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- THE FRIDAY LETTER -
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from Gilder Publishing,
for friends and subscribers)
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| http://www.gilder.com/ | Issue 282.0/February 9,
2007
SIGN-UP A FRIEND FOR FREE!
HEADLINES:
- The Week / Gilder: Making Success Eminently
Possible
- Friday Feature / Burger: NetLogic’s Pop
- Friday Blogger Bonus / Huber: The Inegalitarian Web
- Readings /
SPECIAL
OFFER
|
Outpacing the Market for
Over 10 Years… |
The Week / Making Success Eminently Possible
February 2007 Gilder Technology Report excerpt.
George
Gilder: The
risk in technology stocks has nothing to do with intrinsic volatility, which in
turn, as recent academic studies show, is not
demonstrably related to return. In our universe of technology stocks, the risk
resides in the likelihood of the company succeeding in its business plans and
generating a future flow of earnings. If those earnings rise fast enough, the
stocks will tend to succeed regardless of the performance of the overall
market.
Risk
is a product not of volatility but of information or ignorance. The risk that a
company will fail can be appraised through close scrutiny of its technology,
market, and management. This risk is company specific and can be remedied by
information. It is in no way analogous to the generic risk imparted by
leverage. While the prevailing theory upholds the idea that leverage can
achieve higher returns at the cost of incurring greater risk, the GTR
believes that ignorance is the source of risk and attempts to remedy nescience
with knowledge rather than compounding it with the additional risk of leverage.
Leverage is merely a tool of good management and is desirable when it improves
the company’s return on investment.
The
Gilder Technology Index (GTI) is compiled independently by Dick Sears and
posted daily and weekly (with sage commentary) on the Gildertech
subscriber-only “Telecosm Lounge” message board (www.gildertech.com/board).
It registers two episodes of successful stock picking, separated by a
millennial eclipse when we mostly gave up on the business to respond to a
series of suits and other attacks that prevented us even from benefiting from
the initial rocketing rebounds of some of our favorite companies such as Corning
(GLW) and Equinix (EQIX). The fact that without an inking of active
management, we succeeded in outpacing the market over a 10-year period is
nothing short of amazing to me. We did not do it by poring through the noisy
gyrations of Sigma Design’s (SIGM) daily stock price movements or the
mostly meaningless rearview data of EZchip’s (LNOP) or Microvision’s
(MVIS) earnings reports.
Instead
we understood that in an entrepreneurial economy full of creative surprises,
noise and signal will look the same. In order to distinguish between them the
investor must use not an oscilloscope but a microscope. Rather than measuring
meaningless rearview data, he must fathom the specific details and complexities
of particular companies, including their finances, and follow the vectors of
paradigm technologies and economic developments. That is what we do here. It
does not guarantee success but it makes success eminently possible.
To
read the complete February report or to subscribe to the Gilder Technology
Report, visit www.Gildertech.com today.
|
The
Telecosm Lounge |
Friday Feature / NetLogic’s Pop
GTR Technology Analyst Charlie Burger: Why did NetLogic’s
(NETL) market cap pop some 10% the day after its earnings release? Read the
November Gilder Technology Report for the answer. Remaining intact is
the unchanging story of a need for fast memory and pattern matching across the
wirespeed reaches of the Net. Last quarter marked the passage of NetLogic’s
mid-winter doldrums as a distended supply chain relieved itself of excesses.
Though recovery in Japan will have to wait until later this year when NTT
begins transit to its triple-play network, it appears that CEO Ron Jankov will
enjoy a wee rebound in sales during the first half as a spring thaw begins
again melting his established markets and huge new opportunities come in view,
from pullulating streams in video servers to hypertrophied headers in IPv6
network nodes.
A record 11 design wins in the quarter were spread out
over all product categories, including eight in the NL6000, 7000, and 8000
lines. These content addressable memories (CAMs) store large databases of
information about the network and use innovative processor architectures to
make complex wirespeed decisions about packets traversing the network. NetLogic
is the runaway leader in advanced processing of packet headers with its NL families
of CAMs for high-end routers and switches.
