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

To: Seeker of Truth who wrote (44809)	7/23/2001 8:57:13 AM
From: Wyätt Gwyön	Respond to of 54805

When VC's are ready to throw a billion dollars to compete with a gorilla, the prices will again be insanely high. Since we all rule that out for a long long time, your remark is purely theoretical. yes and no. what it really points to is a Catch-22: if you are a public co and i am a VC, i will watch you, and as long as you are doing poorly i will not bother your space, but if you start doing well i will pull out the bankroll and invade your space...your space will then become overcapitalized as too much money faces too little profits... you will then be caught between a rock and a hard place a la "gorilla" black sheep CSCO (which people magically don't talk about no mores). i.e., you will have VCs invade your "lock" market of core routers and develop a better product than you (JNPR); even as, in your efforts to expand beyond this market, you now have to pay top dollar for startups (e.g., Cerent) which reduces your ROI and leads to bungles (a la Monterey). which is to say, making money is perennially hard for most of the would-be gorillas except MSFT, which is a monopoly as explained by a board-game from 75 years ago. i agree with you that INTC and QCOM have good locks. that is a rare and commendable thing in technology, but you know what? that ain't all that matters. price also matters. i think INTC and QCOM are ridiculously expensive. i can find other, cheaper locks out there, but i will be happy to buy INTC and QCOM if they ever get cheap (QCOM anyway).