Teri, Bucks, Dave and Eugene
I've just finished reading the posts I missed while I was away... and I wanted to deal with a couple of myths....
The first thing i'd like to draw your attention to was the "love-in" during the q & a part of the 3rd q cc. If u remember, the investment community bought hook line and stinker (as did I for a frightening hot second) amat's claim that their "strong" order book insulated them from the cyclical nature of the semi manu industry... like this was the dawn of the age of predictable earnings... I think that we now have irrefutable evidence that this is not the case - agreed contracts get "pushed out" as easily as new orders...
The other myth I'd like to address is visibility... and I gesss the two are related... Mgmt. said, if you care to think back, that they had "excellent vis." for two quarters... it seems to me that in fact they had decent vis, for one... lets look at the evidence... strong growth became no growth in two months... ambitious cap-ex expansion by amat itself is now accompanied by compulsory unpaid holidays (if you do not have the extra week owed)... we went from Bob and Stevie to squegee in three weeks.
I bring this up to draw attention to the myth on which the recovery of the asian financial markets is based... and it is on this myth that those who think that amat is now trading at its lows - given that wall street is forward looking (which is not supported by the facts) - rest their case... It says that korea, singapore, japan etc, have in fact weathered the storm. Seeing as there has been absolutely no time for any structural changes, this myth has to be based on the legend that the asian troubles are due to speculators like our man soros....
there can be no other explanation.... Japan is still using band-aides, hong kong is still an economy supported by land price speculation - this cannot last as china is the man next door... with plenty of land to go around, korea is still a oliglopoly, and in indoneasia they're just working out a way for the cronies to send the imf $$$ direct to their swiss bank accounts rather that having to even give the pretense of reforming their economies.
closer to home there is also a structural problem... the myth is that we have seen the worst of the "channel stuffing" and the dram price implosion, but here again this theory is based on a legend - that it is an orderly market somewhat controlled by intel and the desire to make profits - that dram manufacturers will shrink production when faced with losses and intels inovations will keep the proccessor market lucrative. Unfortunately none of the above is true right now.... The net effect of the IMF bailout will be to allow the huge sea fabs to produce at a loss for longer, as it is in effect a subsidy... Dram prices must therefore continue to melt down until capacity is taken out of the market elsewhere... and intel has for a momment lost its ability to bring order the market for cpu's... what has happened in this market is a quite startling miscalculation by CPQ, which brought the price of computing down to a price-point that could only be afforded by destroying Intel's near monopoly, but that has imposed a priceing structure on AMD and cyrix that ensures they will not make any money will they fight for a toe-hold... this in turn has caused intel to drop prices to retain share which is hurting margins and has not been very successful, so they will have to reduce prices further or lose the low volume consumer market, which i doubt they're prepared to do...
the next myth is that windows 98 is around the corner... this myth is based on the fact that Microsoft says it is... WELL OF COURSE THEY DO... what are they going to say... dear justice... we know you think windows 95 is a competition killer but WAIT TILL U GET YOUR HANDS ON WINDOWS 98... it integrates the web seamlessly... the web in fact becomes the MICROSOFTWEB, with our revenue producing sites bookmarked and prioritised.... NO WAY IS JUSTICE GOING TO LET MICROSOFT GET AWAY WITH IT... windows 98 will come out one day... but not in '98, or in its current form....
SO tell me why should we buying amat at these prices... a asked the question before... i really didn't get too many ansewrs, and I don't like being amat-less i don't feel whole
just one man's opinion on sport.... nice to be back... akidron |
