To All, The High Tech Strategist Review. An outstanding issue this month, with Fred calling spades spades and laying his patootie on the line:
1. Once again, Fred warns us that nuclear winter is not really the slowdown before Y2K. It is the fact that there was a huge tech frenzy of buying before Y2K and demand will die next year. And probably the year after.
2. He thinks the component businesses are especially vulnerable due to double ordering and excess inventory accumulation at OEMs.
3. Expect more preannouncements from IBM and Hewlett-Packard. Business really sucks at those firms. Fred expects every category of IBM's business to show deterioration this quarter.
4. Like many of us, Fred takes a shot at the SIA's silly, opimistic chip forecasts. When they say "this is the most optimistic we've been since 1995," that sent the bulls off to buy shares in chippies. Without examining the fact that the 15-20% growth per year predicted in 1995 fell a bit short. In fact, we will not reach 1995 revenue numbers this year, and this is the best year since 1995. Sad that the bulls have to rely on such weak reeds.
5. He believes that Microsoft's optimistic comments came as a result of the pc boxmakers and component geeks begging them to put on a smiley face so they can sell shares to the public before the fit hits the shan. He notes that MSFT used creative accounting ("Unearned revenues") to fudge sales last quarter. And Fleck has already noted that MSFT revenues were negative sequentially for the first time I can remember. Basically, MSFT faked the quarter and fibbed about pc sales to try to help out other tech execs who are trying to unload shares.
6. Fred relates Intel's bullish statements, after yet another quarterly miss, to the CEO's need to dump 400,000 shares at higher prices than were in the stock prior to the scam. Intel has missed 8 of the last 10 quarters. True, this year the estimate is only for a mighty 6% gain year over year, but Fred thinks they will miss even that easy hurdle. Then he does a paragraph or two of past Intel lies to the public. BTW, Amd's retail notebook share is now 50%. He also mentions a seven figure cancellation at Intel from a major OEM, which must be part of their gangbuster sales. What a bunch of slimeballs.
7. Fred thinks Cisco has a shot at missing the quarter. I disagree. I agree that the networking market stinks to high heaven, but Cisco has enough cash and reserves to fake this quarter. True, if anyone looks behind the bottom line, it will be scary, given the overpriced nature of the bowwow, 102 times earnings, but bulls can't read that far. Their lips get tired. <g>
8. Dell is the OEM buying DRAM at contract and selling it at the higher spot price. You have to hand it to these guys. They will try anything to make their quarter. I think they will make the new, revised lower estimate. But the quarter after that, they will have to lower again. And again. Dead meat.
Great, fact-filled piece with a bit of passion thrown in for a change. Definitely worth the price. |
