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Technology Stocks : Ultratech Stepper

UTEK 30.23

0.0%

Jun 5 5:00 PM EST

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To: Sam who wrote (998)	7/22/1997 2:04:00 PM
From: Joe Dancy	of 3696

Sam - have not given much thought into how deflation would impact companies like UTEK - seems all the semiconductor and electronic companies have been operating in a deflationary environment for as long as I can remember. What concerns me is if we get the economy into a deflationary (versus inflationary) spiral. Several years ago (1993) there was a book published called "The Great Reckoning" that indicated with all the debt compiled by governments, and the fact that the capital market is now worldwide and the free market will punish anyone who attempts to inflate with higher bond and treasury rates, that we would see deflation. Was an interesting and well written argument. They predicted a frenzy of wealth to be created as financial assets increased in value with disinflation, only to collapse as deflation became more severe and profits disappeared. They also argued that because the private markets would set long term interest rates based on inflationary expectations, governments would be able to do little to re-inflate the economy. Was interesting reading, but I didn't buy their deflation hypothosis. They also predicted the decline of the welfare state because it has become too expensive and unsupportable with taxes in a worldwide free market. Well, now it appears deflation is becoming a concern of some of the economic "experts" - here's another article published yesterday in Worth Online: worth.com Sort of makes you rethink how stocks might behave in a deflationary scenario. I think that a cutting edge technology company that is growing like UTEK would have a better chance at maintaining their profitability in a deflationary environment, if for no other reason that they have been operating in this environment for so long. Best - Joe

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