FSII - The Worst is Over? Message Board

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Technology Stocks : FSII - The Worst is Over?

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To: Donald Wennerstrom who wrote (2132)	8/1/1998 12:04:00 PM
From: Donald Wennerstrom	Read Replies (1) of 2754

There is a good article in today's issue of the Los Angeles Times about Silicon Valley. The article can be found at: latimes.com The article confirms a nagging suspicion that I have had for quite a while as a result of looking at the high prices in 1995 and 1997. The industry is in a three year downturn starting in 1995. This is in sharp contrast to the analysts predictions of 20 to 30 percent yearly growth rates. Specific quotes from the article are listed below: "A combination of factors has turned a typical periodic slump into the current industry malaise, analysts say. The Asian economic crisis has slowed demand for semiconductors, exacerbating a glut of computer memory chips. Bill McIlvaine, managing editor of the trade publication Semiconductor Business News, calls 1998 "the worst year since at least 1985." "We had an unprecedented period of prosperity from 1991 through 1995, and now we've had an unprecedented three-year period of downturn," said Jonathan Joseph, a chip analyst with NationsBanc Montgomery Securities in San Francisco. The semiconductor business--a bellwether of the entire industry's health--declined 9% in 1996, grew only 4% in 1997 and will shrink about 10% this year, according to Joseph. "Since 1996 we've had excess capacity and a slowdown in demand. Then PC demand slowed in late '97 and early '98 . . . so it's a compound effect." Based on this information, those investing in the semiconductor area (including me) have been investing in a no growth area for the last 3 years. It's always nice to find this out don't you think?:) On top of all this, the outlook for the end of this malaise is still far from clear.

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