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No. of Recommendations: 41
Imagine if we “Gorilla Gamers” found a company that pioneered a new market in technology software AND hardware. This company:
1. Developed a discontinuous innovation that would forever change the world
2. Has proprietary, open architecture to this technology
3. Has very high barriers to entry
4. Has a relatively high switching cost
5. Developed and completely controls the value chain and
6. The market will grow at 25% for at least the next 20 years!

If I told you that this company generated over $2 Billion dollars in profits last year and owns more than 90% of the market, how much would you pay for it?

Some of you would say 25 X earnings would be a steal - $50 billion.
Some of you would say 80-100 X earnings or even 192 X earnings like Cisco would be fair - $160 - $384 billion.
Some of you would even say that that “it doesn't matter what the market capitalization of this company is – just buy it!!!!”

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?

Let's say (for arguments sake) that you got in when the market cap of this company was only $50 billion and went fishing for 20 years.

<Time elapse 20 years>

Now, you just got back from your 20-year fishing safari and are ready to retire in Style! You look up the ticker and can't find it. It turns out that your ENTIRE COMPANY was sold to Hasbro in 1998 for $5 million (with an m).

The company you just bought was Atari Inc. in 1980. At that time, they had just posted record sales and $2 billion in annual profits, occupied 80 offices in Sunnyvale, California and dominated over 90% of the video gaming community.

Your $500,000 investment is now worth

Drum roll . . . .

$50 - Have fun on your retirement.

Atari was the biggest and best example of a mature gorilla 20 years ago. They DOMINATED the video gaming world, controlled the value chain and had ALL the characteristics of a Gorilla as defined by the book and this board.

I realize that the principles of the GG say to sell when a discontinuous innovation threatens the gorilla; you may have sold Atari when you acknowledge a threat from Nintendo. The point is, you must stay informed and open-minded about evolving technologies. Most importantly, you must understand that price does matter when evaluating a stock.

Unfortunately, there is no easy answer. No book has all the answers for investing. The Gorilla Game isn't “wrong” per say, it just isn't always right. Price DOES matter and the people who said to buy QCOM in January 2000 were WRONG. If you owned it then, you should have sold.

If you own CSCO now, you should sell – it's too expensive given it's future earning potential

If you own INTC now, understand that it is both expensive and NOT a sure bet; the AMD Athlon core is a discontinuous innovation (possibly akin to Nintendo vs. Atari?). INTC does not have the laser tight focus it had 5 years ago; it's branching out into everything.

JDSU – I donno: I really don't.

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)

-corley1

P.S. Perhaps the Gorilla Game should be re-titled “You should have bought CSCO in 1990.”
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corly1,

Point well taken. However,

"...the AMD Athlon core is a discontinuous innovation."

Which has captured which market niche and created which tornado, thus able to overthrow the evil INTC empire? Ooops, I used GG terms.

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No. of Recommendations: 5
Not sure if a label of King would have been more proper...

My cousins owned a Colecovision
My friend owned an Intellivision
My Dad still had his Pong game

They just kinda sucked compared to Atari...

I see your point though...but I can not remember ever seeing a post where any of the more respected GG posters (like BB and Mike Buckley etc...) ever state that an investor in the GG tech markets should not have to worry about keeping up with the markets...

In fact, I am almost positive that I HAVE read posts here, at the GG board, which stated that the GG companies, while offering higher returns with less risk, require more attention than other types of investments (ie..old economy stocks)...

This is due, of course, to the rapidly changing technology environment that the Gorillas live in, which causes GG investors to stay alert for any discontinuous innovations which may render their Gorilla obsolete...

If I misunderstood your point with this post, then just ignore all this...

By the way...I had my Atari up until a couple of years ago. It still worked well, and the games are still fun, despite the lousy graphics.

The Atari system, it turns out, was a stellar investment...even if the company turned out to be otherwise.

I still hold the record for Missile Command...don't try to tell me that you were better...I will just be forced to laugh at you.

