Kevin Landis, PEB, KSS, AREM, GCW, Articles

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Non-Tech
Kevin Landis, PEB, KSS, AREM, GCW, Articles

An SI Board Since April 2000

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Emcee: Mark Johnson	Type: Unmoderated

Introduction Compact

The Internet Financial Connection, August 28, 1999

Presented by Mark Johnson, Editor of the IFC

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This newsletter can be viewed at
siliconinvestor.com

In This Issue:

1. Tech Outlook With Technology Pro Kevin Landis
2. PE Biosystems
3. Kohl's
4. AremisSoft Corporation
5. Gerber Childrenswear
6. Interesting Articles on the Internet by Joe Dancy
7. IFC Reader Highlight: SanDisk is "No Flash" in the Pan
8. Disclaimer

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1.

Tech Outlook With Technology Pro Kevin Landis

siliconinvestor.com

Mark Johnson, Editor of the Internet Financial
Connection, provides the following interview with
Kevin Landis of Firsthand Funds
firsthandfunds.com .
AudioInvestor.com provides an audio version of
the interview. Click the link below
theaudioinvestor.com
if you would prefer to listen to the interview.
Below is the write up.

Q: Kevin, is there anything new going on with your mutual
funds since we last spoke 6 months ago?

A: The four funds that we manage have not really changed.
The essentials of the funds are unchanged. But, we do have
two new funds in registration.

Q: What are those two new funds called? I assume that
they will be focused on technology.

A: Yes, we will introduce an e-commerce fund and a
communications fund. Both are in registration.

Q: For the New readers and listeners here on Silicon
Investor, could you elaborate a little bit on your
investing philosophy and what you try to accomplish?

A: As the name "Firsthand" implies, we think it is very
important that we use our home field advantage the best
that we can. So, working here out of Silicon Valley, with
a staff of technology veterans who have "Firsthand"
experience in the industry, we try to stay very close to
the companies that we invest in. We try to understand
technology from the fundamentals on up so that we can take
advantage of our position, our backgrounds and the flow of
information that we get here.

Q: Key Technology indexes such as the NASDAQ Composite and
the Morgan Stanley High Tech Index have corrected around
12% to 13% from their highs. In your view is this the end
of the tech correction?

A: It feels like it but you never really know. When you look
at these mood swings that the market goes through, the
periodic corrections and the stampedes back into technology
that inevitably follows them. You're really trying to play
a guessing game with market psychology. While that can be a
fascinating exercise with human psychology, that is not what
we're about. We would much rather be good long term
investors, owning quality companies at the right price, on
the right side of the big trends, than to be good traders.
Which is actually, believe it or not, I think harder to do.

Q: Are we going to have a "Usual" strong 4th quarter in the
technology sector?

A: That's a very interesting question. The investment
community and the industry is taking a look at a phenomenon
that everyone sees quite clearly but no one has been through
before. That is this Y2K issue. I know that a lot of people
who follow software stocks fear a nuclear winter scenario
in which there is a spending lock-down until we get into
January. If that happens, I would not worry to much about
it because, I think that will be a nice big backlog of
demand. So, the 4th quarter may be one unpleasant quarter
and may represent some buying opportunities. Apart from
that, the general technology trends don't really know what
year it is or what month it is. The Internet needs more
bandwidth and people are buying things like flat panel
displays and DVD's for their own reasons that are not
dependent on the calendar.

Q: Are there any new tech names that you have added to
your portfolios recently?

A: We have a few and I can mention just a couple of
examples. In our Tech Value Fund we added AT&T (T 50).
In our Tech Leaders Fund we added Qualcomm (QCOM 190 3/4).
In our Tech Innovators Fund we took substantial positions
in a couple of new issues. One is Packeteer (PKTR 36 1/4)
and another is GlobeSpan (GSPN 59 1/2).

Q: Kevin, could you elaborate on why you like those
stocks that you added?

