of the other mfg. LED's is much higher than CREE's. UW please correct me if I have mispoke anywhere along the way in here.