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To: PaperChase who wrote (75442)	11/15/1999 4:37:00 PM
From: Earlie	Respond to of 86076

PC: With respect to inventories,....do I recall you also saying I was wrong on this last year? (g) Over-builds can be inventoried in many different ways and in different places. Sometimes, the big bulge ends up on the retail floors (two years ago), and to some extent in the distribution channels. Last year, retail pulled all the pricing stops and managed to clear the floors in the two weeks preceding Christmas (and paid for it with empty stores through the Spring), but some resellers and distributors again took it in the ear. Lessons do get learned. The "return policies" that resellers built into their agreements with the box builders two years ago, following a burning at the stake due to "channel-stuffing", actually accounted for IBM's tiny little $500.0 million loss on PCs of a year and a half ago. (g) Check out ANY of the resellers' recent numbers, comments, forecasts and LAYOFFS if you think business buying is or will be consequential. For the past two years (plus), the corporate sector has been frenetically buying new gear. Now they are coasting and will do so for at least the next couple of years, or until some NEW applications come along (none in sight). That heavy buying is an anomaly, in fact it represents an ugly problem for the next few years. You are dreaming if you think any rebound in business buying is possible for the foreseeable. I note the comments posted today about the freeze in government buying just as an example. This year, the PC inventories will likely end up under tarps in front of the box builders' warehouses. By the way, note how nobody talks revenues anymore,...it is all about "unit sales". What a crock. Sure unit sales can increase, especially when the price of a commoditized product is dumped into the dirt. Unfortunately, it then becomes a bit tough to make a real buck, so the accounting legerdemain is turned on. Notice how the unit sales bumped up nicely this Summer, but (a) the average selling prices still continued to tank, and (b) The ISPs, who were giving away computers to anyone who would sign up to a long term contract, (which is why the unit sales bumped up) really added to the level of saturation. While many do not want to admit to it, the wonderful days of decent profits are now a past tense item in the PC business. Today, it is a brutally competitive game that just gets tougher. That is why the insiders are selling to the dummies at a rate that is unprecedented. Don't blame them. Best, Earlie