A: Sure! The Technology Value Fund focuses on value first
and foremost. So, we took a look at AT&T and compared it
to the likes of MCI WorldCom, Level 3 Communications and
Qwest Communications. We realized that companies in that
business are valued richly if, they are moving in the
right direction and making the right moves. AT&T was not
valued that way. It is very cheap compared to all of those
other companies because it looks like a company that has
stagnated. We think that AT&T is coming out of that
stagnation. We see some of the moves they are making in
the cable area as really positive signs that they
understand what they need to do to get back into the game
and really become a force again. We like AT&T there. On
the wireless side, we thought it was time to anoint
Qualcomm as our technology leader for wireless. They
really seem to have the standards evolution process by
the throat in that business. Qualcomm seems to have
a lot of influence in the business, far beyond their
current size. In the Tech Innovators Fund, GlobeSpan is
a manufacturer of DSL chips. They make the devices that
will allow you to have high speed residential access, if
you choose a DSL solution over a cable modem. Packeteer
is an interesting new company in the area of data
management and data grooming. When you have a network
that perhaps has "traffic jams" due to various demands
placed upon it, the Packeteer technology allows your
network to perform better for certain mission critical
applications.

Q: You just went over the stocks you recently added. Could
you touch base on some of your favorite stocks in
technology area?

A: We still are very positive on the Internet
infrastructure theme. That does not discount the networks
who carry the traffic but also includes companies in the
Lucent and Cisco peer group. Not just the big ones but
also some that are turnaround plays such as Newbridge
Networks (NN 27 3/4). That theme also extends down to
the supplier base so, we are still very big in companies
like; Applied Micro Circuits (AMCC 95 1/2),
Vitesse (VTSS 71), PMC-Sierra (PMCS 97) and
TranSwitch (TXCC 52 1/2). Another trend that we think
is pretty strong these days and is likely to remain is
wireless technology. It is huge and really going
through a boom. We have done well with a company called
Triquint Semiconductor (TQNT 51 1/4). They are a
semiconductor company that provides components to various
wireless devices but specifically to wireless handsets.
We are also big players in a stock called
Zoran (ZRAN 31 1/2). They are a chip company that has
important design wins in DVD players. Zoran, I think is
a good example of leverage in technology investing.
Zoran is a little company that has positioned itself to
ride a very big wave. It is a similar situation to
Genesis Microchip, another small chip company that has
crucial design wins in flat panel displays. If you are
reading this article online, you are looking at a
dinosaur and that is your monitor. Over the next five
years it will probably be replaced by a flat panel
display and there is a great chance it will have a
Genesis chip built into it.

Q: Other than investing in the "picks & shovels" and
semiconductor companies such as Vitesse that helps move
information across the Internet, have you invested in
any of the dot coms in the Internet area? Are there any
other ways you are playing or indirectly playing the
Internet?

A: Our Technology Value Fund has zero dot com exposure
but we have added AOL to our Technology Leaders Fund last
fall. We seem to have made the right call in picking AOL
as the number one franchise on the Internet. Although it
does not have dot com in the name, it is clearly a dot
com type of a stock. Look at its valuation and the way
it trades. That is one position out of 25.

In our Technology Innovators Fund, we own two that I
would have to say have dot com exposure. One is
At Home (ATHM 40 3/4). With its merger with Excite,
they have dot com exposure. We also own
InfoSpace.com (INSP 44 3/4), which is an aggregator of
content for the Internet. Although we own a few dot
com names, their weightings within the fund are
relatively small.

Q: Are there any other ways you are indirectly playing
the Internet space?

A: Other than owning a very few selected dot coms and
owning a fair amount of the infrastructure technology
companies, we have taken positions in the Internet
outsourcing companies. These are consumers and resellers
of the infrastructure technology. Companies such as
Exodus Communications (EXDS 86 1/4) and
Globix (GBIX 40 1/4) set up data centers and purchase
lots of gear from companies like Sun Microsystems and
Cisco, while purchasing T1 and T3 services. That is
a nice way to play the Internet and to play the
phenomenon of everyone trying to get on the Internet
but not feeling like they are comfortable building
up their own computer room. I think that trend has legs.

