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Strategies & Market Trends : Steve's Channelling Thread
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To: TREND1 who wrote (18515)6/21/2001 10:49:23 PM
From: Jdaasoc  Read Replies (1) of 30051
 
Larry:
(1) April was .44
(2) May was .46
(3) These numbers support the April 4, 2001 Nasdaq low
of 1619 as being the final Low. IMHO.

Signifance of (1) and (2) is meaningless as both orders and shipments continue to decline. Therefore (3) becomes a meaningless statement as well. Sorry.
SDRAM DIMMs are selling just above the cost of DIMM preparation. MU still has inventory value close to 13 weeks sales. They could write off another $260 M besides large operating loss next quarter. Find me some book to bill numbers from 1988-1992 period where economy was in recession and you will see prolonged dip in BtoB of more than 3 months. The bill part of BtoB has been shrinking for 9 months now hiding the real collaspe of demand for semiconductors for 9 months now. No pickup is going to happen as companies are still laying off employees.
Debt writeoffs is always been the item that has to be accounted for last but not least before economy turns around. I thought this morning that Eastman Kodak had a problem with a major customer when they announced a $76 M writeoff from one customer and cancellation of bond offering. I find out this evening it was from one store NYC chain called Wolff Photo. Man I hate to see how big the bag of smelly debt gets to be recession starts to hit.
Debt writeoffs if this is real recession rather than short economic slowdown will rival the percentage of debt repudiation of 1989-91 real estate collaspe but debit balance that we start form is much much larger by consumers and businesses. GBLX, LVLT, COVD, RTHM and a slew of other multi billion debts by telecoms will be repudiated before we are out of the woods. The survioring companies in telecom and network equipment makers who made many of the loans will need special handouts from Congress like big steel and automakers in 70's; savings and loans in late 80's.
IMO CSCO and other network equipmewnt will be like real estate in late 80's to early 91. Many sellers few buyers and declining prices. The fact it is tech equipment this time around and not real estate will cause its value to go to near zero before it can be reclaimed in bankruptcy courts.

john
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