Dreamer
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No. of Recommendations: 69
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:

http://boards.fool.com/Message.asp?id=1220008003579000

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:

http://boards.fool.com/Message.asp?id=1220008003615017

http://boards.fool.com/Message.asp?id=1220008003615020&sort=postdate

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:

http://www.fool.com/portfolios/rulemaker/2000/rulemaker000419.htm

•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).

BB
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excellent corley
bulldog
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No. of Recommendations: 11
A nice rant...one I'd be proud to have written, but I don't agree with the labelling of Atari as a gorilla. It wasn't. They may have had proprietary architecture (their own design) in a tornado market, but how was it open architecture? Where was the value chain?

What you had was a slew of competing technologies in a red hot market. Yes I remember Pong, but clearly Atari's 2600 was the first huge far reaching success in this market. It wasn't long before the me-too's hit the market. Mattel's Intellivision and the Colecovision are the two biggies which come to mind. Intellivision (if I remember correctly) was the first system to expand the playing field and create semi realistic games. For instance on the Atari 2600, a soccer game was played by 3 blocks on each team. Blocks? Well I hesistate to call them humans. Intellivision put numerous stick figures on the screen and had a much more realistic feel for its time.

Intellivision also was on television constantly in my neck of the woods. If you grew up in the Tri-cities area or closeby you must have seen WPIX-NY showcase Intellivision everyday live on TV, with some annoying kid yelling "Pix! Pix!" over and over to trigger the game to execute the fire button. At that point, even as a kid, I knew Atari 2600 was toast. A fun system, but there was already something better.

Atari failed to follow through. The Atari 5200 (which I owned and enjoyed) wasn't much of an improvment over the Intellivision and had a limited number of games. Most of the writing was taking place for the red hot Matel system. Colecovision came aboard next with great sound and graphics, though it too wasn't long lasting.
The Atari 7800 was nothing short of a flop. And by then two things were taking place...

Computers were tornado-ing (and Atari lost there too, to Commodore64, AppleII, and the IBM line). The games on these computers were more creative and interactive than their console counterparts, and the graphics were improving every year. Again Atari's console market was dealt a blow.

And to place the final knife into the dying PRINCE, Nintendo hit the shelves and revitalized the console market with a huge ad campaign that took the world by storm.

Funny how these Console Royalty games continue to produce losers over the long haul. Nintendo's market share has been carved up over the last decade by big players like Sega, Saturn, and Sony. Saturn faded fast, but Sega's Dreamcast is competing. And now the system to beat is the Sony Playstation. Ten years ago when kids referred to playing console games, they said "Let's play Nintendo." Now they say, "Let's play Playstation." There is a new lead Prince (King? I dunno. Don't follow it enough).

Is Sony doomed to be overtaken by the next big thing in the console market? Perhaps. At least Sony is attempting to make their lead system an all encompassing device with computer and net cruising capabilities. And they are licensing out their console design technology to other designers. In short, Sony is not a gorilla, and Atari didn't hold a candle to Sony when it comes to marketing power.

Atari was not a gorilla. You would not have bought Atari as part of a gorilla game strategy.

DP


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No. of Recommendations: 12
Unless I am mistaken, I do not recall Moore ever stating that you should buy for 20 years and forget about it. If anyone else suggested that here, I think they missed the point. Markets change rapidly, and a company's position in the evolving business ecosystem can change quickly too. For example, Oracle, EMC and Cisco are very much at the center of the ecosystem while Microsoft may very well indeed be threatened at the top of the food chain.

The book talks about not micro-managing your portfolio. This is not new. In fact, almost none of the concepts in the book are new. Assessing your portfolio four times a year is probably quite adequate. This prevents you from making knee jerk reactions and allows you to spend time learning and building knowledge, while scoping out other baskets of stocks in which to invest.