Q: Are there any other trends or emerging areas that
appear interesting that you may be looking at or you
may invest in?

A: There are always a lot of interesting technology
trends. It is not always the obvious big trend that is
right in your face. For many years, the overwhelming
technology trend has been the PC evolution and what
has been going on in the PC market. I think things
like digital photography, flat panel displays, DVD
Players and wireless communication are all fascinating
trends. If you can find good companies that are going
to benefit from or play leading roles in these
transformations, you will do quite well.

Q: Before closing, is there anything you would like to
say about technology, the Internet area or about the
mutual funds you manage?

A: First of all to the investors, I would say, "have
patience." Technology equals growth over the long
term. In the short term, it equals volatility.
Volatility can only harm you if you let it stampede
you out of a good investment, just because nobody else
seems to want to own the technology at the moment.

For the IT (Information Technology) professionals out
there, I would like to say that we are growing and
looking for people with direct industry experience,
who are passionate about investing.

We just hired our wireless guru, Rex Dwyer
(A Silicon Investor active participant and an
ex-amateur tech analyst, now a professional analyst
for Firsthand Funds) and we are looking for several
other technology gurus in areas such as e-commerce,
software and photonics. Send an email to
<mailto:scw@firsthandfunds> and we will be happy
to talk to you.

Thanks Kevin!

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2.

PE Biosystems

siliconinvestor.com

Barbara Labadie of Griffon Capital Management, provides
the following stock idea on PE Biosystems (PEB 68 7/8).
For more information about Griffon, please send an email
to <mailto:barbara@griffoncapital.com> . Below is
the write up.

Some people like to invest in indirect plays or the
"picks & shovels" in certain industries. For example,
in the oil industry, one can invest in companies that
supply the drills and the oil rigs that are used to mine
for oil. In the Internet area, one can invest in the
companies that make switches and routers, or the
backbones in that area. Barbara Labadie of Griffon
Capital Management (whose firm has had an annual return
of 32% for the five years ending June of 99'), is using
the same approach when it comes to investing in the
biotech area. She has chosen PE Biosystems because,
they will directly benefit from enormous growth in the
biotech sector.

PE Biosystems is one of two operating units of the PE
Corporation. The other unit is Celera Genomics which
is run by gene maverick Craig Ventor. For a great read
on Celera please see the January 11, 99' edition of
Time Magazine pg. 54. PE Biosystems is a maker of
instruments, reagents and software that are esstential
for research and development in the biotech field. "I
think the biotech industry is the future and will see
dramatic growth for the next 20 years," says Barbara.
"Not all the biotech companies will win... Whether they
win or lose, biotech companies will have to buy the
equipment in order to do their research."

Barbara explains that buying stock in PE Biosystems is
like taking a "leap of faith." She says, "You have to
know and appreciate the future of biotech to cherish
the value that's being generated." Barbara notes that
management is sensational and they "do things right."
She likes the company so much she has made it her top
holding. World financier George Soros has accumulated
a 10% stake in PE Biosystems.

Barbara figures that PE Biosystems will earn around
$1.50 for fiscal year ending in June of 00' and $2.35
in 01'. She thinks they can grow in the 40% area and
mentions that they have expanding profit margins.
Barbara believes that PE Biosystems should be a core
holding and will outperform the market over the next
several years.

There is a thread that discusses PEB on SI.
Subject 18596

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3.

Kohl's

siliconinvestor.com

Steve Kensinger of Wilke/Thompson Capital Management
provides the following stock idea on
Kohl's (KSS 75 3/8). Below is the write up.

