Mike,
Have you read Greenberg's article on slowing cell phone demand, rising inventory levels? I'm pasting it below. Since the market anticipates these sorts of things it will pay to be careful (I know you will). Best.
JF3
BTW, someone give the signal when INTC starts unloading its RMBS stock -- maybe they'll do it this quarter to make up for those chip recalls. Hmmmmmmm.
thestreet.com
Herb's Hotline: Whither Cell-Phone Demand?
By Herb Greenberg
Senior Columnist
6/9/00 2:52 PM ET
Howdy, and welcome to the weekend wrap edition of ... The Hotline. (In my head there's a whooshing sound after the word, "Hotline.") Today's report of sluggish producer prices. As if that was really some kind of surprise. Could've told you to expect that based on recent anecdotal evidence submitted by Hotline readers. Oh, but don't worry, the economy is slowing everywhere but cellular phones. Or so that's the message delivered in last night's chat with Cramer and Seymour. This one really pushed my already high blood pressure even higher, not because of what Cramer and Seymour said (though that didn't help) but because of the question from somebody who goes under the handle of njfeds, who asked, "Do you agree with Herb about cell phones peaking?" Do you agree with Herb about cell phones peaking? Is that what I wrote? I don't think so! That's how rumors get started.
What I wrote, in yesterday's Hotline, was, "While cell-phone demand continues to soar, there are signs that cell-phone makers are no longer raising their forecasts for demand for this year. (Remember, before you can fall, you have to stop rising. Could that be what's about to happen?)" It was a question, not a statement. A question?! And it referred to info one of my reliable spies picked up at this week's PaineWebber conference in New York. But, oh, it doesn't stop there. Cramer then responded, "This was such a canard. The penetration rates are so low right now vs. where they are going. I wanted to have that TV show back so I could do a spit take!!" A canard? A canard?! A spit take? (What the heck is that?)
Yep, I'd like to go a few rounds with JJC on that topic, and this time I'll dispense with the questions and get right to making a point: There's no doubt cell-phone growth, in the future, will be strong. Booming, in fact. But we're talking right now! Right now. And right now cell phone-related inventories are showing a sequential quarterly rise at such places as Nortel (NT:NYSE - news - boards), Lucent (LU:NYSE - news - boards) and Ericsson (ERICY:Nasdaq ADR - news - boards) while analysts report that Radio Shack (RSH:NYSE - news - boards) recently reported 5% comp-store sales growth in cellular products, not 20%, as had been expected. What's more, one reader who works for a major cell phone distributor says, "Everyone from carriers to distributors are drowning in product." Adds one savvy money manager: "You've had double-ordering, double-ordering and double-ordering for six months. Any change to that and you'll have no ordering in the handset business." Bottom line: While the economy remains perky, it's slowing at the upper and lower fringes and that slowdown is affecting all discretionary items -- even cell phones. But, oh, excuse me, you should strike that from the record, your honor, because according to Mr. Cramer, "it's a canard!"
Moving on... More of a ruckus at Rambus (RMBS:Nasdaq - news - boards): Writing in the morning notes for Cantor Fitzgerald this morning, independent analyst and longtime Rambus bear Larry Woods hammers away at the bullish belief that Intel (INTC:Nasdaq - news - boards) eventually will incorporate Rambus' memory technology into its chips. "Put bluntly," he says, "Intel is no longer strong enough, or appropriately positioned enough, to pull this off. Consequently, we expect a quick divorce once Intel dumps its Rambus stock and without the backing of Intel, Rambus is toast." Now them's fighting words. Stay tuned ...
Back to Cramer: Yesterday he mentioned that while my short-selling sources are the best, in the end they're really little more than "a rag-tag band of militia that has no ability to stand up to the mutual-fund/analyst complex. They are armed with bows and arrows and horses compared to those nuclear-propelled fellows." Which is why, counters a member of that rag-tag band, they have to fight that much harder and be that much smarter. And which is why, in the end, they often beat the complex at its own game. And which is why, jokes one, they eat rats as in, "You dirty rat, I'm gonna get you!"
Onward: Everybody wants to know where they can get a copy of Moody's analyst Pamela Stumpp's report on earnings before interest, depreciation and amortization, or EBITDA. Sorry, it's only available to Moody's clients (and they're not sure whether they're going to make it avail to the public), but I wonder if she'd have a few extra copies at her New York Society of Securities Analysts speech on June 15 ...
Then we have: Kevin Hites, a reader, who writes, "C'mon, you can do better than just print readers' letters. It's not what subscribers are paying for. You really should try to add some value to the site. Cramer is carrying your ass right now." Well, Kev, don't know if you noticed but that big red word next to the Hotline says, "FREE." That means it's available to everybody, including subscribers. It's meant to be little more than midday chatter (or patter). It's a different story from the main Herb on TheStreet column, which remains paid. And don't knock comments from this column's readers. If you only knew who they are. They're not just great readers; they're fabulous sources from all industries. (Keep those cards and letters coming, folks.) ...
Finally, yesterday we went to see Mission Impossible 2: Great beginning, slow middle, feisty end, though at times it reminded me more of the WWF! (Then I remembered I was watching Tom Cruise, not Hulk Hogan.) Good midday summertime fun (in an almost empty theater, no less. But you would expect crowds at noon on a Thursday?) Oh, and my almost-11-year-old loved it, which is what I hope you'll say about this weekend wrap edition of ... The Hotline. (Whoosh.)
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