Pierre, both Win 98 and y2k were mentioned and they were considered a non-event. This seems like a strange comment and I feel you have to take these views from Trend Focus in that context. Also, when he talks about killer apps, he's only seeing developments on the desk top as drivers.
Clearly, the enterprise seems to be at least under addressed. At the same time, when asked for his projection on the ratio of storage off the desktop, he's seeing 2 drives sold for each PC unit. That's one in the box and one out. So, this is an increase from 1.6 that I had been reading before.
Part of his feeling that the enterprise will not save the day is due to the intense price competition in this group. While it was a sweet place to be before, that's all changed.
So, why the low forecast? He's predicting slowing US economy and slack PC demand in 98, single digit growth. He's looking at continued problems in Asia turning worse. Huge over build in the industry will only make any slight increase lost on price competition. Lack of demand for high margin products.
You can find areas to contradict his view, be it PC sales forcast, Asian problem over done, or US economic strength continues, but in the end there is just so much weighted against this group it seems hard to believe they can be rated much more than a hold.
Now, he also said he thought we were at a bottom. That we would slooowwwlllyy rise off this point. That is positive. Perhaps there is a point for a buy out premium on some companies, but really the players that might fall out won't necessarily be a independent companies.
He says look for diversified players with enough cash to weather this storm. Keys to future success will be better management over manufacturing and reduced components. He's a bit dual about the advantages of vertical integration, but in the short term it does not seem to offer anything as components are under intense pressure.
A single interesting comment with no elaboration was aluminum media is under assault. Glass 95mm media dynamic loaders? Maybe Stitch can flesh this out.
So, my view is that we are in a trading range for a while with possible down side issues to deal with. Long term appreciation will be a ways off with near term risk.
IMHO
Regards,
Mark |