Wisconsin based retailer Kohl's is a specialty store
that offers mainly brand name apparel goods that are
of high quality, and priced between discount stores
such as Target and higher priced department stores.
Typically Kohl's prices are at or below the sales
price of department stores for the same brand name
goods. About 60% of their instore goods are apparel,
20% household goods, 10% footware and 10% accessories.
Kohl's operates close to 230 stores in 23 states,
primarily in the upper mid-West and the
mid-Atlantic states.

One of the things that makes Kohl's stores a success,
notes Steve Kensinger of Wilke/Thompson Capital
Management is that they have a great niche, which is
between the discount stores and the department stores.
Ideally, Kohl's locates their stores on the outskirts
of where a big mall is. They like to be located near
a Target store and a mall. "For working housewives it
is a hastle to try and get into a big store... Kohl's
locations are generally easier to access... They sell
brandname goods at discounted prices. Kohl's does not
really compete with Target, they are complementary to
each other."

Another reason why Steve likes the Kohl's Corporation
is because they have consistantly grown sales in the
20% area during the last several years. Comparable
store sales have been growing in the single digits,
while at the same time, the number of new stores
continues to increase. The average store has roughly
$20 million in sales and a new store does about 70%
of that. "As the stores mature, there is a ramp up in
sales." Kohl's is expected to open 40 to 45 new stores
this year and around 50 stores next year.

In the past, Kohl's outsourced their credit card
services. Witin the last two years Kohl's has brought
that area in house and now do it themselves. There are
over 3 million credit card holders under the "Kohl's"
brand name. Kensinger says, "Those card holders help
drive sales because the names on the credit card list
can be marketed to and enticed with special sales and
discounts. Typically the card holders are better
customers."

As mentioned above, Kohl's has stores in 23 states.
Steve adds that the remaining states gives Kohl's a
lot of room for growth potential over the next five
years. "It is a well thought out model and a consistant
company." He thinks their stock will hit the $90 to
$100 level within the next 12 months.

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4.

AremisSoft Corporation

siliconinvestor.com

Joe Dancy, Co Editor of the Internet Financial
Connection provides the following stock idea on
AremisSoft Corporation (AREM 8 1/2).
AudioInvestor.com provides an audio version of
the interview. Click the link below
theaudioinvestor.com
if you would prefer to listen to the interview.
Below is the write up.

AremisSoft Corporation (AREM) develops, markets
and supports applications software targeted at the
healthcare, manufacturing, hospitality and
construction industries. AREM's software products
address the management of critical information in
various corporate sectors such as accounting,
purchasing, manufacturing, customer service and
sales and marketing.

In the past five years AREM has experienced rapid
growth both internally and through acquisitions,
with revenues increasing from $2.7 million in 1993
to $42.4 million in 1997. During this period AREM
successfully acquired and integrated the operations
of eleven businesses. The company currently has
more than 5,000 customers.

AREM went public in May, and sells its software in
seven countries with around 70% of revenues coming
from the U.K. Around one-third of that revenue is
from the manufacturing sector. The price to sales
ratio is 1.8, the trailing price-earnings ratio is
12, and the estimated price-earnings ratio for 1999
is 10. The company is a small cap firm with a market
capitalization around $90 million.

For the second quarter AREM revenues increased 36.0%
from year earlier levels. Net income for the quarter
increased to $ 0.20 per share, and earnings per share
for the first six months increased 55.6% to $ 0.28.
The company has developed a niche in selling
Enterprise Resource Planning (ERP) software to middle
size companies. Many companies in the ERP sector are
temporarily depressed due to Y2K fears, however longer
term this sector should do very well. Michael Murphy
of the California Technology Letter also likes the
growth characteristics and valuations of companies in
the ERP sector. Our Real Audio interview with Michael
where he discusses the ERP sector is at:
audioinvestor.com

AREM also has software products in the On-line
Analytical Processing area (OLAP) - another sector
where demand is growing strongly. Some estimate that
demand for OLAP products will increase from $2 billion
in 1998 to over $4 billion in 2001 - presenting
opportunities for companies like AREM.

