<Also remember guys/gals- tech stocks nose dived last fall in anticipation of the slowdown caused by Asian events, the first major group to do this. IMO tech stocks will also be the group that leads us "onward and upward" when things stabilize....>
Doug, It seems to me that the disk drives lead the tech sector on the way down because their problems were competitive issues created by over supply in a commodity product. In fact, clearly the disk drives would have crashed regardless of the Asia crisis, and in fact it may just be a saving factor if costs fall and some competition gets hurt..
With companies like Maxtor (Hyundai) and Samsung looking to build multi billion dollar production lines in a manor many compare to their venture in DRAM, things were looking difficult. There is a good chance that Samsung will be forced out of the game and Maxtor may have to delay expansion.
Add this expansion to plans from Fujitsu, Hitachi, NEC, Toshiba, then don't forget IBM's very heavy investments and then the normal developments from the main three non-captive suppliers and you have a fiercely competitive evironment.
Then, if that wasn't enough to skin the cat, Compaq goes to Build to Order and HP and IBM try to emulate. Now, in addition to over supply, you've got the buyers telling you they want the drives the same morning the PC is built and shipped. By the way, you can stock all our inventory because we also want 32 turns a year like Dell. All manufacturing plans turn to chaos. Billions are lost over couple quarters.
The funny thing is that it all seemed to catch everybody by surprise.
So you say, and I quote myself and about everyone else who's ever written on this thread, Innovex is shielded from all this warfare between drive makers because they all buy from INVX and it don't matter who winds up selling it to the box makers as it'll hold INVX wires and if there is a slowdown, the MR conversion will save the day.
So what's my point, oh yes, " "onward and upward" when things stabilize....". But what things are you waiting to see stabalize? Do you think IMF fixes to Asian eco systems will help INVX? Will we see more disk drives sold?
I think we'll be in trouble until inventory levels fall and quarterly price drops stabalize. I think this could be helped by stabalized Asia currencies, but they are not going to come back quick and that will make it hard to buy PC's and drives. Main thing is to see Japan and Europe start buying again. Europe shows signs of strength and Japan weakness. Question is will deflation of imports and bad loans bring us all down, not to mention this idiot obsession by Americans for sex scandals, (please grow up).
Well, I'm loosing track, but I should think we don't have much reason to see real earnings growth for several quarters and then things should be well set for good growth. By then, you only hope that no irrepairable damage has been done to market share or margins.
Here some food for thought from a newletter I read about PC sales forcasts:
PC Market Overview
Eric Lewis of IDC (International Data Corp.) addressed the audience on the
outlook for the PC Industry. Lewis sees the PC market continuing to be a
large and growing market with 59 million units shipped in 1995, 80 million
estimated in 1997 (up 15.7 percent from 1996) and 114 million forecast for
the year 2000. Demographically, sales were distributed regionally as follows:
U.S. 40%
W. Europe 24%
Asia Pacific 13%
Japan 10%
ROW 13%
Some 80 percent were desktop systems, 18 percent portables and 2 percent
servers. As for who bought these systems, IDC estimates that 29 percent
went into home applications, 33 percent into medium/large businesses and 27
percent into small businesses. Compaq was the clear leader with 12 percent
market share in the first nine months of 1997.
The Korean PC market is the seventh largest in the world with 2 million
units or 2.4 percent of world demand. IDC had previously cut their Korea PC
forecast and just did so again by another 14 percent. The other A-P
countries that are affected by the crisis are Indonesia, Malaysia, Thailand
and the Philippines. These combined account for 1.2 million or 2 percent of
world demand. These forecasts have also been cut. Japan saw no PC growth
in 1997 and IDC forecasts only a 5 percent growth for 1998. They see China
as being largely unaffected and having very strong PC sales. The resulting
worldwide growth is forecast for 1998 at 13 percent, still positive but the
lowest since 1991.
On the sub- $1,000 PC topic, Lewis sees this as opening up some markets
primarily in the home where it will incentivize some first time buyers as
well as some upgrades from some really old installed systems. He feels that
businesses will be slow to respond to cheaper systems and will still prefer
to buy better machines with longer lifetimes.
His forecast for slowing growth suggests caution, but continued expansion
keeps the PC market attractive overall.
Guess I got off track.
Regards,
Mark |
