All the Dell bulls: The following post might enlighten you a little bit. This guy knows what happens right now in corporate PC world because of his profession.
exchange2000.com
To: +Michael D.Burke (36104 )
From: +Earlie
Friday, Nov 13 1998 11:36AM ET
Reply # of 36194
Hi Mike:
Haven't had much time of late, and probably won't for another few weeks. Here are a
few comments from our part of the boonies for what they are worth.
Corporate buying of PCs has fallen dramatically this past three months. No one single
reason cited. Personally haven't seen this kind of corporate fall-off since I've been in the
game. We thought it might create some "mild disappointment" for Dell, and said as much
earlier. Looks like it did. Next Q will not be a love-in for Dell. Good company, but the
server game is getting very crowded (which is how they kept their ASP nos. up) and
Michael doesn't know how to compete at the bottom of the consumer game, which is
where the action will be this Christmas. The popular PC "sell" at retail will be $400 to
$700 this holiday season. We see Dell "really disappointing" over the next quarter or
two
Next quarter is shaping up as a PC bust. Usually can't provide a solid forecast for the
Christmas buying season until after the U.S. Thanksgiving, but we are close enough to
be able to say that the consumer buying is not going to burn down any barns this time
around, and with business on a buying holiday, January is going to see the PCs piled to
the warehouse lights. Following this year's Spring/Summer efforts to unplug the channel,
darned near every box-builder ramped up big and has over-produced in the belief that
"we're going to take a big bite out of the competitions' market share". Not a few, ALL
of them. This accounts for the "increased" semi sales (actually a negligible amount,
.....not hard to pick up an "increase" coming off a summer when nobody was a buyer).
N.Y. analysts have been calling the bottom of the semi market for over two years (this is
not an exaggeration). So far, they have been as wrong as I have been in expecting the
market to crater over almost the same period, so they are excused. (g) On the other
hand, I can't see anything to suggest light at end of tunnel for semis. This recent run-up is
a bear's dream come true.
Greenspan did the unthinkable (a rate increase that was not "telegraphed"), but was
facing an equal unthinkable, a bond market that was starting to resemble one of our
Winters,.....FROZEN UP. He had to do something in a hurry so he did. Unfortunately,
all his action accomplished was to delay the inevitable. Only stock market lambs fail to
worry about why he did this, or what its ramifications might be.
U.S. stock markets need big foreign fund inflows to stay in bullish territory. Foreign
money that poured in this year (especially that which was provided by Japanese
"big-bang" escapees) was badly burned in the "correction" plus the U.S. dollar cave-in.
It is departing. This bodes ill for the next few months.
Foreign central bank selling of T bills is starting to escalate as we expected and warned
of. This is Greenspan's nightmare. Rates will move up later as every effort is made to
keep this wall of paper from coming home. The Euro arrives in less than 7 weeks. It will
be accepted and utilized as a new (and gold-backed?) reserve currency, which will
place further massive pressure on the greenback. The dollar will wilt under the pressure,
which will provide further wounds to foreign holders of U.S. assets.
Deflation now controls the global economy. Six months ago when a few of us on this
thread suggested that it might not be easily repelled, we were considered idiots
(remember CNBC's "Asia is on the mend" baloney?). At this end, we have a simple
question for the bulls,.....Half of the globe's consumers currently purchase little beyond
essentials. A year ago, they were the big "growth-driven" buyers of everything. How
does one replace them? "Show me the buyers" sums up the view at this end. With U.S.
consumers "tapped out" and humping big debt loads, their "borrow-to-buy" capabilities
are thin. When the market eventually does let go, those capabilities will vanish, which
makes the big liquidity build-up a rather useless exercise.
How long can the current madness last under these circumstances? Not long now.
Greenspan will no doubt pull a few more rabbits from the hat, but sooner or later they
will be depleted. It's a rearguard action at best.
Best, Earlie |