Personally, as shareholder in Intel, I am glad that they are expanding their product lines and research efforts. It's not like they are expanding into totally unrelated lines of business. So, let's talk about discontinuous innovations. In Clayton Christensen's book, The Innovator's Dilemma, he talks about many industries where the incumbent leaders got smoked when discontinous innovations arose from the low-end while the leader retreated to the high end. The innovators kept attacking from below. It is said that the very reason why Andy Grove built the Celeron is because he read this book. I would rather Intel invest some money into to projects that ultimately fail if it helps them find at least one or a few innovations that allow them to remain a leader in their industry and not be attacked from below.

Bruce brown did a great job dispelling the Atari analogy. I think that anyone who would have played the market as suggested in the original post of the thread did not play the Gorilla Game. Hence, if they did not play the Game, then you cannot blame the Game for such a failure.

Best,


John Del Vecchio
Investment Research Fool
The Motley Fool
http://www.fool.com
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Atari had a chance to take the niche of computers for musicians with their built-in midi ports, but failed to follow through and provide up-to date technology. They provided one initial exciting complete product, then didn't support it or build on their initial success. They Apple was slower, had less memory, and was more cumbersome....but the value chain formed around them and as a result, our Atari computers became door-stops and 99% of musicians bought Apples/Macs.

John M (one of the 1% with a Windows)
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No. of Recommendations: 17
Enlighten, enrich and amuse. This is a fun discussion.

[Atari] may have had proprietary architecture (their own design) in a tornado market, but how was it open architecture? Where was the value chain? - Padavona

The value chain was in the production of Atari Cartridges for the Atari Console. Many companies produced games for the Atari Game console; there is your Value Chain; there is your open architecture. It just so happens that it didn't work out because Atari's leadership provided textbook examples of how to run a company and a brand into the ground.

What you had was a slew of competing technologies in a red hot market. Yes I remember Pong, but clearly Atari's 2600 was the first huge far reaching success in this market. - Padavona

In 1980 (the entry point for my example) there was not a “basket of competitors.” There was basically just Atari: the Gorilla / Monopoly.
http://www.hut.fi/~eye/videogames/atari_history.html

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 . . . -BB

It means that when you're trying to sell a book about an investment strategy, it does not behoove you to illustrate the greatest example that strategy faltering. I realize that you would not have held Atari for 20 years from 1980 if you read the book. However, Atari was already piling up enormas losses by 1983! One must constantly be on the lookout for a changing landscape; the market will be quick to punish failure.

Their example of Atari as one of the players in the PC industry did not properly underscore how Dominant Atari was in the gaming console world.

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. -BB

I don't think ANYONE would touch that market now. I see more blood and carcasses there than in your average slaughterhouse! (both literally in the games and figuratively in the companies that produced them).

Apple went public . . . AMD went public in . . . What would have happened had we tossed $500K into Intel back in 1971 . . . BB

You are very fond of this example. I never said to invest in Apple when it went public. I certainly never said to invest in AMD when it went public (I did say to invest in Jan 2000, though).

And why would anyone, even Gorilla Gamers, invest in INTC when it went public? There was no tornado yet, no bowling alley – heck there wasn't even a Garage. INTC was not even a mouse or a duck, let alone a Gorilla; a mouse, FYI, is even weaker than a chimp :-).

Can you show me, using data from 1971 alone, why I should have bought INTC when it went public as part of the GG? If not, please stop using this example. It's tiresome and, frankly, it makes no sense. You can just as easily illustrate your point by showing that once INTC emerged as a gorilla (I don't know the date – but you should) they continued to provide stellar returns to date.

Buying AMD when it went public? Please. How about buying AMD when it was clear that their Athlon microprocessor was a discontinuous innovation (September 1999): Up 375% in less than a year! That's a little better example – don't you think?

Let's zip over to the April 19th Rule Maker report on the first quarter's numbers for 2000:

Or we could look here for another analysis:

http://boards.fool.com/Message.asp?id=1060050003466023

highlights:
Intel actually had higher OPERATING INCOME in Q1 of last year compared with this year. . .

