It's all a matter of perspective. The value of the Rule Breaker Portfolio has increased about 18% since the year began. If it didn't budge for another 11 months, it would be the kind of return that, repeated each year, would leave most Fools grinning. On the other hand, the port ended 2000 worth only half as much as when the year began, and it's still down some 40% from where it was, say, 52 weeks ago, to pick an arbitrary time frame.
If I had one more "other hand," I could point out how the port is up more than 800% from its inception back in the distant mists of the early 1990s. Of course, what these numbers actually prove will depend on what those who offer them are trying to prove. Like I said -- it's all a matter of perspective. With that in mind, I took a Rule Breaker stroll for some Foolish perspectives on some of the companies that populate the port.
Amazon.com turning traditional?
On the Amazon.com (Nasdaq: AMZN) discussion board, they're talking about the company's fourth-quarter results and Jeff Fischer's column. Jeff wondered if Amazon still qualifies as a Rule Breaker, given that its financials "aren't becoming" of that title, and its potential to be more than a traditional "middle-person to consumer" retailer appears to be fading.
Fool Gordon66, however, is beyond wondering. He finds it "mind-boggling" to think a company with Amazon's price-to-sales ratio meets the Breaker criteria. "There's no point in having discussions predicated on the possibility that Amazon might become a Wal-Mart (NYSE: WMT)-scale competitor," or even one-tenth that size in the foreseeable future. "Amazon is not a growth company anymore." The company's only plausible upside from here, Gordon66 believes, is growth more like that of Target Stores (NYSE: TGT), with "typical retailer profitability."
In response, Fool babybull acknowledges that "a completely virtual model is untenable," but believes many of these issues will be addressed as Amazon forges more partnerships like the one with Toys "R" Us (NYSE: TOY), with inventory, site management, and fulfillment handled by each company based on its expertise. Because Amazon is "lighter" and can scale faster than the typical retailer, babybull contends, "its margins will be higher and its cash flows better." This Fool suggests the proper perspective on Amazon is to compare it to Dell Computer (Nasdaq: DELL), a point that gets picked up later in the discussion.
Amgen's patents and pipeline
Amgen (Nasdaq: AMGN) emerged victorious two weeks ago from a patent infringement case it brought against two rivals in defense of Epogen, its best-selling anemia drug. With investors no longer concerned that millions of dollars may be diverted from the company's prime revenue stream, more attention can be paid to the product pipeline -- the drugs not yet approved and marketed, including new versions of Epogen and Neupogen, the company's other superstar pharmaceutical. But gearing up to bring those new wonders to market helped swell Amgen's costs last year.
Not surprisingly, Fools are talking. "Amgen is in the precarious position of having a huge percentage of its revenue in two drugs," wrote JRockne. He's concerned about valuation and thinks it may be time to say goodbye to one of his more successful investments. While Epogen and Neupogen remain huge and produce tons of cash to help fund the pipeline, he says, they're still subject to patent expiration and new competitors entering the fray. At the same time, "The pipeline drugs remain -- in the pipeline."
Amgen Fool epdharma agrees that pipeline products are "nothing but potential," but takes a more upbeat view. "If just one of those drugs makes it out into the marketplace and does well, it will be an enormous success for this company." He's holding his stock in the belief that more than one new product will be a hit. Meanwhile, "in the spirit of Foolishness," 71MGB offers an analysis of Amgen's pipeline, as found at the company's site.
AOL, Microsoft power plays
Another hot topic found on my Breaker stroll picks up a theme last sounded here when Paul Commins asked: Is AOL the Next Microsoft? Of course, Microsoft's (Nasdaq: MSFT) MSN trails AOL Time Warner's (NYSE: AOL) flagship AOL service by most measures, and so the more we focus on things Internet, the more that question could be reversed: Is Microsoft the next AOL? Again, perspective. Either way, we've got two monsters -- one whose creation the government just sanctioned, and one whose dismantling the government seeks -- and their competition is being discussed on both of their discussion boards.
FullerKZ thinks AOL Time Warner is positioned to become "the information age 'Web-enabled' media behemoth." He also believes, however, that Microsoft's financial strength and management will be tough to beat. The company's battle with the government may have restrained it, but the antitrust case will soon be over and AOL had "better wake up and smell the coffee," he warns, believing AOL is better off with Microsoft as a partner than as an adversary. "Microsoft has more friends than enemies, especially when it comes to the Web and the seamless transmission of entertainment and commerce in the digital age."
Goofyhoofy begs to differ. "Let's be clear. Microsoft has no friends. They have a lot of people who are scared not to be nice to them, however that is not the same thing." He finds the recent mergers, alliances, and power plays fascinating. "The strategies of AOL, Microsoft, Excite@Home (Nasdaq: ATHM), and Yahoo! (Nasdaq: YHOO) are so vastly different from one another," he muses, yet "they all have a common goal: To dominate this new communications infrastructure for the next half-century."
A different perspective
That somehow leads to yet another point of view I stumbled across on the Excite@Home board in a post from Fool fxguy, who first stumbled across it in our "Best Of" collection (in a post from yet another Fool whose name I don't know), and shared it in a post called, appropriately enough, "A Different Perspective." Yes indeed!
Fools all -- I invite you to maximize your browsers and behold "Earth at Night."
Nico Detourn lives in California, working out of a converted master bedroom that, in moments of grandeur, she thinks of as the Fool's Silicon Valley bureau. At the time of publication, she owned shares of AOL Time Warner, Microsoft, Yahoo!, and Excite@Home. See Nico's profile for a list of all her holdings. The Motley Fool is investors writing for investors.