Gene, >>>Technology is great, but it's only worth what the market perceives it to be. :-)<<<
You are absolutely correct with respect to sentiment. If you look at AT&T - the share prices have recently doubled - and there is no change whatsoever with regards to fundamentals.
However, if you are right about the computer industry with respect to the sub $1k market and the commoditization of computers than Intel could be selling at the same multiple as automobile manufacturers and not unreasonably sell at PEs of possibly 4 or 5.
But, if we take this automobile metaphor to it's logical conclusion, small businesses and individual's, not to mention bottom line oriented larger businesses - there should be a huge demand for Yugos if not Hyundais. After all why spend $20/$30 thousand more for an automobile when you don't have to.
Automobiles don't even cut costs, manage inventory, and bring products to market faster to compete against the competition. All automobiles do is provide transportation. You can't even play 3D games or games rich in the use of mutiimedia.
My main point, I guess, is that you may have a very narrow perspective of the world. You are not necessarily looking at what computers can do for businesses. When you are talking about cutting costs by 5% and saving several million dollars and bringing it down to the bottom line then spending $200 or $300 for the latest microprocessor is not something that many CFOs have to spend much time on.
If you could use the computer to manage inventory better, you can save huge amounts on rent for storage - not to mention the improvement of your cash flow - again bringing huge sums of money to the bottom line - spending $1000/$2000 more for the latest and fastest microprocesors could make sense. Even in the consumer area, just think of the numbers of people who buy Rolex watches and drive imported cars - do you think they really want to save a few dollars and use a low resolution 14" monitor and save theselves $200 on a cheaper microprocessor.
I know this may sound insensitive and there are many people that are homeless, are unemployed, and have to worry where there next meal is coming from - but there are also a lot of dual income families with good wages - and many with huge bonuses coming to them in the next few weeks.
The new world economy is huge - and you may have to look at it from many different perspectives in order to arrive at some sensible conclusions.
Regards,
Mary Cluney |
