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

To: gdichaz who wrote (50200)	2/5/2002 8:30:08 PM
From: Pirah Naman	Read Replies (2) \| Respond to of 54805

gdchaz: Cash flow is the real measure of success for a company in retrospect. What is now past was once future. What is now future will one day be past. Free cash flow will be the measure of future success. But what about looking ahead? We must always look ahead. And part of that is putting expectations on business performance. If a company has never consistently made real profit, then we have to seriously think about when it will, and how much. If a company has consistently made real profit, then it becomes easier of course. That is the fun and how those of us who try to do just that try to work out winners. As a purchaser of a business, a "winner" to me is the company that makes (will make) the most real profit. Looking ahead - everybody who invests (however rigorous or sloppy their approach) is looking ahead. Anybody who proceeds on the basis of "a winner = the company that will make the most profit" has to look ahead. Enjoy using the windshield while keeping the rear view mirror in sight. But the fun is, which gives a view ahead? The real question is "if looking ahead without considering the timing and magnitude of future profits, how tinted is the windshield?" Since this is abstract, lets put some meat on the bones. Sure. In past GKI and W&W indexes, and current indexes, there are companies who have never made real profit. That is the meat. That is the point here. The lesson being repeated in the market is that for businesses which fail to generate real profit, there is additional risk. The prudent investor does more than acknowledge it - s/he thinks about it in specific terms when analyzing a potential investment. That is the meat. Qualcomm. There is really no question that there is no way to win against Qualcomm's technological lead. I believe that my cost basis is about the same as yours here, so let there be no distractions as to bull vs bear or anything like that. But I would never say that it is inevitable. Over the years I've observed far too many "things have to work out this way" fail to work out as projected. It goes on today with lots of shiny pebbles "this one has to win because of innovator's dilemna" or "this one has to win because of market share" and so on. A lot (not a few) of them won't work out. So I will go no farther than to give credit for high probability in a case where I have great confidence. But, back to QCOM. Let us agree for the purposes of discussion (since we agreed so long ago with our pocketbooks) that QCOM's technological lead is insurmountable. When do you see them starting to rake in the money as a result? How much do you see them raking in? Best to you. - Pirah

To: gdichaz who wrote (50200)	2/5/2002 8:45:36 PM
From: Eric L	Read Replies (1) \| Respond to of 54805

Cha2, << Nokia? At Los Vegas who would bet that way? >> Someone who instead of betting in Las Vegas has done serious DD, has looked at their balance sheet. and invests in Kings who have greater than 2X market share (and still growing it) in their core business? <g> Still looking at the world through cdma2000 colored glasses I see. <ggg> << There is really no question that there is no way to win against Qualcomm's technological lead. >> Their technological lead has not translated into a technology adoption lead. What do you think of Qualcomm delaying MSM6200 (ZIF WCDMA with GSM/GPRS) sampling one quarter and the MSM6300 (ZIF 1xRTT with GSM/GPRS) two full quarters? While I am sure there are very valid reasons for this, and the market for dual-mode WCDMA will be small at the outset, three vendors are committed to having dual-mode handsets on the street H2 02 (Sony Ericsson, Nokia and NEC) and there is a possibility that Siemens and Motorola will as well. Obviously if sampling isn't till Q3, they are unlikely to be using Qualcomm silicon in their initial models. If they don't use them in their initial models the question becomes will they use them in later models. Qualcomm has a target of better than 50% of the WCDMA chip market. They do not however enjoy the architectural lock they have on the cdma2000 side by virtue of controlling the architecture and standard. As for the MSM6300, I think it is a critical chip for Unicom's migration from IS-95 to 1xRTT and I have some concerns about takeup of cdmaOne against GSM in China in the interim. This is certainly not the end of the world, and neither chip was expected to produce revenue this year, but I am candidly disappointed in the delay. No early mover advantage on the 6200 and critical delay on the 6300. Best, - Eric -