MB: While it may be wishful thinking, I find it difficult to believe that the near-term arrival of the auditors (year end this month) would not have already triggered some dumping of inventory. The auditors can be expected to be a bit "antsy" about the continuous increase in the company's inventories throughout the year, as well as the decline in ASP's. Better to dump than to writedown. Then again, if they have dumped, quarterly sales revenues will be "impacted"...heh, heh, heh.
Like you and Skeeter, I see a very negative set of year-end numbers coming our way, as well as a probable "warning" or "pre-announcement".
Very solid contacts of mine out of Hong Kong tell me that the level of PC deal making going on at present (Christmas sales related), is "piddly", compared to last year. Reason.....no one can see enough profits in the typical deal (5,000 to 25,000 unit order size) to make the risk worth while. I enquired as to whether it might have more to do with HK's changed status than with risk-reward ratio and was hooted down....the boys continue to enjoy a "benign environment", thank you very much.
I'm starting to get a real chuckle as I watch and read about the efforts devoted to "inflation watch"....... sooner or later, the investing public is going to learn a new word..."DEFLATION", and its meaning is likely to be highlighted in the near term as some recognition of the amount of over-investing that has taken place in Asia, becomes known. As this Fall's PC selling season gets underway (like-now, at the build/wholesale level), inventories are piled to the rafters. Most players at all levels are HOPING that they will have a barn-burner selling season, TO MOVE THE INVENTORIES .....(few are talking about profits). By about the third week in September, we will all know what the selling season will look like....I personally think it will be ho-hum average in unit sales (no new sales drivers), mildly up in revenues and a massacre in terms of margins and profits. Dear Mr. Gates didn't help when he propped up one of the walking dead just in time to add yet another competitor to an already over-crowded dance floor...... not that $150 million will really make any difference to Apple's chances for survival.....he'll have to ante up a lot more before the funeral takes place.
After considerable commentary by a number of us here on the SI forums, the financial press is finally starting to recognise the amount of "scam" represented in many tech stock quarterly reports. I'm getting the right kind of calls (finally), and I'm sure others are as well. About time. This one could really provide a bit of grease to the skidways this fall, especially if it exacerbates an already nasty earnings reporting period, which is what I expect. Bear hibernation period is almost over.
There is one last ingredient required to make this Fall perfect for the (few, remaining, tattered, almost extinct) bears, and that is a "new era lesson" for the "buy-the-dip" crowd. For years, they have been positively reinforced, as every dip has indeed turned into a "buying opportunity". I suspect that this market will retain resiliency until those boys have been smacked behind the ear a time or two through some nice fat losses. Strikes me that until they acquire a bit of respect for the downside, the "new era" will continue. Hard to believe that we will get through the Fall, without this occurring....and can hardly wait. Ah, patience.
Best, Earlie |
