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Technology Stocks : Intel Corporation (INTC)
INTC 40.51+0.4%3:59 PM EST
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To: Jim McMannis who wrote (115494)11/1/2000 12:10:38 PM
From: Rob S.   of 186894
 
Dataquest's forecast hasn't changed that much from previous forecasts. The history of the semiconductor sector is that it has always been cyclical in nature. Business expands rapidly and prices semi companies are able to get for higher volumes of parts goes up. That generates huge cash flow and bottom line results. But then they build capacity so they can make more money and eventually their greed exceeds the market's ability to absorb more parts. Then prices contract and margins collapse (I know everyone knows this junk already). I don't think the basic nature of the industry has changed.

Of course these forecasts are often wrong as are most 3-5 year forecasts for volatile industries. Dataquest and other forecasters make their money by selling their advice so that companies can plan adequately and analysts can pretend that they know what they are talking about so that their brokers can churn stock. On the one hand, new and exciting products and applications for existing ones (PC and the Internet) have recently burst on the scene with greater impact than expected. On the other hand, history preaches that good semi cycles eventually falter. Maybe there is a "new world economy" that will lift this industry to perpetual growth for much longer than previous electronics industry business cycles. When the semi prices were based on expected earnings 2-4 years out, it was indeed a speculative market.

But now it's a good period to buy imo.
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