Tech Cheerleaders Strike Again With Genesis, Riverstone
By James J. Cramer
02/28/2002 13:16
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Which is worse, Genesis Microchip GNSS or Enterasys/Riverstone RSTN ? Genesis, considering that on Feb. 8 the analysts were all going gaga about how business was? Or Riverstone, because it was so darned obvious that its clients -- Qwest again! -- had been cutting back furiously?
Or could it just be the same darned thing, the sector? Consider how bagged people felt with Flextronics FLEX the other day. Consider how bagged people felt with EMC EMC or Cisco CSCO (although Enterasys has the added disadvantage of chicanery).
The issue here is that the management for each of these companies continually told us that they had seen the bottom, that things were going to get better, and in the end, that things had gotten better!
And they were wrong.
Contrast that, say, with Caterpillar CAT . Management was so honest the whole way -- we see no bottom, we see no bottom -- until it was absolutely sure that a longer-term positive trend was in place. Some of that is seasoning. CAT has been through it all. These other guys have never seen a downturn.
Some of it, though, is just, well, the responsibility of people. The tech managers, almost to a person, feel that they have to keep the balls in the air. They are so afraid of being downgraded, so afraid of alienating their acolytes, the mutual and hedge funds, that they go way too far out on a limb. When I look at the shareholders of Genesis Micro, I see really smart people who aren't used to being bagged.
But you can bag anybody with the level of enthusiasm that these people showed less than a month ago!
My takeaway is simple: Go where they can't or don't want or don't know how to bag you. Stay away from the bag artists, many of whom are in tech!
Random musings: The Honeywell HON people are all over me, saying that I have overstated the number of pure Bendix claims for asbestos, which they place at 40,000, not 100,000. They also say that all Mergenthaler claims that have been paid are insured and that there are no further claims. I don't want to be too glib about this, but when it comes to asbestos claim counting, I don't know if there is a real answer of how many are settled and how many are Bendix-pure. But I will in the future report exactly what they say and what my reporting comes up with. |
