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http://www.fool.com/portfolios/rulemaker/2001/rulemaker010130.htm

The author pretty much looks at the tech stocks in the rule-maker portfolio and he feels Intel offers the best place to invest additional money. btw, i know this article is old.

He starts off with Cisco and says that with sales more than 21 billion it will be hard for CSCO to continue growing, yet later on, he feels Intel at more than 32 billion will find new ways to grow. I may add that Intel's revenue generated from non-pc products are not doing that great. Intel does have tons of cash, expertise, and manufactoing capcity unriviled by anyone in the world, but is that enough to expand into broadband & wireless markets? Cisco, however, i feel is in a much, much better position than Nortel or Lucent and will come out stronger in many markets.

I can understand the author's worry about Cisco b/c of it's high price. I guess he feels that Cisco can not continue to grow at 50% a year to justifiy that high price. So something has to give.

As for yahoo, well i can not calm your fears, but i think they have a huge user base & revenue will probably come.

And Koogle has most certainly executed upon his vision of creating an addictive service. Yahoo! now has 185 million unique users, of which 60 million are "active registered users," defined as anyone who logs into one or more of Yahoo!'s registered services at least once a month. A recent Salomon Smith Barney report helps put these numbers into perspective:

Yahoo!'s core active registered user base is about the same size as the newspaper industry's total daily circulation (and newspapers generate $40B+ in ad revenue/year). Yahoo!'s global user base is roughly twice the size of the U.S. cellular telephone industry (again, $40B+ in annual revenue). Yahoo! reaches more people in a month than do the top 10 magazines in the United States (more than $5B in annual sales).


Internet advertising brings many of the great things found in TV, radio, and print all in one medium. I think the problem this author has had with JDSU is it's poor financial statements. Due to all the acquisitions and major cut back in telecom spending, Richard McCaffery is very suspect of JDS Uniphase's FCF potential which i can understand. They have over 21 billion in goodwill i believe and many telecom carriers have huge debts.


And, I'm betting Intel will eventually figure out how to participate in markets for chips outside the PC industry, just as Dell figured out how to make a sensible and profitable notebook computer.

How is Dell's ability to enter the notebook market similar to Intel's ability to enter chips outside the PC industry? Notebooks are still computers, which is what Dell was great at doing, and their built-to-order model also worked with notebooks. I guess you could say Intel's knowledge in making chips could work well in non-pc markets.


Longer-term movements however, like the trend we've seen in the Rule Maker Portfolio over the last six months, often occur for very good reasons. It's a rare investor who can see through the veil of misery and understand that a powerful long-term opportunity still exists.

For example, Dell Computer (Nasdaq: DELL) -- which I own -- might have been one of the top-performing stocks of the 1990s, but in 1993 it posted its first (and only) quarterly loss. The company had to cancel plans for a secondary public offering as it wrestled with higher receivables and inventory. A shortage of cash created a working capital crisis.

The company, which was growing more than 100% annually, had to put the brakes on and run a detailed analysis of its business units to determine what was driving profits and losses. Before the cost analysis, Dell didn't know which units were the most profitable and which ate cash. In fact, at this point Dell still sold PCs through fast-growing retail channels like Sam's Club, though it wasn't making any money doing so.

At about the same time, the company's notebook computer unit ran into trouble and Dell had to cancel product lines to focus on a design that worked well and made economic sense. Investors saw the problems and priced the stock much lower. It fell from $49 in February 1993 to about $16 in July (unadjusted for splits). Dell had to change its stripes. Its skill, Michael Dell realized, wasn't designing new technology, but integrating and selling products buyers wanted. Until it got this straight, the company was off the beam.

These aren't trifling problems. Looking back, it might seem like no big deal, but who knew back then that Dell had the mustard to take a hard look at its business and refocus on the most profitable areas? Who knew that by 2000 it would increase sales by a factor of 10 without even doubling inventory? (Dell has $30 billion in trailing sales and carries just $424 million in inventory, compared to 1993 when it had $2.9 billion in sales and carried $220 million.)

Dell solved its problems, learned from its mistakes, and the stock jumped from a split-adjusted $0.25 per share to almost $60, splitting six times over the next seven years. But I can understand why investors bailed during the rough times. It may not have taken a genius to understand Dell would survive, but to knuckle down and reinvest during the lows, it took patience, faith, and an ability, perhaps, to see something the market didn't. I don't pretend that was an easy call.


The same could have been said for Aol. Aol in 1996 lost trust with many on wall-street when it was found that Aol management had lied about certain operating costs (marketing), then there was the busy signals fiasco, and not to forget the bundling of MSN. Who could have known that in 2001, this company would have over 32 million users paying roughly $23.90 generating billions in commerce and over 600 million in adverting. One way would have been to look at the stats, because they don't lie. Aol through-out all of this continued to add users which should have shown the great barriers this company has.

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