Probably the most important number that should concern AMD investors from Intel's quarterly report is Intel's growth in microprocessor revenues YOY.

That number was a measly: 2.8%

For comparison AMD's grew:63.0%


Not quite as rosy –huh?

TMFFuz Talks about The Innovator's Dilemma and being attacked from below. If you think that the Athlon is targeting the low end or is an inferior product, or is in any way an “attack from below” then you had best check out some benchmarks! It's more like a nuke.

There are quite a few companies today that you should be purchasing for the next decade.

Among them are EGRP, GMST, QCOM, CRA, and LHSP (maybe even JDSU)– Just pick good entry points (like EGRP now!). I would not add AMD to that list even though it is my largest holding; they require constant reevaluation but are still a fantastic buy for at least the next 6 months for their microprocessor business and their flash memory.

Not all [gorillas] 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 agree. I definitely believe that GG investing will provide superior returns to index investing over the long haul. Just don't get caught up in the hype; don't pay $500 billion for Cisco or $140 billion for QCOM in 2000. They are GREAT companies – but price does matter.

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.

We agree more than we disagree, BB. We would not be stuck holding Atari if it weren't for that 20 years of fishing (I, too, hate fishing BTW). :-) Holding Atari for 20 years is not in accordance with the rules of the Gorilla Game.

I see your point though...but I can not remember ever seeing a post where any of the more respected GG posters (like BB and Mike Buckley etc...) ever state that an investor in the GG tech markets should not have to worry about keeping up with the markets...LucidDreamer

BB has stated in prior posts that “You would have been better off buying CSCO in 1990 and gone fishing for 10 years.” I can't find a link, but it's kind of a null point – don't you think?

While I feel that the Gorilla Game should be re-titled to “you should have bout CSCO in 1990,” I similarly feel that my original post should have been titled “Just don't go fishing!” :-)

JMHO,

-corley1


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The value chain was in the production of Atari Cartridges for the Atari Console. Many companies produced games for the Atari Game console; there is your Value Chain; there is your open architecture.


If you insist this is a value chain, that's the weakest value chain example I know of. Game producers = 1 link in the chain. No offense meant, but I cannot fathom considering this a Gorilla play then, anymore than I consider the Sega Dreamcast a Gorilla play now. Isn't Sega Dreamcast worthy of a basket pick by your definition of "value chain?" After all, there are companies producing games on CD for them.

You need to hold the value chain to a higher standard if you expect to find meaningful technology investments. Ideally a value chain should be very powerful, far reaching, and expanding.

Corley, you seem not to be so much of a market bear, but rather a Gorilla Game bear. You spend a lot of time finding flaws in the logic, whereas many members of this board are making money following the plan as was intended.

DP
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No. of Recommendations: 16
You are very fond of this example. I never said to invest in Apple when it went public. I certainly never said to invest in AMD when it went public (I did say to invest in Jan 2000, though).

Yes, it illustrates semiconductors - one of the important breeding grounds for gorilla games and royalty games - as well as the benefits of long term investing.

It means that when you're trying to sell a book about an investment strategy, it does not behoove you to illustrate the greatest example that strategy faltering. I realize that you would not have held Atari for 20 years from 1980 if you read the book. However, Atari was already piling up enormas losses by 1983! One must constantly be on the lookout for a changing landscape; the market will be quick to punish failure.

Both "Inside the Tornado" and "The Gorilla Game" list plenty of roadkill. I continue to disagree with your view of Atari and the home gaming market.

And why would anyone, even Gorilla Gamers, invest in INTC when it went public? There was no tornado yet, no bowling alley – heck there wasn't even a Garage. INTC was not even a mouse or a duck, let alone a Gorilla; a mouse, FYI, is even weaker than a chimp :-).

