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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Frodo Baxter who wrote (4704)	10/13/1998 5:46:00 AM
From: Pierre-X	Respond to of 9256

Re: Gurley Fabulous article. Thanks for the link. Gurley is a smart cookie.

To: Frodo Baxter who wrote (4704)	10/13/1998 10:49:00 AM
From: Robert Douglas	Read Replies (1) \| Respond to of 9256

A comment on the Gurley article: Return on invested capital is the correct measure by which a company's “relative fitness” can be measured. The “Warren Buffett” approach to investing was really one that identified companies whose franchise allowed them to consistently achieve above average returns on invested capital. This is difficult to do over time because it attracts competition. That is why you hear so much talk about “barriers to entry.” High ROIC attracting capital is a natural law of finance. Often times these high returns lead to periods of over-capacity and subsequent low returns. This is precisely what has happened to the disk-drive industry. -Robert