Steve: What I'd really like you to do is to go back over my posts and find any consequential comments that I have provided about your favourite company CPQ. I think what you will find is that most of my comments relate to the PC industry in general. I also think that you will find that the warnings with respect to things like a falling PC sales growth rate (provided over a year ago), increasingly aggressive accounting practices, impact of falling PC sales growth on semi conductor pricing, inventory levels rising, and above all else, supply side growth, have all been accurate and timely.
With respect to my knowledge of the PC industry, I'm not quite sure that it's zero, particularly since I've been an independent Tech analyst for thirteen plus years. I suspect that the fact that I spend a fairly significant part of every month on the road visiting stores, resellers, wholesalers and producing companies provides me with at least a passing understanding of what really counts, which is how well sales are going, and what the pulse is like where it really counts, which is at the end of the sales chain. I used to spend more time with company officials, but found that they rarely had a clue when problems were occurring in sales. I also found that most believed their own forecasts even as their own sales statistics melted.
With respect to my historical perspective and depth of reading/research, I'll match mine against yours any day. The very fact that you maintain a bullish outlook with respect to the PC industry as well as a disregard for the significance of what is going on in Asian currency/stock/bond markets tells me that your understanding of economic history is less than stellar
Steve, it's no skin off my nose if you choose to maintain a bullish stance on either the PC industry as a whole or CPQ in particular. You will lose your shirt along with the rest of the perma-bulls out there. If you can't see the powerful changes occurring within the PC industry, nor understand the impact this is having on the massively over-valued tech sector, then anything I write is not likely to have any impact in any event.
On a related topic, perhaps you could provide us with your analysis of how CPQ is going to maintain its margins as average selling prices fall and Asian demand dries up (CPQ has stated that Asia will provide a good deal of the company's sales growth in 1998).
While I don't advocate shorting CPQ heavily at this point, particularly when there are better targets in the form of GTW, MU, AMAT, NVLS, etc., nevertheless, when the consolidation/market share shakeout phase of this slide ends (i.e. when Apple,Packard Bell, Acer, and other small players follow Dec's lead and totally vacate the field), then it will be time to short the remaining players heavily, including CPQ. I pray that they all aren't shoved off the cliff together, but rather are shot one at a time, so that they can be shorted in sequence. Unfortunately, history suggests that the former case is more likely than the latter. By the way, CPQ has already fallen 24% from its highs, which suggests that shorting it has not been a losing proposition.
As in poker, there is a time to press and a time to fold. Now is not the time to bluff.
Earlie |
