I posted this on Greg M's board in response to someone who sees Improved forward outlooks.
Improved forward outlooks.
You see improved forward outlooks?!!
Look around - I see declining forward guidance.
Those companies that did not guide lower for next quarter will get killed IMHO.
Do you really think CSCO will be guide towards increasing forward revenues? Well maybe they will if they are stupid enough, but will it be enough to satisfy the PE gods these days? The days of 100% growth for CSCO are long long gone, INTC, DELL, MSFT etc etc etc. We are still waiting for new leaders. QCOM is one perhaps. Can you name many more with certainty. Why should QCOM be rising anyway? Look at NOK, ERICY, MOT etc etc etc. Perhaps I do not understand QCOMS revenue stream but do you really see surges in new phone sales?
Take a good look at EMC. Is it worth it? Some say yes but I give a big thumbs down. Storage needed...? You bet, but at what price?
Notice EMC said they expect REVENUES to be growing. Uh... what about margins? What about competition. Some of these companies have not had serious competition for years. Look at how they toasted NTAP because of competition as if EMC has none. Give me a break.
How much pie can CSCO/JNPR slice up to support lofty PEs on both? Look at fiber.... GLW vs AVNX vs JDSU vs the easy growth has already been taken. Anyone else see reduced margins because of competition? Anyone else see that the EASY growth has been taken? Is CHINA and the third world going to ramp up as quick as the USA? This internet buildup is going to continue all right, but at a pace big enough to support PE's well over 100?
Is consumer confidence going to surge in the midst of all these layoff? Have the layoffs even begun to start? When bankruptcies start to rise will that inspire confidence?
Here we are in the midst of one huge financial bubble, with stock prices declining, consumer debt at an all time high, credit card debt at an all time high, layoffs increasing, and Greenspan is trying to get people to borrow more!!! Buy buy buy buy! Do the USA a favor and buy us out of the recession. LOL - What then? How long can the credit bubble keep building up?
Buy what? Another PC that is not needed? A car that can wait? Cable modems? (I would buy that in a second but they are not offered in my area) but will the average person see the need? What then, what are people going to buy: phones, PCs, cars, trucks, airplanes, increased restuarant dining, what????? - Please tell me where you see increased consumer spending, and in what timeframe.
Without increased consumer spending, where are we headed? Recession anyone? Stagflation perhaps? Greenspan has us a ZERO growth right now. ZERO! Is this just nother "inventory problem"? It will all be corrected in a quarter and people will start to buy again. I come back to my question of buy what??
Do you really believe the housing data? I do not. There was miserable weather in NOV/DEC so we are just seeing a buildup on that last remaining demand IMHO.
I almost forgot to harp on energy. Are gasoline prices coming down or rising? Natural Gas? What about the bankruptcy situation in California? Is that a problem to worry about? Who will bail the lenders out on that one? Is energy inflationary or deflationary right now?
What about corporate spending? Are corporations trying to make do with less? Are the telcos slowing down or ramping up fiber & PC purchases etc? Yes, the telcos will have to build out and modernize (or die), but at an increasing or decreasing pace? Globalization.... Yeah right. At what pace. China has proven to be one torture after another. Will this change overnight?
What about the pace of change in technology. It is still increasing at a huge rate. But is this good? Good for who. Yes this is good for the consumer (look at how much PC we can buy for how little), but look at the enormous costs for companies to keep improving. More and more data is crammed into smaller and smaller boxes. Again good for the consumer, but good for business? AVNX is doing wonders for data transmission over fiber using bands of light. Absolutely 100% phenominal IMHO. But now we see more use and transmission over fewer fiber lines do we not? Is this good for GLW or JDSU? Perhaps I am missing something here as I am not close to the situation but I think you get the general idea - Technology is becomming obsolete at increasing faster paces. This would be good except for a couple of "little" problems: More frequent inventory liquidation (anyone want those Pentium 3's), research costs to stay ahead, more solution (bandwith, storewith, etc) in smaller and smaller packages at decreasing margins because of competition.
Now, in light of decreasing consumer confidence, increased layoffs, increased competition, slowing rates of growth everywhere, huge inventories, obsolesence sometimes before deployment, and PE and PEG's that still for the most part at a very high historical level in spite of how far we have fallen
Why pray tell should
1) Companies guide forward
2) People be increasing their debt
3) People should be buying tech
M |
