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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (57123)	12/9/2001 12:33:38 AM
From: Sam Citron	Read Replies (3) \| Respond to of 70976

Alan Abelson paraphrases Fred Hickey: If, as we suppose, the economic "recovery" is mostly, as someone so aptly dubbed it, a "false dawn," then the torrid stock market rebound is built pretty much on vapor. And as for the techs, which have spearheaded the rollicking rally, they're flying without wings. That's not exclusively our view. More importantly, it's also the view of Fred Hickey, probably the best informed and undoubtedly the savviest and least emotional observer of the tech scene we've run across. Fred puts out the estimable monthly commentary entitled the High Tech Strategist. And he very much eats his own cooking, both buying techs and selling them short. He confided with a chuckle on Friday, he has had two bang-up years. (He covered all his short positions first chance he got in late September.) He points out that this isn't the first time we've had investor hyperventilation over techs since the great retreat began in March 2000. Tech stocks flared that summer, in January of this year and again in the spring. All of these rallies fizzled and Fred has every confidence this one will as well. Aside from one of those periodic eruptions of animal spirits, he thinks the current upsurge in techs is built strictly on hype and hope. Both those admirable props have been encouraged by winks and nods from companies, eager to get their stocks up, and by analysts, just as eager to have those stocks go up. What's lacking, Fred observes, is any solid basis for optimism. The supposed signs of a pickup in personal computers and chips are strictly a case of wish fulfillment. A modest inventory build-up on the part of producers, vendors and component makers in advance of the intro of Microsoft's Windows XP, a build-up also encouraged by concerns about the effects of September 11 on deliveries as well as replacement demand for equipment lost in the Attacks, has been foolishly mistaken, he says, for the start of a rebound. He points to the miserable demand for PCs at the retail level (see, for example, the latest reports by Best Buy and Radio Shack), limp business on the distributor end and weak demand in Asia (Japanese computer sales, to illustrate, are down 20%), as indicative of the true state of the computer market. And he expects things to get worse in the months ahead. Moreover, the big hope for a revival of PC demand -- Microsoft's Windows XP -- has the makings of a fair-sized bust. In its first week on the market, sales trailed Windows 98's initial week's sales. After which, things really got ugly: Second-week sales of XP plunged 38% from the first week's level, followed by a 50% drop in the third week. Ranging over the vast expanse of Techland, Fred finds a dispiriting landscape everywhere. Cell phones, which got a lift right after September 11, are soft around the world. Telecom continues to drown in overcapacity, and, he points out wryly, one prominent player -- Enron -- isn't likely to be a very big spender on equipment for quite a spell. As for the supposed turn in semiconductors, he's plainly unpersuaded. He notes that one of the slender reeds the bulls are hanging recovery on is the recent rise in DRAM prices. After a drop in price from $18 to 80 cents, he snorts, the "recovery" has been all the way to $l -- and that hardly lordly level might not hold. It may be a little early, Fred opines, to get aggressively negative on the techs. But it's sure not too early to be skeptical as all get-out. from Barrons 12/10/01 interactive.wsj.com