Shortages developing that may hurt earnings short-term for some companies discussed here. May help others, depending on which side of the supply/demand equation they find themselves.
quote.bloomberg.com
Technology News
Sat, 27 May 2000, 11:43am EDT
Nintendo, Palm, Cisco Face Crucial Parts Shortages (Update1)
By Cesca Antonelli
San Francisco, May 26 (Bloomberg) -- Companies from Nintendo Co. and Palm Inc. to Cisco
Systems Inc. say they may lose sales because a shortage of parts is preventing them from
meeting rising demand for communications gear.
The dearth of everything from electronic capacitors and liquid crystal displays to flash-memory
chips has worsened in recent months as more companies compete for a limited number of
components. Palm, for instance, is battling for the same screens and chips for its handheld
organizers that cell-phone makers use.
Concern about shortages crimping sales growth is taking its toll. Cisco's shares have fallen 12
percent since May 9, when it said a lack of memory chips used in optical and wireless products
could hurt its ability to meet sales and profit forecasts. Palm has dropped 11 percent since
Monday. It said it won't have enough trademark organizers for Father's Day and graduation gifts.
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Flash Memory
Sales of flash-memory chips, which retain information in devices when the power is off, will rise to
about $15 billion in 2002, from about $8 billion this year, according to Dataquest. Even so,
analysts say chipmakers can't add capacity fast enough to meet demand from cell-phone
companies and digital camera makers.
``Flash is becoming more prolific in its use because it's now smaller, cheaper, faster and can hold
enough memory to be a real consumer item,'' Acree said.
Cisco has had a hard time getting flash, and Acree said supplies will be tight until companies
including Intel Corp. add production. Intel, the biggest maker of flash chips, plans to spend $2
billion in the next two years to quadruple flash output. |
