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Technology Stocks : C-Cube
CUBE 39.61+1.2%Jan 16 9:30 AM EST
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To: Nikita who wrote (24259)10/23/1997 10:57:00 AM
From: JPM  Read Replies (2) of 50808
 
"Just my guess but if a company sells alot of it's product in
Asian markets, and those currencies are getting hit it takes
a lot more sales to translate into the same US dollars. The
currency crisis, should it persist, will definately hurt
CUBE if a large portion of their sales are in ASIA (which I
understand is the case). Just my opinion.
N"

Good point. I have a question for all of you. Is it not the case that CUBE sells its Chips in US Dollars? It would make sense. If this is the case, then what we have to worry about is the price of the VCDs going up in the local markets in Asia (due to currency translation probs)... in this case, CUBE doesnt need increased VCD volume to make up for any potential decreased revenue... CUBE just needs to maintain the rate of VCD growth to continue growing its own revenues (not to maintain them), and this is a big question given a weak currency.... so the issue becomes, will this HK disaster affect the VCD market in China?

My inclination is to think that unless we have a major spillover effect, the answer is no.

#1... the VCD chip (which is the only imported component whose price will be rising in local currency).. is only 15% or so of the VCD players... given that the problem is in HK and not china, this doesnt seem like a big factor. if anything, this will help VCD manufacutreres export more VCDs.

#2... will this send China into a recession and crush the market for VCD? to me this is almost comical.

thoughts appreciated.

Jp
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