To all,
Interesting roundtable discussion by 3 money managers on high tech in this week's Barron's. Re the outlook for PC revenue next year, Chip Morris said:
"Japan and Southeast Asia combined account for about 25% of world PC consumption. You might take the whole lump, and say a quarter of the world PC business is going to be pretty much flat in 1998, compared with 1997. On top of that, the PC industry has been showing a decline in ASPs, with the emergence of the sub-$1000 systems. If ASPs fall 10% [this sounds a modest assumption to me], and you get 20% unit growth in 3/4 of the world, and none in the rest, you get worldwide revenue growth of about 5%. I guarantee no one is factoring that kind of number into their expectations for 1998."
That last bit is the killer. As if to confirm, Paul Wick (a huge success in this year's [late lamented] bull market) later on says he's not so sure the PC market is going to crater next year - he still expects mid-teens revenue growth. Which is probably what most people expect. But if you use Morris' 2 assumptions above, and it's hard to see why they don't hold water, then you need 33% unit growth to get that 15% revenue growth. Have people like Wick thought this thru or are they just coasting, surfing the great bull wave .... trouble is we're getting close to shore.
Larry, could MU be a leading indicator for the PC group as a whole. I mean guys like INTC, AMAT, MSFT, DELL, and CPQ. Haven't checked the charts yet but didn't it peak at $60 before the other guys reached their peaks? And if it breaks $25 and makes new lows could this be a precursor for the rest of the PC pack? Why it could be leading is because it reports a month ahead of everyone else. Also I would expect it to provide the biggest bang because it's the lowest quality ... by far. Anyway, just a thought.
'MU ................... tanks'
regards, Mike |