You are correct. Using the illustration of microprocessors and the PC technology adoption life cycle, 1971 was a non event for any investment as it didn't exist yet. To be fair, I should choose the time frame in the 80's when the tornado appeared for the PC technology adoption life cycle. My link to the Qualcomm comparison was not to be confused with a tornado being any where in sight for Qualcomm when they had their IPO. It was an illustration of two semiconductor stories and their first 8 1/2 years following their respective IPO's.

There seems to be so much micromanagement of portfolios that it's always nice to point out that some times, going fishing might have been the best solution and builds a strong case for long term investing in certain companies. How many were in and out and in and out and in and out and in and out of Rambus? Qualcomm? Cisco? Microsoft? Intel? Oracle? Siebel? i2? Others? I'm sure we could all raise our hands for decisions we made in the past that would have been just fine had we left things well enough alone and let time go to work for us. I sold Oracle after holding it for many years and then bought it back again last year once I realized that the enterprise application market computing phase of client/server was adding and moving to the zero intall client phase of computing. My loss and Uncle Sam's gain. My mistake as a high technology investor who was not doing his best research at the time. I sold a portion of my Rambus because I admitted I had made a mistake of buying 'too early'. I explained all of that here on this board when I was licking my wounds last year.

It's tiresome and, frankly, it makes no sense.

Point taken. The inside flap of both versions of "The Gorilla Game" list examples of "if you had invested $10K at the IPO" of some companies. If you pick up your copy of either book, you will see these examples on the inside cover. My fishing example is right there in plain view. George Gilder talks about the Intel example using the IPO date and price. I know that Gilder, Moore, Johnson and Kippola are all tiresome company, but if reality is tiresome - then so be it.

I enjoy knowing the long term results of great investments like Wal-Mart, Home Depot, EMC, CMGI, Dell, AOL, Microsoft, Intel, Oracle, Cisco and many others from the longer term time frame like Coke, Disney, GE, etc... . In the last decade we have all had opportunities to invest at or very near the IPO's of some fine technology companies that just might some day land in the same class of returns as the best from the mentioned list. Since I am planning on investing for the next 30 to 50 years, I like to know what the history of high technology (as well as other investments) have offered to long term investors. I'm hopeful and confident that I will have a few nuggets in my portfolio for that time frame. Will it be those early shares I bought of Uniphase, of i2, of Siebel, of Broadcom, of Brocade, of Redback, of Foundry, of Sycamore, of Juniper, of Ariba, of Qualcomm, of Network Appliance, of Lernout & Hauspie, of Gemstar or will it be shares of something none of us even knows exists at this point in time? Or will Cisco and Intel be carrying market caps of well over a trillion dollars and be paying their long term shareholders oodles of dividends?

Buying AMD when it went public? Please. How about buying AMD when it was clear that their Athlon microprocessor was a discontinuous innovation (September 1999): Up 375% in less than a year! That's a little better example – don't you think?

Was it clear that AMD has a discontinuous innovation? Or is it clear that AMD has a continuous innovation?

I believe the demand for microprocessors and semiconductors is healthy enough to create a compelling picture for investors of both companies. The amazing longevity of the PC technology adoption life cycle and the client/server technology adoption life cycle have lined all of our pockets with the kind of good fortune we should all be very thankful for as investors. The next 30 - 50 years will create similar opportunities for investors.

I will probably be doing some tiresome comparison of some of the stocks that had their IPO's in the 1990's for younger investors in 2010, 2015, 2020 and beyond.


