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

To: Mike Buckley who wrote (45019)	7/31/2001 2:46:48 PM
From: tinkershaw	Read Replies (1) \| Respond to of 54805

GMST could grow licenses into the 100 million range, yet if the ad market remains much smaller than predicted, GMST will never justify its current valuation What I meant here was not grow licenses into the $100 million range but 100 million household range. Despite doing this add revenue will not necessarily grow at the same pace. This is important because the Gorilla is usually undervalued by the market. When you take a MSFT, CSCO, or such the market factors in licensing fees, hardware sales, etc, and gives a valuation that is inevitably undervalued overtime. However, this is different if say MSFT's licensing fees were considered really a nice h'ouerderv and basically just an entry ticket to 100 million pairs of eyeballs and the subsequent surge of ad revenues. In such a case, the tornadoing of license revenues would not necessarily be indicative of the tornadoing of the much larger expected ad revenues to follow. Since the market will expect these Godzilla revenues, they will be priced into the stock. Yet if they don't appear, or only appear at much lower levels than anticipated, then the stock will be overpriced - whereas gorillas are almost always underpriced based upon current market expectations. Thus, the Godzilla aspect that dominate the GMST business model create additional risks in regard to valuation that are not present in just a pure play Gorilla. Hopefully, that is a bit clearer of an explanation. Tinker P.S. Not making any GMST valuation call here. I haven't looked that close other than ad revenues of $2-$3 billion have been projected per year by 2004-2005 by analysts from the Guides. It could very well be these Godzilla profits are not priced into the stock. But what is important is that we cannot just assume the stock is underpriced (as Gorillas are) based upon current market expectations. P.P.S. Please no posts about Gorillas always undervalued --- phooeeyy!. What I am saying is based upon current market expectations. NTAP is the prime example. The market expected data storage to be a can't live without growth market without stop for the entire decade and beyond. And this was not without reason. Today we know that is not necessarily true and the Street holds a different expectation. So outside of major macroeconomic issues, the gorilla is undervalued based upon these expectations.