re: Why would something (I assume you meant someone) think expansion would be mothballed because SOME companies cannot get credit?
This is not a case of an industry weeding-out, where the strong companies can get funding to continue grabbing market share, while only the weaker companies see credit shut off. Instead, what's happened in the last 12 months, is a huge change in attitude of the credit markets, toward every company in those sectors. Even the strong companies are not funding expansion out of cash flow. They need to raise money through equity or debt, and are finding it much harder to do. With stock prices so much lower, even the biggest and strongest companies in the internet and telecom sectors (AMZN and WCOM, for instance), can't use their stock for acquisions, the way they could in 1999 and 1998. And even the best companies (CSCO, and numerous others) are finding that padding sales numbers by providing easy credit to customers (vendor financing, where making the sale is the first priority), will come back to haunt you eventually. Look for CSCO, L, and many others to take huge write-offs of bad debt as the shake-out in the telecom and internet sectors goes on.
I think it's a safe bet that this will affect chip demand. |
