Heinz:
"Incredible demand" is a crock. How so?
PCs soak up most micros
Business typically buys about 2/3rds of all PCs in any given year.
Business essentially stopped buying PCs as of last early fall, primarily because most had over-bought in preparation for the (supposed) Y2K crisis. Resellers, the companies that sell most PCs to most corporations, have been reporting increasingly nasty numbers over the last three quarters, and they are forecasting worse to come.
Consumer purchases of PCs have risen of late (which surprised me), particularly in the U.S. In the last month, that seems to be cooling off. Most see this as an anomaly closely connected with the vertical rise in the stock markets this spring when everybody and his granny was getting rich on stock appreciation (I have no strong opinion on this, but tend to agree).
Price wars have cremated PC sales revenues, so the producers only talk about CONSUMER UNIT sales. Revenue growth is downright crummy for all of the major producers.
IBM jumped out of the retail PC game after taking a (close to a billion dollar) haircut. This provided market share for Dell, GTW, HWP, etc. to fight over. The effects of this won't last a full quarter.
Most local cloners are just starting to believe that they are winning against the "direct sales" (Dell) business plan. Personally, I have never understood the appeal of this direct sales business model. I think it is as dumb as a bag of nails to buy an expensive, service-intensive item from some outfit that can't and won't provide local maintenance, and to pay an exorbitant price to boot, but that is marketing for you. Interestingly enough, the local cloners are seeing a slowdown in new machine sales this past several weeks (as noted above) but an increase in "upgrading" over the last two months. This bodes well for the local cloners and poorly for the big six. It also makes a lot of sense, given the market action of late.
In summary, the "nuclear winter" in the PC business is alive, well, and intensifying.
Intel will use every device in the book to cover up the fact that their lunch is being eaten by AMD. Intel can't produce and deliver high end micros in quantity that will compete head to head with the Athlons and most tech types have been aware of this for months. Intel has a serious high end micro yield problem, a disastrous motherboard situation (which was brought to the attention of this thread's participants many weeks ago), a dead and rotting albatross about its neck called Rambus, an aggressive and technically advanced competitor that has already pulled off the largest market share theft in history at Intels' expense, a decaying end market for its main product line and a price war environment to boot. How this insane market can't (yet) get this story sorted out beats me, but it is for certain that it eventually will do just that.
I think (but can not yet confirm) that Intel's "expansion" is really a crash program to get the yield problems behind them. We shall see.
In summary, and IMHO, the PC/semi sectors are ripe territory for bears. We are entering a market that is starting to peel off accumulated silly PEs and this sector has much to donate to this cause.
Best, Earlie |
