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Technology Stocks : KEMET Corp.
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To: techtonicbull who wrote (330)7/27/2000 1:40:15 AM
From: Czechsinthemail  Read Replies (1) of 906
 
The negative case is that KEM and the other cap producers are at or near their peak with much of the visible backlog due to double ordering. If electronics companies generally go into a slowdown, the demand could slow as the new supply is being added. That would be the scenario by which earnings would essentially be flat going forward.

This would seem to be the SSB/Joseph early demise hypothesis, and it is the only way I could see the S&P earnings projections working out. As I mentioned earlier, I don't think this scenario looks very likely until sometime next year at the earliest. In that case, the cap companies should earn a great deal of money before supply and demand come into balance.

Even in that case, I think there is likely to be more residual demand for capacitors simply because there are increasingly more applications using them. I think it should mitigate the down cycle when it comes.
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