Larry:
Today's action, if anything, more so than ever, underscores that the market looks to the future fundamentals than yesterday's news (ie, Intel warning).
Now, let us examine the future of MU's business in the light of a slow down in intel's revenues, and the accompanying (possibly) slowing of growth in the PC market:
1. If people do not buy new computers, they probably will buy more memory to to enhance processor performance, if not for faster processing, at least for the sake of keeping pace with software innovations on the desktop and the internet.
2. Definite slow down in equipment procurement, meaning chip capacity growth is significantly slowing down. The Koreans are hurting, and more than likely cannot continue dumping their product and expect the US to support their cause with the IMF. Hence, it is highly likely that they will scale back production, at least in the short term, to appease US law makers, who are now quite aware of the problem, thanks to Micron's persistence.
3. Memory is so basic to the technology sector at large (communications, networking, computing et al) that I do not foresee a significant slackening in demand growth (and neither do the the not-so-senile-unlike-kurlak analysts.
4. What is occuring now is a replay of the scenario that occured in the 93-95 time frame.
A parting note. TA (and trends) is a consequence of fundamentals (bearish or bullish). Trends by themselves do not cause anything to happen, they just reflect the underlying fundamentals, and do not by themselves create the fundamentals. To exalt TA to a stratospheric state just because a few of us donot/cannot grasp the complexities of the fundamentals does not make FA vanish, rather, it simply underscores why the smart people are smarter than the not-so-smart ones (G). Ultimately, to understand stock behavior, you have to go back to FA, however complex the technology, and however numerous the governing factors, otherwise, you will be forever condemned to a state of trying to interpret micro movements on thirty second charts to make money in the market (G).
Best Regards,
Sridhar |
