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Subject:  Re: How 'bout some “Gorilla-Like” Returns? Date:  6/22/2000  2:43 AM
Author:  BruceBrown Number:  3077 of 8787

Atari? Why not toss in some other roadkill along the way as well? We could all find some negative examples (roadkill) in both the long term as well as the short term.

On page 3 of "Inside the Tornado" it mentions that Atari between 1977 and 1982 grew their home gaming business by a double every year until they reached $1.6 Billion in revenues in 1982. How well did Atari's management manage during the tornado and how well did they prepare for the future? Look up the name Atari in "The Gorilla Game" and it gets one mention in passing in the middle of a sentence on page 155:

"Recall that back in the early 1980's there was a burgeoning PC industry, led by Apple with its Apple II, and including Commodore, Atari, Amiga, and others. All of them were utilizing microprocessor technologies that allowed them to offer a low-cost, desktop-sized computer. But there was not much software for these computers.....businesses were not taking these devices seriously in the executive suite, but engineers and other early-adopting end users were bringing them into projects....."

That's it. An entire book devoted to the discussion of gorilla gaming in high technology and Atari is not discussed other than that one sentence. In the history of gorilla gaming in high technology - one little mention in passing in one sentence in a book devoted to high technology. Does that mean that the home gaming market did or did not satisfy all of the qualifications for the breeding grounds of a gorilla game? If you could qualify that, then the answers might be found in that qualification. Did a discontinuous innovation hit that changed the home gaming market? The above went on to explain that the killer apps of spreadsheet and word processing once IBM joined the fold created the explosion for the PC technology adoption technology life cycle.

You mention:

Regardless, most all “Gorilla Gamers” would say that you could put $500,000 into this company, not look at it and basically go fishing for 20 years – right BB?

I'm not sure most or all or even a few gorilla gamers would say that about the home gaming market. Certainly not about an early adoption market where the basket approach of candidates is the better strategy. However, since you bring up my oft said phrase of fishing (I hate to fish), let's go into it a little deeper to add to what appears as a serious 'beef' you have with Cisco, Intel, Qualcomm (why not toss in Oracle, Microsoft and a dozen smaller ones as well) and gorilla gaming in general.

Here are your thoughts from the QCOM board:

The obvious focus was on the killer apps of spreadsheets and word processing fueling the explosion in business use of the PC once IBM joined the fold. I don't know if I would consider the video gaming market as ever having such a definitive 'moment' in time that would have been equal. Space Invaders? Pong? A video game that helped kids improve their IQ and get their homework done all while playing it for endless hours? Then again, I've never studied the history of that market segment. Yet, we can use the history of what happened to Atari when applying today and tomorrow's gorilla games or studying the tornado and royalty games. Not every company wins. That's the game.

As the book illustrates so well, there were plenty of discontinuous innovations that came along to shape the PC industry in the 80's and 90's. Apple went public in 1980 for $22 a share (two 2 for 1 split adjusted $5.50) and 20 years later sits at $55 5/8. So I guess that $500K figure you mention is worth $5.05 Million today. That's what happens to a chimp. AMD went public in 1983 and opened at $35 7/8ths per share (a 2 for 1 split adjusted $19.4375) and 17 years later sits at $95. $500K in 1983 is worth $2.64 Million today. That's what happens to a monkey. Intel went public in 1971 for $16.75 per share and has split 12 times since then. It closed at $139 yesterday. What would have happened had we tossed $500K into Intel back in 1971? We would have been able to purchase 29,850 shares at the IPO and after the 12 stock splits, we would hold 18,133,875 shares worth $2,520,608,625 today. That's what happens to a gorilla. Career note: It's much more lucrative to be the founder and CEO of a gorilla! $2.5 Billion is chump change these days for said career track folks.

In case you missed my previous Intel examples:

How do the underlying fundamentals of Intel, now heading towards that magical number of being a public company for 30 years, look in the first part of 2000? Let's zip over to the April 19th Rule Maker report on the first quarter's numbers for 2000:

•13% sales growth
•63% gross margins
•30.8% net margins
•9x more cash than debt
•.93 on the Richter scale for the Foolish Flow Ratio

Intel expects interest and 'other income' alone for Q2 to be $2.3 Billion. Revenues for Q1 were $7.99 Billion. I assume revenues will top $8 Billion for this quarter. AMD had $1.09 Billion in the previous quarter.

I know that Price Does Matter and “Gorilla-Like” returns could mean a 10,000 fold DECREASE in your portfolio over a 20-year period.

JMHO (with some facts thrown in)

P.S. Perhaps the Gorilla Game should be re-titled “You should have bought CSCO in 1990.”

Yes, you should have purchased shares of Cisco in the early 90's if you were following high technology investing. Not only was Cisco a hot topic, but the market created an excellent buying opportunity in 1994 in case one had missed it before. There are quite a few companies today that you should be purchasing for the next decade. Not all will win, but the one's that do win will more than make up for the one's that don't in your portfolio. I would hope that if you study the gorilla game in depth, you won't be stuck holding an Atari in your portfolio for the duration of 20 years. I don't even feel that needs any more discussion in light of the way it was presented.

JMHO (with some facts thrown in as well).

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