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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (4050)	7/16/2002 10:07:10 AM
From: Cary Salsberg	Read Replies (4) \| Respond to of 95418

Hi Sam, I have little confidence in the integrity of political and business leaders, but I have great confidence that the 3 Lord of the Ring movies will be owned on DVD discs and loved by many generations of Americans. (I just finished reading the 4 books again after 36 years.) The bubble was the result of the gangsters from the business and political world perverting the promise of technology. The country has been reminded of the greed, stupidity, and lack of ethics of many so-called "leaders" and their followers, and the clean-up from the mess is of Superfund proportions, but technology marches on. It marches on at a pace and with a power that has never been seen in our history. We are 6 to 18 months away from the time that the greatest technology advance in history will become obvious to everyone. The bear market in technology has 0 to 12 months to go. Most of the worst market damage was done after 9/11. Further damage reflects problems at individual companies and these companies' failures affect the averages. I believe, as I stated previously, the concensus of market historians armed with numbers and fuzzy interpretations of what went on behind the numbers are bearsh*t. Comparing the internet bubble to the tulip bubble is only valid in the area of human psychology. It is wonderful that at 1300+ on the NAZ, almost a 75% fall, references are made to a 16 year bear and 1966-82, a period of less than a 20% fall with a maximum ~45%. Even better, is the wonderful "depression" from an 88 year old for whom the great depression was probably a seminal event in his life. I am waiting for someone to step forward and offer suffering investors some useful advice. Something better than diversify and consider bonds or hide your money in gold and in your mattress. Our society is made great by every individual who wants to create, build, and help (his fellow man). Technology is built by engineers and engineers spend most of their time thinking about creating, building, and helping. This is a far cry from businessmen and politicians who spend most of their time thinking about winning. I am content to place a prudent amount of my money on the most successful, most innovative, hardest working engineers. Their efforts are leveraged by engines of progress like Moore's Law, they are the hope of our world, and they and their companies will succeed and thrive. I expect to WIN on my bet on them.

To: Sam Citron who wrote (4050)	7/18/2002 4:25:12 AM
From: Barry	Read Replies (1) \| Respond to of 95418

Sam, To paraphrase a Jimmy Rogers comment (about purchasing a futures contract on some coffee beans, I believe), an investor wannabe would learn far more from spending ten minutes studying your message very carefully than wasting two years getting a Hahvard Business School MBA. Thanks for your elegant post.

To: Sam Citron who wrote (4050)	7/18/2002 10:07:31 AM
From: Cary Salsberg	Read Replies (1) \| Respond to of 95418

Re: "What is technology but the practical application of science to commerce and industry?" The application of science to reinventing our world. In your statement, technology is subservient to commerce and business. In mine, it is just the opposite. And that is why I can ignore political and business incompetence and malfeasance. The Constitution, Bill of Rights, and Moore's Law are the future and historical comparisons to previous data for "commerce and industry" ignore the fact that the world is being turned on its head.

To: Sam Citron who wrote (4050)	7/18/2002 12:05:17 PM
From: pompsander	Read Replies (1) \| Respond to of 95418

Sam: A great post, and much appreciated. I have forwarded it to several friends who are struggling right now with getting a handle on events in the markets, and particularly tech.

To: Sam Citron who wrote (4050)	7/18/2002 8:39:15 PM
From: Crossy	Respond to of 95418