BB
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No. of Recommendations: 9
I have a small tidbit of information relevant to Atari and the early video game industry. The concept of the video game
was invented at a company called Sanders, now part of Lockheed-Martin. I currently work for Sanders and it is part
of the company lore. Ralph Baer is engineer who came up with the idea. He put together bread board electronics to
make the first pong game. The company applied for a patent and wrote it up broadly enough that it applied to ALL
video games, not just pong. I did a search on the patent database, here is a link:

http://164.195.100.11/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=/netahtml/search-bool.html&r=3&f=G&l=50&co1=AND&d=pt77&s1='video+game'&OS="video+game"&RS="video+game"

Now, sanders is a defense contractor so it was not in their interest to go into the video game business themselves.
They licensed it out to other companies that were interested. I think Magnavox might have been first. Anyone
remember the Oddessy game system? Sanders collected royalties from ALL the video game manufacturers up until a
few years ago when the patent expired. Without owning the intellectual property to the business they were in I'm not
sure Atari could be called a gorilla. But I haven't read up on the rules for gorillas yet...I just see all the references to it
:) I saw this thread on the best of feature and thought you might be interested in this little bit of history.

Tom Gunn
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The gentle Mr BB has done it again. Nice going Bruce. Still I dont think gettle wit will suffice.

When I read the screed of corly1 I thought this belongs on a johnny-come-lately board and lo and behold we have here another stock picking genius from the AMD board. Instead of trying to destroy the Intel board this week it seems they have decided to attack the seat of evil, the Gorilla Game board. I quote his pal-"we Gorilla gamers". Ridculous- no?

Flush from the brilliant sucess of finally "winning" with AMD (dont hold your breath kids it could be over soon) they have decided it is our turn to benifit from their talent( and wisdom).

Forgive me, but there is more here than the abrasive style, the clumsy phraseology, and the ever present illogicality. There seems to be a profound ignorance of what or how a GG is structured. The terminology isnt used and one wonders if the concepts were ever considered. (In fact I would wager that the book was never read and the system never thought through.)

I wonder what is in the chockypops that make todays adolescents put so much energy into clumsy attacks of other peoples methods. Why is it not sufficient to know they are right and that we poor benighted readers of these posts are wrong. Why the messianic zeal to write these pitiful rants? Is it to help? Or is it to enlighten? Ithink not. I guess amuse! Maybe having hit upon the best investment since-well Atari they have nothing to occupy their time better than to help others. Maybe- I just cant take too much more of this AMD humor. Fairs fair- please give us a break to get out breath and recover. Come back in a few months and hit us again.

Binturong
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What a great discussion. A not-so-gentle reminder that we should buy at the height of pessimism and sell and the height of optimism. Easy to say - not so easy to do.
Don
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Corley 1

Very good points.
Its always important to be on top of everything.
Do your research,
Be openminded.
Listen to what your comrades as well as distractors are saying.

And don't go fishing.
If you cannot do that, there are tons of good mutual fund you can invest in...names like Janus fund.

For now, I can see the early formation of a tornado...especially if willamette cannot foot its bill.
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No. of Recommendations: 3
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:

http://www.fool.com/portfolios/rulemaker/2000/rulemaker000419.htm

•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.




Points to be made on intel:
1. its falling behind in tech (maybe or maybe not it will reled with willamette, but for now its behind)
2. it has made critical mistake of underestimating demand, and let its opponent drive right in.
3. its core business is expected to be the dominant business even at the end of 5 yrs. The diversification is great, but won't be able to provide the growth needed if the core business should falter.
4. The interest and investment income is great, but they are really one time gains, and will not be looked upon by wall street as part of the core earning. Even it will make the PE look real good. Hence setting up for possible future disappointment. The gain of 300-500% on micron stock in 18 months is phenomenal, and i doubted they can repeat that feat. They have made some great investments, but dont expect them to be able to repeat it.
5. intels growth is very small yty (without the investment income).

The landscape has clearly changed for intel. Intel is a mature gorilla. Its trying to transform into a different gorilla (by diversifying), it may or may not be successful, but, look for some stormy landscape starting q4 2000.
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No. of Recommendations: 3
unnecessary personal attack and insults:

"
Forgive me, but there is more here than the abrasive style, the clumsy phraseology, and the ever present illogicality. There seems to be a profound ignorance of what or how a GG is structured. The terminology isnt used and one wonders if the concepts were ever considered. (In fact I would wager that the book was never read and the system never thought through.)"