As voice, video, data, and mobility applications converge onto the Internet, packet headers are getting longer and routing decisions are becoming more complex, pushing CAMs to process more at each node and at ever increasing speeds to facilitate latency sensitive applications such as IPTV. These demands are spurring initial design wins for the third-generation NL7000, which supports twice as many decisions with the same board space and power profile as the second-generation NL6000, and for the fourth-generation NL8000, which uses a new core architecture capable of 1.2 billion decisions per second and 50 gigabit per second (Gbps) throughput.
For
low-end switches and routers, NETLite’s simplified architecture reduces power
and price. The line garnered two design wins in the quarter and Jankov expects
sales to start swelling next year as voice and video put additional demands on
Internet access boxes. An even lower-power version of NETLite, originally
designed for Cisco (CSCO), is now generally available for the
lowest-cost, high-volume switches and access equipment with very strict power
budgets. Jankov has entered into design and marketing agreement with Marvell
(MRVL), EZchip (LNOP) and Xelerated, and has teamed with Broadcom
(BRCM) to develop Ethernet routing solutions, which could eventually propel
NETLite across the access landscape through Broadcom switches…. [READ ON]
Find
out why this stock has little downside risk past this year and huge upside
potential.
Read Charlie’s complete analysis in the February ’07
issue of the Gilder Technology Report. Subscribe today at www.Gildertech.com.
|
The Gildertech Blog, http://blog.gildertech.com/ | Logon
now to see what’s new. |
Friday Blogger Bonus / The Inegalitarian Web
Peter
Huber on Forbes.com: The new Congress is determined to enact a "net neutrality"
bill. Nobody yet knows what those two words mean. The new law won't provide any
intelligible answer, either. It will, however, put a real drag on new capital
investment in faster digital pipes by making it illegal for many big companies
to help pay for them, while leaving everyone guessing about the details for
years. That last bit is great news for all the telecom lawyers (like me) who
get paid far too much to make sense out of idiotic new laws like this one.
The
law, we are told, will just make sure that the likes of Verizon and Comcast will continue to treat
everyone's Internet traffic the same--Google's, Yahoo's, yours,
mine. And we need this law because those phone and cable companies have such an
iron grip on the wires that without the law they control all the content, too.
A simple two-word law is all we really need--an equal rights amendment for
bits.
It
will be a 2 million-word law by the time Congress, the Federal Communications
Commission and the courts are done with it. Grand principles always end up as
spaghetti in this industry, because they aim to regulate networks that are far
more complicated than anything you have ever seen heaped up beside an amusing
little glass of chianti.
The
network that's lighting your screen today isn't neutral at all. Google, Amazon
, Citicorp--all pay a privately negotiated price for better connections from
their huge banks of servers to the Internet. What they get are fast connections
from their premises--and for just their content--to one of the several dozen
"network access points" that channel data into the Internet's
sprawling, ultrahigh-speed backbone.
Read
Huber’s complete article:
http://www.forbes.com/opinions/free_forbes/2007/0212/094.html
____________________________________
Readings /
When Being A
Verb Is Not Enough: Google Wants To Be Your Internet
http://www.pbs.org/cringely/pulpit/2007/pulpit_20070119_001510.html
Apple
Pushes To End DRM
http://www.technologyreview.com/blog/editors/17521/
Recording
Industry Fires Back At Apple’s Jobs
http://www.informationweek.com/news/showArticle.jhtml?articleID=197004591
Which
PC Is A Windows Vista PC?
http://www.informationweek.com/news/showArticle.jhtml?articleID=197004144
Why
Wal-Mart’s Movie Service Is In Beta
http://alwayson.goingon.com/permalink/post/9494
Kudlow:
When You Tax Profits, You Tax People
http://article.nationalreview.com/?q=MmQ2MDY4ZmFjZDkwZTUyZTIyNTAwMjIyY2Q5NWM5ZTM=
Big
Budget
http://www.aei.org/publications/pubID.25572/pub_detail.asp
IRS
Offers Option Relief
http://www.siliconvalley.com/mld/siliconvalley/16659105.htm
The Weekly GTI
http://www.gtindex.com/
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