re:Worse reaction so far to AAPL than to INTC last Friday:
There is a pattern to the warnings: they are PC-related. I think we are at the inflection point of a huge, and permanent, shift.
Selling a commodity doesn't make you much money. Only the company with world-class execution, volume buying so they can squeeze their suppliers, can make money selling a commodity. that's hard to do. Dell, Walmart, can't think of too many others. Mostly, the stock of companies that sell commodities don't make good investments.
Most of what goes into a PC is a commodity (the memory, the hard drive, the plastic box it all goes in, etc). The non-commodity components (and the good stock investments) have been in the CPU and the software.
The above was true, until the latest generations CPU and PC software. I just bought a new PC. I got it with Windows 98, not ME. I got it with a Pentium 600Mhz, although I could have gotten a lot faster CPU at the Dell site. This is the first PC I've bought that did not have the Latest/MostExpensive from Wintel. I can afford to buy whatever I want. I didn't buy the Latest/Most, because there is NoAddedPerformance. I did, however, get a cable modem, a Ethernet card, and the best video/graphics cards. Wintel are in serious trouble, as their cash cows are starving. Sort of like what's happening with T and WCOM, as long-distance phone rates approach 0.00$/minute. All these companies find the ground shifting under their feet, and are working very hard to find firmer ground to stand on. My guess is that Microsoft and WCOM succeeds, Intel and T don't.
But the pattern I see in these warnings, does not indicate softening in chip demand, just a decline in the margins in PC-related companies. If the communications-chip companies join the INTC/AAPL chorus, then anyone holding AMAT really needs to start worrying. If you aren't worrying already. |
