Ike, yes most tech stocks have rebounded from earlier wrecks. But not most of the companies themselves. AMAT, even in this rebound, still has lower revenues and earnings than the peak in the previous cycle. But the stock went up over 70% form the high set during previous cycle. To me, only one thing explains this - mania. TXN made good earnings. Agreed. They still have lots of problems with DRAM business which is in the tanks. DSP is not big enough to pick-up the slack in DRAM. They are yet to impress the street with revenue growth. Should this downward spiral in DRAM prcing last for a couple of quarters, MU will be a chapter 11 candidate. -g- (yes, I have puts on that turkey also - they are now big winners, but after losing a ton on MU puts earlier.)
For the DRAM situation and contract fabs, Asean situation has every bit of an impact. Not withstanding higher cost raw-material imports, for the Koreans and Taiwanese the domestic material and labor should be cheaper. Which drives the prices further south. The immediate reaction from box bulls will be - it is good for the box makers. I say not for long.
Motorola may be close to a local bottom, though I think it is worth no more than 45 bucks - given it's prospects. Intel, this is so much loved by everyone, I wouldn't dare to bet that it has further downside.
All in all, I think SOX may still have room to go down another 7-10%.
Regards.
-Mohan |
