Tom:
Right on with respect to T.K.
Last Summer I posted that TK knew that the industry was heading for the tank, (a grade three student could see the supply/demand situation cratering), but stayed bullish until his institutional clients had sufficient opportunity to unload. A bit imprudent to turn so suddenly as the last client sold the last share, but other analysts were starting to toll the bell, so he had to act quickly. (g)
Any bulls contemplating the purchase of semi stocks now might wish to contemplate a recent report by the Taiwan Semi Association, which essentially stated that June orders were lousy. June is typically a delightful month for semi producers as this is the month when orders usually rise as PC manufacturers set up for Fall/Christmas production. Maybe next year.
The semi industry stocks will continue to slide southward until the basic problem is remedied. None of them will make any money until a bunch of them go bankrupt. The industry will continue to produce far too much product for the foreseeable future.
With respect to MU, I've enjoyed watching the analytical crowd pulling their expectations down almost on a weekly basis of late.. Somebody must be whispering in their ears (g) Still, the little lambs can be kept in line through the maintenance of distant big "expected" profits. Only in a mania does the public maintain any belief or confidence in the distant forecasts of looneys who can't project next month with accuracy. How many quarters has it been now that they've commented "you've seen the bottom"? I've lost count.
Tonight my favourite short (lowest risk by far) will provide both a very large loss and a big inventory writedown. The company has masked its problems by stuffing product into inventory for several quarters, but now the smell has become unbearable, so the garbage cans will be put out at the curb. It would be a fun exercise to go back and recalculate the actual loss the company has camouflaged through this slimy process, but it doesn't matter, as the actual survival of the company is now open to question. Intelligent shorts will focus on the cash situation, keeping in mind that there are now no assets to sell off, there are big interest bills to pay, and the products are selling well below all-up cost to produce. The cash crisis comes in a quarter or two, and shorts are a patient lot.
Yesterday spoke volumes. Dow up big (on pure stupidity), yet MU down. I wonder why. (g)
Best, Earlie |
