Asian Financial Crisis to hit Cube real hard in 98:
The whole Asian financial crisis is incomprehensible to members of this thread as the bad debt coupounding the currency crisis is significantly higher than anything faced in the USA ( the S&L crisis was only 2% of US GNP ) with 10% in Japan, 20% in Thailand and South Korea and 30-35% in China. My contacts( which are confidential so don't bother to ask) in Hong Kong tell me that people who were very confident and prosperous less than 6 months ago before China took over, are now very edgy and panicky over the recent woes ( with no end in sight). The " bubble" has been burst, and it won't get any better from here on out. The myth of continual high growth is crumbling like the currencies of Thailand, Malaysia and South Korea. We are now in an era of the Asian meltdown. In fact, Thailands credit rating has been downgraded for the third time this year to a notch above junk bonds by Moody's Investors rating service. Major financial institutions are now scared out of their wits that China will eventually come crashing down under the weight of their internal banking deficits. The question is not whether China will come crashing down, but when in 98. By the time you have that fact Billy, Cube will be in the single digits. All the bail outs will do is further the debt problems and mount an even bigger crash down the road. In Short: There will be a dramatic slowdown in all of the Asian economies which will severely hurt their imports of American goods, including Cubes. Cube is finished for the forseeable future. It may rally tommorrow or the next day, but its earnings are gonna get squeezed big time in 98. I've lowered my target price for Cube to 8-$10 a share sometime in 98. The theme for 98 on this thread will be: Where did Cubes earnings go? At least you heard it here first and I warned you.
A second major problem from the Asian currency collapse in addition to the demand slowdown is that it will also increase the amount of supply coming on the market that will have to find export markets, and the price of these goods will become dramatically cheaper due to the currency devaluation. The biggest problem facing US companies is that supply far exceeds demand ( sounds like Tom Kurlak of Merill Lynch ) and that prices could soon start to fall even more, which will hurt corporate profits. Witness the pricing pressures and lack of demand in the disk drive sector. The pricing pressures are now moving into the semiconductor industry. Pricing pressures have begun to affect Cube. Lack of demand is sure to follow, which again will eventually decimate Cubes profits. The early warning signs are already in place. Billy, John Reimann - I call you the martyrs of Cube. You love Cube so much you will risk great financial loss for her. So be it. That is your choice. It appears you have sold your soul to the Ice Cube. My posts are for prospective investors in Cube. Think clearly and distinctly before you buy. |
