Yes, the disconnect there seems the widest anywhere. Look at the valuations (PEs forward or backward, P/S) for the telco equips. Then look at the trend in sales, profits, and balance sheets in the telcos. IMO, buyers of telco equips today are not just paying for the rosiest future; they are paying for a rosy future that can't happen. I don't see any way telco capex turns up before 2003. That implies that the upturn in earnings for telco-equips can't happen till then, either. Which implies it's still too early to buy the telco-equips.
Contrast the semiequip-semi relationship, with the telcoequip-telco relationship. The semis have much better balance sheets (compare, for instance, the balance sheet of Intel vs. WCOM or T, it's day vs. night). There is numerous reports from numerous chip companies, that sales are bottoming, and a rise in sales will produce a large rise in profits. By contrast, the telcos are still warning, still downsizing, still cutting capex budgets, seeing no end to the price wars. Only in wireless is demand holding up. |
