From a fundamental standpoint, CSCO and other electronics OEMs tend to benefit from the same forces (overcapacity, falling prices, etc.) that hurt chipmakers and equipment suppliers. I see these companies as having more growth potential and more pricing power than the boxmakers, at least for the short term. Still, it's all electronics, and anything that seriously damps the computer technology sector (macroeconomics, regulation/taxation of the Internet, Internet bubble bursting, etc.) is likely to hurt these guys, too. If it were my money and I were looking for an alternative to AMAT I might look further afield: drug companies and biotech research if you still want technology, or maybe the services sector.
At the same time, I think it's premature to be talking about the end of the current upcycle. From a business standpoint, I think we're still close to the bottom. I don't expect the Real (tm) revenue growth to start happening until late 1999, and it should keep going for at least a year or two after that.
Disclaimer: it's not my money, and since I never bought AMAT I don't care about an AMAT exit strategy.
Katherine |
