Nyquist Capital

Here’s a quick statistic worth sharing. Cisco (CSCO) CEO John Chambers spoke yesterday at the Credit Suisse Tech Conference and made the following point.

Cisco’s market capitalization has increased from $10B in January 1995 to $110B in November 2005 to $165B in November 2006; during that same period, the aggregate market capitalization of its 12 largest competitors has declined from $71B to $62B to $55B.

Wow. I’d like to get the detail behind this one.

Full Disclosure - I hold Cisco puts as a hedge against other positions. Lucky for me they are not positions in Cisco competitors…

FSAN has completed their first GPON interoperability testing. Interoperability of GPON systems is important, since the ITU standard ultimately should yield systems that interface more smoothly than the loosely defined GE-PON specification.

Continue reading ‘GPON Interoperability Smokescreen’

Paul Kedrosky highlights one slide presented by Craig Mundie at Microsoft Analyst Day that compares the cumulative R&D investment of Microsoft (MSFT) and Google (GOOG), among others.

Two ways to look at this.

1. Google, Apple (AAPL), while highfliers, cannot have possibly built an insurmountable competitive advantage because of the relatively low investment they have made. Microsoft has huge latent value as the result of accumulated R&D spending. The asymmetry in the ability of these companies to invest is not appreciated.
2. Microsoft has an exceptionally poor return on R&D when compared to peer companies and this slide illustrates that point perfectly. Microsoft’s decision to spend even MORE on R&D is the WRONG decision since they have not figured out how to spend R&D efficiently

This slide really amplifies market concerns that Microsoft’s plans to increase R&D are misguided. I didn’t hear Mundie speak, and the slide is out of context, but I don’t think it makes the argument investors want to hear.

Three Japanese Carriers were sunk by a handful of American fighters in the Battle of Midway and turned the tide of the Pacific war. The World Trade Center was destroyed by a handful of thugs.

Russia also repelled the Germans in 1944 by taking 20 million casualties.

Which way to go? I suppose you only pick the latter when you don’t know how to do the former. The market, or at least the market we are in now, rewards tactical brilliance more than human wave tactics.