Scott- In both the "VCs say the worst is over" article, and the profile of the hedge fund manager Loring (sp?), in all candor, I found the articles to be pretty shallow in their (respective) points..
That hedge fund manager is an idiot, IMO. He says Csco should easily be a double in 12 months......he cites no debt, 15billion in cash, etc....First of all, Csco doesn't have 15b in cash (you can check it out for yourself)..not even close.....secondly, he is saying Csco is going to be trading for 8-10x sales a year from now.....hasn't this guy realized that those days are over? Csco, Nt, Juniper, Sycamore are now just beginning to slash each others throats over pricing, and it ain't going to be pretty for revenues or profits..
Secondly, VCs say "the worst is over".... aren't these the same guys who got totally blindsided by this thing to begin with?
This downturn is going to be so misunderstood. It is going to be longer, and much more boring than anyone imagines. Everyone wants a quick recovery, and V rally in their respective areas because its in their vested interest for it to happen. But Humpty Dumpty is broken into lots of little pieces, and its going to take a long, long time to find them, get the glue, and painstakingly glue piece-by-piece back on...
We've had some, but not near enough rationalization of capacity in many industries......that whole process takes a long time, especially since it is such a massive projct.....tech firms are going to have to lay off a lot more people still....the consumer hasn't even begun the painful (for US economy) saving process, etc....sure, we could get a blip up here...maybe a quarter or two with 1-1.75 growth....but profits are going to suck for a long time to come...and we'll probably hit the wall in housing, sink into recession after wasteful tax cut gets used, and Fed rate cut start losing the upcoming (mitigated) effect..
None of this takes into account the world economy, which is an unmitigated disaster waiting to happen. We're talking currency crisis, liquidity lock-ups (Japan, Latin America), and a whole bunch of scary stuff that has been postponed for years due to the generocity of Uncle Alan...
So, in conclusion, I hope you don't believe the articles you linked....cause I certainly don't.. |
