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.

Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Ken Brown who wrote (970)	4/5/2001 10:40:55 AM
From: Sam	Read Replies (1) \| Respond to of 10065

<<Some say it's just an "Inventory Correction" and growth will quickly resume when excess inventories are worked off. I've also heard this explanation a lot lately. And each time I hear it, I can't help but wonder, what happened to that touted "Just-in-time" inventory system that it seems everyone had recently instituted? I thought it was supposed to keep inventory levels at record low levels, and that inventory buildups were a thing of the past?>> Great question. I think part of it may have to do continual optimism on the part of the telecom companies, and poor communication between them and the contract manufacturers who do their production work. If the ECMs have agreed to carry inventory (as apparently some of the bigger ones did) and do fulfillment, then what incentive do the telecom companies have to make sure that their manufacturing orders actually reflect the reality of demand? Rumblings from ECMs like SLR, FLEX and JBL suggest that there may be some shared responsibility for carrying inventory in the future. It all works great as long as sales are more or less keeping up with production, but when it doesn't.... In addition to the above, the speed and depth of the dropoff in demand caught everyone by surprise. Perhaps it shouldn't have been so surprising after such a long up cycle--we were due for a pause, and many people were just exhausted, i think--but it was, perhaps due to a natural inertia of thought and expectation--the assumption that the future will be just like the most immediate past. These are my speculations on this important question, anyway. It is also probably true that there is "just" an inventory correction in some areas, and more serious problems of demand/saturation in others. Sam