"

I wonder what is in the chockypops that make todays adolescents put so much energy into clumsy attacks of other peoples methods. Why is it not sufficient to know they are right and that we poor benighted readers of these posts are wrong. Why the messianic zeal to write these pitiful rants? "
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No. of Recommendations: 8
Points to be made on Intel in regards to Q1 which the Rule Maker portfolio owns and tracks:

• 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.

• AMD had $1.09 Billion in revenue during the previous quarter.

BeReal's points to be made on Intel:

1. its falling behind in tech (maybe or maybe not it will reled with willamette, but for now its behind)

2. it has made critical mistake of underestimating demand, and let its opponent drive right in.

3. its core business is expected to be the dominant business even at the end of 5 yrs. The diversification is great, but won't be able to provide the growth needed if the core business should falter.

4. The interest and investment income is great, but they are really one time gains, and will not be looked upon by wall street as part of the core earning. Even it will make the PE look real good. Hence setting up for possible future disappointment. The gain of 300-500% on micron stock in 18 months is phenomenal, and i doubted they can repeat that feat. They have made some great investments, but dont expect them to be able to repeat it.

5. intels growth is very small yty (without the investment income).

The landscape has clearly changed for intel. Intel is a mature gorilla. Its trying to transform into a different gorilla (by diversifying), it may or may not be successful, but, look for some stormy landscape starting q4 2000.


In digesting the points you have made, I see more validity in the points at the top of the page as having any influence on an investment decision. Those metrics measure the underlying health of Intel's business. If a trend begins that starts to change those fundamental metrics - it will show in the quarterly reviews over a period of time.

Rather than address your points here, you will find plenty of discussion on the Rule Maker and the Intel board that have both addressed your points on a quality level.

I highly recommend The Gorilla Game book as a nice read as well as the Rule Maker Seminar in July and August of this year to add to your investing tool arsenal.

BB

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No. of Recommendations: 1
In digesting the points you have made, I see more validity in the points at the top of the page as having any influence on an investment decision. Those metrics measure the underlying health of Intel's business. If a trend begins that starts to change those fundamental metrics - it will show in the quarterly reviews over a period of time.



Thats precisely what i said, it (the effect) will not show till at least q4 2000. Reason being the semi is very undersupplied. So there is no need for turf/price war yet.
The gorilla model is good, but not foolproof! Also I see the follow rules being violated:
1. high barrier to entry.....amd is in.
2. discontinuous innovation (no longer true for intel).... amd's innovation is more than competitive.

IMHO, we are hearing the footsteps!
Just look at msft, one major legal failure set the stock down by 48%.
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The gorilla model is good, but not foolproof! Also I see the follow rules being violated:
1. high barrier to entry.....amd is in.


AMD has been in for a long time. So?

What you are failing to grasp (again, a plea for people to actually read the book prior to commenting on it) is the industry still makes decisions around Intel standards. This may or may not be changing. I wouldn't be so quick to bet against the company which has layed the smack down on AMD for a decade.

Good luck to AMD longs, but you may want to take one more look at the scoreboard.

Latest quarterly revenues:

Intel 7.99 billion
AMD 1.09 billion

In baseball, 8-1 is a blowout. At least in sports, the 2nd tier teams get to draft first next year.

Disclosure: no positions in INTC nor AMD. But I do own a computer with an outdated Intel P2-300 in it.
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Good luck to AMD longs, but you may want to take one more look at the scoreboard.

Latest quarterly revenues:

Intel 7.99 billion
AMD 1.09 billion



Padavona:
thats precisely the point you are missing!
Intel has 82% of the market now...a mature gorilla with little room to grow. Amd has 17% of the market only, with a discontinuous innovation (in athlon), it can make major inroad to intel's turf. Even minor gains in market share can rocket amd's stock price. Whereas competition in the highend can shave intels margin and share price. We are not talking about 10 yrs ago amd vs intel, we are talking about now!
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No. of Recommendations: 20

Padavona:
thats precisely the point you are missing!
Intel has 82% of the market now...a mature gorilla with little room to grow. Amd has 17% of the market only, with a discontinuous innovation (in athlon)


You still need to read the book. Your definition of discontinuous innovation is faulty as well, for we would need to consider each x086 processor upgrade as discontinuous under these overly loose criteria.

