From Yahoo:
1) Though I suspect the rate of PC sales growth may be slowing somewhat, there is not universal consensus on that point. Intel's report may be a smokescreen covering loss of business to AMD and an end to some of their production capacity limitations. Neither of these is a negative for KEM and other cap makers
2) Most semiconductor analysts have indicated that there are two areas of potential concern: PC processors and mobile phones. Other electronic areas are booming. Capacitor business is less dependent upon the pricing of electronics and more a function of the volume of electronics produced and sold.
3) I find it interesting that hojo409l would attribute delivery delays to hoarding rather than the inability of production capacity to meet demand (which would seem to be a more obvious and simple explanation). Perhaps there is some hoarding going on, but it is hard to quantify (not to mention hard to do when there are shortages). Perhaps you could look to inventories of the cap maker's customers. If they were hoarding capacitors, you might see some evidence of that in rising inventories. Whatever hoarding may be occurring is a function of capacitor shortages, and it also shows up as long lead times for delivery on orders. The suggestion that hoarding is being evidenced by capacitors being released into the spot market doesn't make sense. You could only see this retrospectively if hoarding had been occurring and then ended. For now, there isn't much evidence of capacitors being dumped on the spot market -- otherwise there wouldn't be the shortages, delivery delays, hoarding, etc.
4) >>If slowing device production occurs at the same time as OEM component inventory release and at the same time as component suppliers bring increased production on-line there will suddenly be a lot of components looking for a place to go.>>
There is a BIG difference between "if" and "is". The assumptions that there is a slowing demand for capacitors, that major customer hoarding has been occurring, and that massive quantities of capacitors are now about to be dumped on the market just as there is a massive increase in production capacity pretty much summarize the worst-case nightmare scenario. However, there isn't a lot of real world evidence to support the conclusion that it is actually happening. If maybe's were babies, the world would be a nursery, but trying to pass off fears as facts just doesn't wash.
5) Similarly, the assumption that KEM and the other cap companies are somehow overpriced because of unreasonably high expectations doesn't make much sense. First, they have all sold off significantly from their highs. Second, they trade at trailing PE's way below market multiples. If anything, you would have to say they are already discounting the end of good times. As I've said earlier, eventually the cycle will come to a balancing of supply and demand. But assuming that we have reached that point or will reach it soon may be way off base. And assuming that the stock at current levels doesn't discount the downside may be a way to sell low and miss the high.
6)>>KEM price should have climbed much higher by now>>
KEM's price HAS climbed higher and is now having a 33% off sale. Coming to the conclusion that, because the stock price should be higher than it is, it won't go higher seems like perverse logic. If business continues strong and the market doesn't completely collapse, the way to bet is that the stock will go up.
7)>>And maybe analysts know a lot more than you give them credit for>>
LOL. Perhaps you might give the analysts covering KEM some credit?
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Their consensus estimates of $3.75 for FYMar01 and $4.16 for FYMar02 simply don't support your gloomy conclusion, nor does the pattern of consistently rising estimates.
Priced with a trailing PE of less than 17.5, I think it is easier to argue that KEM's price is currently more restrained by the possibility of a downturn than inflated by upside expectations. But consider this: if KEM returns to its high and meets the current consensus estimates for this fiscal year, it will have a gain of 50% from where it is currently trading -- and a trailing PE of only 11.8.
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