MB's Barron's letter:
"Downright Negatory"
To the Editor
Andrew Bary (The Trader, February 8) quotes Morgan Stanley's Byron Wien
to the effect that "investors realize that the fundamentals for technology stocks
couldn't be more favorable." Say what?
The facts:
1. 1998 was the first year ever of negative revenue growth in the personal
computer industry. True, nobody in the media or in the research community
talks about anything other than the tiny unit growth numbers put up at low
prices. But in other industries, dollar sales are the true measure of growth, not
units.
2. Workstation sales, again in revenues, not in hunks of plastic, were down 3%
in 1998, according to International Data Corp.
3. Large server sales were down 8.3%.
4. PC server revenues were up 8% in 1998, though a lot of this growth was
due, again in the words of IDC, to a major OEM "overflowing the inventory
channel."
Boxes gathering cobwebs in warehouses count as sales in this industry. So the
numbers were horrible. And even these recession-level figures were achieved
by a huge increase in accounts receivables for the boxmakers.
I like and respect Byron Wien, but he has the story wrong here. If you believe,
as I do, that the computer is the sine qua non of technology growth, then
fundamentals could certainly be more positive. In citizens'-band radio terms, the
current environment for technology companies looks downright negatory, good
buddy.
MICHAEL D. BURKE
Houston
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