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Subject:  Voice over IP Gorilla Game Date:  8/22/2000  8:28 PM
Author:  tjbd Number:  3951 of 8787

I haven't seen anyone here talking about the VoIP portion of the Paul Johnson interview on this board yet. Anyway, I posted this on the Clarent board (since
PJ already said it was a Gorilla Game, I'll take his word about it, and just try to see if the tornado has begun yet).

I only used their revenue numbers, as they have just completed acquisition of ACT Tech. and during the tornado, a company should only be conscerned with grabbing market share, not so much with earnings:

I admit I'd never heard of this company before reading 
this interview with Paul Johnson, co-author of "The Gorilla Game":

Snippets: Let's break down the topography. What are the most important subsectors of the buildout? 

Johnson:We split the industry into three parts. The next generation of core Internet protocol-based services is one. We have to deliver dialtone for phone
service and IP-based tone in an Internet world. The products here are very software-intensive. We believe that this is a Gorilla Game: high software-intensity, therefore scale economies and high switching costs that are likely to drive value to the first mover.

The second segment is sometimes referred to as voice over IP, or Internet telephony. We haven't had many
new services in the voice world for a long time, and this will leverage the network we have described and all its innovation. Easy provisioning of additional
lines, greater flexibility in directing calls, etc.
This is also a very software-intensive business, with high switching costs and barriers to entry. 


In Next Generation services, looking at voice over IP, we believe the Gorilla candidates are Clarent (CLRN $36-9/16), Sonus Networks (SONS $202-1/8) and 
MCK Communications (MCKC $25). These are a little younger than the IP companies. In our view, none of
the companies has emerged as the Gorilla, so we are in the own-the-three camp.

So I've started to dive into the numbers, here's a quick look at the last 8 quarters, in terms of revenue,
earnings (per share), sequential and year-over-year revenue growth for CLRN:

                  seq.        Y/Y
Quarter revenue  growth      growth      EPS
-------   ----    ----        ----      ------
Q2-2000   28.3     15%        304%      $0.01
Q1-2000   24.6     32%        367%      $(0.02)
Q4-1999   18.7     42%        317%      $(0.13)
Q3-1999   13.2     42%        400%      $(0.17)
Q2-1999    9.3     39%                  $(0.61)
Q1-1999    6.7     14%                  $(0.69)
Q4-1998    5.9     78%                  $(0.48) 
Q3-1998    3.3

I haven't started looking at SONS or MCKC, but SONS was a recent IPO and sport a Market Cap about 8x that of CLRN! And I was wondering why he didn't mention NTOP?


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