Loki, First of all, stop giving Thor a hard time. <G>
I give Compaq lots of credit for doing several outstanding things. I even owned a Compaq pc. In fact, I still own it but it stopped working. The IBM I owned before the Compaq is still working.
I give them credit for ripping IBM's face off and taking over top spot in the pc market.
But why am I bearish on pcs? The industry has been in a 4 year growth downtrend, really more of a swoon than a downtrend, and actually had negative growth last year. As opposed to what some touts and industry shils are saying, I will side with Mikey Dell and Billy Gates and say that 1999 will be the worst year ever for the industry. Since the biggest and most profitable market, by far, are corporate pcs, 1999 looks like dead meat. IT budgets will be directed away from new buys as corps struggle to make the crap they already own work in 2000. Add to that the fact that eps will be down for most corps and they simply do not have the money to spend on low productivity investments.
The reason Europe is wide open for pcs is because businesses there are more likely to require that the products deliver the goods. They will some day, but they don't right now. Investment in IT has been the worst productivity enhancing use of capital in the postwar era. Which is why our productivity growth sucks, big time. It has yet to turn negative like our savings rate, but it is sure nothing to write home about.
Meanwhile, the lemmings are rushing to the cliffs singing "Everything is Wonderful." They believe the hype from touty cos even though their own reported numbers disagree with it. And have pushed the stocks to new highs at the time when the business is in the worst shape it has ever been in.
Ture, it is not all doom and gloom. I would bet on Dell and Compaq to continue to gain market share if the stocks weren't between 200 and 500% overpriced. But the minor market share gains they will make in this declining market simply cannot support their bloated valuations. Also, with the SEC at least sticking their toes in the water on cracking down on accounting flim flam, all of these cos are forced to back off from some of their favorite eps steroids, like selling put warrants. Some scamsters, such as Dell, will still borrow money to buy back shares, but more conservative tech cos. are going to have to toe a straighter path until the SEC's attention span disappears.
MB |
