Jess, Where are you a finance professor, if I am not being too nosy? Please don't read any of the notes I've written about academics or you will not reply politely in the future. <G>
I think it is too early to buy puts on internut stocks, even AOL, right now. As a contrarian, I like to buy when everyone loves them and it is hard to find anyone with half a brain who considers them fairly valued. I need the rational folks to capitulate before I buy again. Last summer, everyone was bullish and the internet stocks were a layup for puts. I don't see that right now. In a wildly overpriced general market in a grotesquely overpriced sector, technology, the internet stocks seem to be an island of some doubt. So, I am keeping my powder dry for the moment. The fact that each put cost the same as a new car also helps me make the decision. <G>
Where I see the problem with your theory about expansion of chip use via the net and greater demand for boxes has a logical flaw: during the invention of the net and what has to be the inflection point in a ramp up in demand for pcs by folks who want to be on the Net, pc sales growth has declined every year. The last up year was immediately after Win 95. Since then, pc sales growth has gone into the tank, despite MMX, Pentium II, Windows NoTasking in several versions, expansion of the net, Y2K spending to replace hardware, 3 Xmas seasons, and, the most important stimulus of all, lower prices. The simple fact is, you can do everything you want to do on older boxes and do not need to buy newer ones.
That makes chip demand in units decent, though the growth rate is sinking like the Titanic, but demand in dollars is stagnant. In other words, we will take more chips, but we won't pay for them.
The other problem for the equipment cos is, in this cyclical and secular downturn, the chippies have learned how to cut costs and expand capacity and bring out new generations with minimal purchases of equipment. Micron Tech, for example, a co. whose slimy guts I hate, moved to a new generation and doubled Mbit output while greatly lowering capital expenditures. That bodes poorly for the growth prospects of the equipment boys, something the smartest cos. in the business, admit and hope to change.
Good Luck,
MB |
