Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: el paradisio who wrote (56975)	7/21/2000 11:44:27 AM
From: Jorj X Mckie	Read Replies (2) \| Respond to of 99985

.Who is the customer for all this high flyers with p/e range from 50-5000... The companies that you listed do not all have the same customer bases. NT and CSCO have the widest range that pretty much falls into the category of "everybody" (LU is giving up on the enterprise). This includes many different types of service providers, to dotcoms, to clicks and mortar to old time industrial. In the enterprise, I am seeing a shift in the growth from the pure dotcoms to the old time bricks and mortar businesses. Internationally, the growth areas will often have a different profile.

To: el paradisio who wrote (56975)	7/21/2000 8:58:40 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 99985

a comment on telco debt by a respected fixed income figure, Howard Hill: <<Defaults are rising in telecom junk bonds. I estimate that company-by-company projections in the telecom/networking arena add up to 5 to 10 times the possible total for these segments. You're probably not aware that much of CSCO and the other suppliers' sales are often funded by the vendors, who will be taking the hit when the fallout comes. I can't recall whether it was on LW or the side group, but last year I was picking the telecom complex as the biggest credit risk in the "new economy". A few days ago, five formerly investment-grade CBOs were downgraded due to defaults in the underlying portfolios of corporate bonds. Moodys is projecting defaults this year to equal or exceed the peak default rate during the last recession. Much more to come if the economy actually slows down, right? I suppose CSCO, Northern Telecom and the other suppliers will figure out how to call the inevitable write-downs "one-time charges" on two-year old equipment that comes back off defaulted seven-year leases or loans, but the reality is that a significant portion of what was previously booked as sales will not be paid. Keep this in mind when you get tempted to buy these exponential growth manufacturers. There's a very strange double-think going on when the market can project a slowdown for the economy, yet not realize that "growth" companies are completely dependent on all those mainstream "old economy" companies' health for their sales. I would add that for most companies, deferring new technology spending is one ot the easiest choices to make when times get tough -- much easier than paying for leases on empty space, or paying severance packages. hh>>