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

To: areokat who wrote (32923)	10/8/2000 1:25:18 PM
From: saukriver	Respond to of 54805

Kat, Fair enough. But I have not heard from anyone (yourself, Kumar, Eric L., probably BB, and to a lesser extent Apollo) in the "Intel is a gorilla camp" specifying the market in which they believe Intel has proprietary open architecture. Clearly, a gorilla can grant a license that is so broad it denudes itself of any semblance of a proprietary lock, and I think that is what Intel did. It was successful in putting those license rights granted in AMD's "weak hands" for many years. Now, AMD is perhaps getting ready to bite Intel's butt in other markets. The arguments we have heard are: Intel has historically had good management, Intel has loads of cash, Intel is coming on fast in Flash memory (still trailing AMD), Intel is expending lots of dough in R&D. Those are not GG arguments. Those are watch and wait arguments. The worst argument I have heard was basically "Well, TRFM says it is a gorilla." That is also not an argument, as I do not believe that TRFM--great as it is--in inerrant. For those in the "Intel is a king" camp, they must feel that revenue growth--although slowing--is still okay enough to justify a continued position. Given slowing revenue growth and knucklehead management, I would not come to that conclusion. TRFM says to hold kings lightly and underscores that execution vis a vis competitors is critical for a king. Intel now faces a stronger array of competitors (BRCM, LU, PMCS, TXN, and even ol' AMD is not misfiring these days). Intel's current management has not earned investor confidence. I see no reason to list it as a king. The best I have heard is from Apollo who suggested that he believes the jury is still out on Intel management. Fair enough. I don't find that as sufficient justification to hold a king that--unlike a gorilla--must execute well. On whether Intel should be removed from the G&K Portfolio, that decision will be made at year-end. But my goal was to spark things up with a discussion this weekend so people can begin to come to a thoughtful decision on whether INTC should continue in the G&K index. "10 percent of us own it," or "We put it there before and don't have time to think about why" does not seem reason enough to maintain its position in the vaunted G&K index. saukriver