Electronic Contract Manufacture (ECM) Sector Message Board

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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector

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To: jeffbas who wrote (1289)	3/5/1998 8:08:00 PM
From: kolo55	Read Replies (4) of 2542

I don't completely buy Intel's description of the problem. I think the Motorola announcement simply confirm what I have suspected all last year; that component suppliers to PCs are undergoing a margin squeeze. I posted both the AMD and Intel announcements showing the revenue drops both are suffering. According to CNBC, MOT has said it was their semiconductor group that was cause of the shortfall, not their telecom groups. Now I'm curious why you think lower component prices are bad for the whole high tech sector? Many high tech companies buy components. Again (for the umpteenth time), lower component prices mean lower unit prices, the customer's budget goes further, leading to unit volume growth. Someone has to make all those units. The subzero PC is a net plus for ECM earnings; Colin King of SCI said just about that last week. Why do you think differently? (PS- this margin squeeze is why I dumped my largest holding INTC in September. Intel even said gross margins would drop to average 50% from the 60% everyone was using then.) Paul

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