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Strategies & Market Trends : Piffer OT - And Other Assorted Nuts
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To: Atin who wrote (62049)12/20/2000 1:14:27 AM
From: Jorj X Mckie  Read Replies (1) of 63513
 
Atin,
I would suggest that you have made a lot of assumptions here that are incorrect and misleading.

Of course, then the reasoning goes, Al should lower interest rates -- make more money available and people will buy and earnings will go up. But here is what happens -- for example, Cisco was selling all this gear and had great earnings. But the money was coming from a lot of CLECs that were being funded by this cheap money. It looked like real earnings -- but no one was buying from these CLECs! *They* had no real earnings and when the spigot was turned off, they died. That should hurt Cisco's earnings. Cisco was buying chips in excess of what they needed because they were predicting higher growth than they got because the CLECs went away. In the meantime, PMCS suddenly has more inventory because they'd been seeing all this demand but all their chips are sitting in Cisco's storage. Now the excesses are being worked off . . .
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