The July, 1999, issue of Manufacturing Systems Magazine
recognized AREM as one of the Top 100 vendors of
software for manufacturing enterprises, ranking it
No. 89 in the list of worldwide companies. AREM is
estimated to earn $0.78 this year and $0.95 next year.
The shares of AREM could trade at 20 times earnings
within the next two years.

There is a thread that discusses AREM on SI.
Subject 27226

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5.

Gerber Childrenswear

siliconinvestor.com

Joe Dancy, co-editor of the IFC and editor of
The Lone Star Growth Investor
members.aol.com
provides the following interview with Matt
Stichnoth of the Wall Street Companion
wallstreetcompanion.com.
AudioInvestor.com provides an audio version
of the interview. Click here the link below
audioinvestor.pyxos.com

if you would prefer to listen to the
interview. Below is the write up.

Matt Stichnoth, Editor of the Wall Street Companion,
is a value based investor who selects companies to buy
and hold for the longer term. Using his research tools,
he finds companies that are selling at a discount. His
latest selection is Gerber Childrenswear (GCW 4 5/8).

GCW is a leading marketer of infant and toddler apparel
and related products, offering products under the Gerber,
Baby Looney Tunes and Curity brand names. Gerber is one
of the leading providers of infant and toddler apparel
and related products. The company also distributes
products to mid-tier department stores and
specialty retailers.

The company has a good business plan according to Matt,
is well managed, and is a "busted IPO" that has attracted
little attention after the public offering a year or so
ago. The process of going public insures that the
business plan is closely reviewed and fine tuned by the
financial advisors, and companies going public generally
have a good story to tell and are profitable.

In this case GCW missed earnings for reasons that he does
not think are material, and the stock price was badly
punished and remains depressed. The company is selling
at a price-earnings ratio of less than 7, at 1.4 times
book value, with $3.50 in cash. It is estimated to earn
$0.70 this year and $0.85 next year, and sports 10%
gross margins on sales. The estimated long term growth
rate is 13%.

Matt thinks that the company has a strong market position,
a well known brand name, and is "a tremendous bargain" at
the current price. The company is making viable moves to
reduce costs by moving production overseas, and is
updating the information services and financial controls
to streamline operations.

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6.

Interesting Articles on the Internet

siliconinvestor.com

Joe Dancy, co-editor of the IFC and editor
of The Lone Star Growth Investor
members.aol.com
and and manager of the LSGI Technology Venture
Fund, provides the following links to
Interesting Articles On The Internet. These
articles were from a daily worldwide search
of over 150 newspapers and magazines.
Subscriptions to his newsletter are FREE.
members.aol.com

To conserve bandwidth please use the link below
to access the article.

siliconinvestor.com

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7.

IFC Reader Highlight: SanDisk is "No Flash" in the Pan

siliconinvestor.com

TR3SS is an individual investor and an Internet
Financial Connection reader. He provides the
following commentary on SanDisk Corp. (SNDK 85).

To conserve bandwidth please click the link below to
view the article.

siliconinvestor.com

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8.

siliconinvestor.com

DISCLAIMER: All information contained on this page are from the
authors cited. The information is believed to be reliable but
there is no guarantee to its accuracy. Stock ideas presented by
mutual fund managers, money managers, newsletter writers and SI
participants may be bought or sold by them anytime before or
after being presented in this newsletter. Anyone purchasing the
stock ideas above should consult a financial advisor before doing
so. The stock ideas mentioned above are not solicitations to buy
or sell but to provide people with information from many sources.
I (Mark Johnson editor of the IFC) am not paid any fees by the
above writers nor by the companies represented. The stock ideas
may represent a starting point for investors. People are
encouraged to do their own homework before buying any stock.
Neither Silicon Investor or the Internet Financial Connection
will be responsible for any loss occurring from
the purchase or sale of the above securities or any securities.
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