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

To: Bretsky who wrote (36419)	12/12/2000 3:50:22 PM
From: hueyone	Respond to of 54805

Re: I think the thread has decided SSTI is definitely not a gorilla; exactly where it belongs in gg, if at all, is debateable. I think SST belongs in a new category I just made up called the pre Watch and Wait category---one step above the shiny pebble category. SST has open proprietary technology called Superflash that is being widely adopted. I believe Superflash has crossed the chasm, that it is in the bowling alley and is rapidly knocking down bowling pins. This problem is trying to evaluate the true superiority of Superflash in a period where the entire flash industry is capacity constrained and very few competitors are operating in SST's low density code storage space. SST claims the competitors have left SST's space because they can't compete with Superflash's reliability, small footprint and low cost. But I am anxious to see how the company fares in a period where industry flash capacity exceeds supply. Commodity type flash producers will see their margins squeezed and earnings growth go flat or even negative. Those companies with truly superior IP will outperform the rest of the industry. This will be the real test. In my October mini hunt report, reply #32636, I was inconclusive about switching costs, barriers to entry and discontinuous innovation versus continuous innovation. By the July, 2001 earnings report, as new flash capacity comes on, I hope to have some answers to those issues. By the way, all the forward consensus earnings estimates have been raised since my October report. In the meantime I am quite happy to hold SST as a low risk, potential high reward stock. The company is coming off a 54% sequential quarterly earnings increase, and consensus estimates are for a 24% sequential quarterly increase this quarter. This expected growth only costs an investor 20 times trailing twelve month earnings. Of course there are no guarantees that SST will continue to perform, but I am betting they will. Best, Huey