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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (57)	3/11/1998 1:40:00 AM
From: Nazbuster	Read Replies (1) \| Respond to of 1722

Porc, I feel a palpable thrill in my spine just thinking about the billions and billions in cash pouring into the coffers of, say, GM or IBM. I understand your concept of value investing, but let me ask a fundamental question: Do your calculations include the assumption that these great cash cows are either immune or resistant to competition or that the huge cash flow somehow reflects that they are doing a better job? I certainly understand an IBM whose customers are locked into millions of dollars of technology and would find it difficult to switch to another vendor. But sometimes it pays... I have a friend with a product which competes with one from Computer Associates (CA). He offers the product to CA users at 60% of their 5-year maintenance cost! In effect, he is giving it away free and charging 40% less maintenance in addition! (His product has higher ratings by Gartner Group.) With a better product and lower prices, he is finding his sales easy. This is just one guy, not a massive corporation. Every company must continue to compete with better products, better service and lower prices (ideally). THe existance of a large cash flow does not guarantee survival. Compaq just reminded us of that this week.