The Athlon is a continuous innovation. The PC as we know it is not changing based on this innovation. The Athlon still uses standard ram, understands disk access, and runs the Windows OS just fine. Hardly discontinuous.

I'll state it one last time, and hopefully this time it will sink in: The Athlon is a continuous innovation, not a discontinuous innovation. And the Atari2600 was a royalty play which was subverted to prince status at best as soon as the other players entered the game. It was never a gorilla by anyone's definition...except of course by those who refuse to read the book, but love to comment on the book.


it can make major inroad to intel's turf. Even minor gains in market share can rocket amd's stock price.


This is true yet it has nothing to do with the Gorilla Game strategy. So why it is posted here I do not understand.

However one point which does apply to Gorilla Gaming should be made. Intel still makes the rules in this industry. They can stumble, and although the market will punish them they will rebound provided they continue to execute in the future.

Then you have AMD. As a PC-afficianado who has been frustrated in the past with AMD's lack of consistency with bringing technology to the forefront (missed projections, late releases), I would feel I was walking on a tight rope as an AMD investor. One wrong move by AMD and they are back to being Intel's red headed step child.

The world is moving forward. At a recent technology conference hilighted on ZDTV, I was interested watching the vision of the future wired home and the future of wireless computing. Among the presenters were Sun Microsystems, Intel, Microsoft, Oracle...the usual suspects. Funny. I did not see AMD.

So while I agree AMD has nice potential short term upside, I believe INTC has a much better chance of remaining a major player 10 years from now.
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Pavadona

let me just say we will never agree on the issues, analysis, and judgements involved, and I shall leave it at that.
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No. of Recommendations: 12
Pavadona

let me just say we will never agree on the issues, analysis, and judgements involved, and I shall leave it at that.
- BeRealCNBC


My first post on this board, which I have been following for 2 months, and it's about something like this. But maybe another voice will help get the point across.

It's not a matter of issues, analysis, and judgements, it's a matter of how a Gorilla is defined in the book (which I have read) -- I won't repeat the criteria here. The fact that AMD would certainly benefit from taking some market share has nothing to do with changing Intel's status of a Gorilla, as defined by the book. The fact that AMD may be a good investment has nothing to do with the book, as it is not a Gorilla investment. If you are arguing based on the criteria in the book that Intel is losing it's Gorilla status, then that would be a good discussion on this board, but you have lost that debate, IMO.

Thanks to all for some helpful posts.

S-Cat
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BeRealCNBC,

let me just say we will never agree on the issues, analysis, and judgements involved, and I shall leave it at that.

Well, you finally got something right.

Harry
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No. of Recommendations: 4
The gorilla model is good, but not foolproof! Also I see the follow rules being violated:
1. high barrier to entry.....amd is in.
2. discontinuous innovation (no longer true for intel).... amd's innovation is more than competitive.


Let's say (for example) that Intel changes the instruction set on their next generation of processors. What do you think will happen? Will AMD be forced to follow suit? Will the compiler companies (Visual C++, etc.) modify their compilers to utilize the new instruction set? I think that the industry will follow their lead.

Now, if AMD were to make a similar change (independently from Intel) to the instruction set, do you think the rest of the industry would follow, or do you think AMD would be left swinging in the wind?

Industry clout still matters. Intel owns the microprocessr clout -- not AMD. Until AMD can find its own discontinuous innovation in a new market, it will not be able to overcome Intel's clout. Period.

Unless, of course Intel does something rash -- like backing Rambus memory. <ggg>

Steve

ps AMD shareholders really get bothered when you mention RMBS!
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