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

To: saukriver who wrote (36311)	12/10/2000 3:32:50 AM
From: Bruce Brown	Respond to of 54805

I don't think it is too much to ask that a management team get its arms around the company's own numbers. That's easy to say in an economic condition where very few companies that cater a large portion of their business to a sector of the economy that was hit with slowing growth could predict accurate numbers. Intel had it wrong. Gateway had it wrong. Dell had it wrong. Micron Electronics had it wrong. HP had it wrong. Apple had it wrong. I imagine the list will continue to grow in many sectors and industries. These companies all started to experience slowing growth quicker than other portions of the economy, but just wait. Yes, Cisco has an amazing infrastructure supply chain management system that allows them to know exactly where they are at any given time in the quarter with the stroke of a few keys. This type of technology control would be a welcome addition to many corporations. Although management continues to have rosy growth forecasts for next fiscal year and has an amazing track record for the past 14 quarters - those 14 quarters were in the 'best of all possible economic worlds'. Time will tell if the next 8 quarters require in adjustment in management's thinking. It's hard to tell because companies like Cisco, Ciena, Sycamore, Juniper, Redback, JDS Uniphase, etc... have all had management's reporting they see continued robust demand. There was a good interview with Thomas Siebel I watched yesterday where he admitted that if the financial industry, the automotive industry, the telecommunications industry, etc... all move into slower growth that there was no question that Siebel would as well. The lag time might be a quarter or two or three behind the slowing growth for the front line companies, but it would come. As an example, if you were an investor during other slowing economic times such as the 1989 - 1991 you will remember well the number of management's that were 'surprised' by their own numbers. The same is happening now and will continue to happen through the next few quarters. Perhaps this time a 'soft landing' can be pulled off, but regardless - the growth has slowed. The problem this time around for investors and corporations was that we had just come off a growth period (1996-99) that was stronger than historical times before it. Premiums paid for stocks were (and still are) higher than previous history. Now we have confirmed slower growth and the market has been taking notice. Still plenty of disconnects between investors, managements and the multiples paid for some of these stocks. My favorite example at the moment is to compare Coke with Intel. That's not to say that Intel couldn't go lower and Coke go higher, but there is a disconnect at least in terms of Coke. Since you said you really don't follow Intel that closely, I thought that since I do (because it is one of my investments) that it warranted comments as to what really is going on with the fundamental numbers at Intel. Regardless of the ebb and flow of the growth cycle, management's continued 'check-up' from the balance sheet and income statement have continued to pass very high marks. BB