Sam, Cary let me fill in in your great exchange with regard to technology trends.. First of all, I'd like to point to a great analysis on Briefing.com by Greg Jones about the brutal efficiency and the effects of creative destruction on the economy and the market as a whole "America's brutal efficiency". It's appears to be quite related to your discussion and I really think he has a point with it : briefing.com Regarding the "bubble" let me use the term that Greg Jones used .. "misallocation of capital". Now how long does it take to "cure" it ? It may stun you but I don't think it should take more than 3 years. Why ? The US. has an enviable system of asset-revaluation: the BANKRUPTCY PROCESS. IT'S very efficient from the perspective of economic analysis. Greg Jones addressed the last time the US had to tackle this problem : the 80ies S&L crisis. I think he is right and the problems created by the "telecom bubble" (rather than tech-bubble I would venture to say) will only need the timeframe of a bankruptcy case. The first regorganized companies are just leaving the junkyard - to rise again: watch ICG Communications, Flag Telecom, Viatel of Europe, Psinet etc. to re-emerge soon. Others' assets were sold to the highest bidder (sometimes for peanuts) - look how IDT's Howard Jonas got Teligent's wonderful MMDS/LMDS system for a ridiculous $20m - a system that had costed $5billion to built I was told. Others are soon to follow: WCG, TSIX, GBLX, MFNX, MCLD, etc. etc. After the Chapter 11 there will be pressure to merge to create footprint. It's a shame that the "pooling of interest" option was stripped from the menu of choices. Goodwill is a sin (just a ask a banker in the domain of risk management). It's just that the taxman (Uncle SAM) loves it so much.. (Money for nothing). So my maximum duration for telecom restructuring is 3 years. we are in year 3 now. it won't turn into an avalanche again soon but the meltdown will be over once the last gavel has fallen. "Erroneously built technology". This is a funny notion. If you read technologists' books like Nathan Rosenberg, Giovanni Dosi or Clayton Christensen you will never see this term. That doesn't mean that technology always has to be profitable per se. Definitely not. Rosenberg shows Babbage and Schumpeter and comes up with something like: technology itself is art pour art. Innovation is not about technology per se. It is about putting technology to use in a commercially exploitable sense. Usually this way to "use" technology on the "shelf" profitably is not immediately clear. It's a murky, foggy area. Look how long it took the laser to be used as the building block (emitter) of the telecom infrastructure (fiberoptics) after the Ruby laser was invented ? See my point: you need a SYSTEM not an isolated invention to address an issue. This is a discovery process. the picture is getting clearer any day. However new, yet dark pictures are also available any day. To me this is disconnected from economic success in the first place. However if the huge R&D hike of the last 10 years really starts getting harvested then profitability will surge astronomically and the wealth of all affected too. IT takes time but the time it takes is getting slower as well. Strategy researchers are calling this "Absorptive capacity". IT's a major new avenue in strategy research - that's what I can tell.. Christensen has another interesting observation with regard to the mid - to longterm viability of technological trajectories. Those familiar will recall that he seperates disruptive from "sustaining" inventions. Sustaining being those that are born "inside" the existing "value network" of suppliers, customers and the industry itself whereas the disruptive inventions are originating from another value network. His book "The innovator's dilemma" addresses the questions of corporate failures - because of too closely adressing the views, issues, values, industrial logic of ones' own value network. By listening too closely to its customers the firm disconnects itself from looming technologies on the horizon. Once those dormant technologies establish critical mass within their own markets they might become, once refined, a danger to the established paradigm of the status quo. Christensen describes the "status quo" usually as being populated by mature corporations with healthy profitability - initially. The disruptive technology and its initial market may lack this profitability and in fact may even turn the profitable "old" market of the status quo into a non-profitable paradigm as well. Adrian Slywotzky, a gifted strategy consultant, founder of Mercer (Part of Marsch & McLennan) who authored "Value Migration" and "Profit Patterns" calls one industry transformation pattern the "migration to a profitless industry". Sounds familiar ? As root causes he invokes the rust-belt saga: high capital fixed assets, overspecialization, etc. The asset intensity of many telecom player is a known fact. Michael E. Porter also highlighted the problem nature of fixed specialized assets in one of his strategy classics. Now telecom and the internet is not really pure competition at the moment because the club-like ILECs still control the access to their on-rump. To some degree this does represent a monopolistic situation and economics can help us spotting the issues. With regard to strategy, this fact makes the application of "game theory" important. You find many of these "mutual forbearance" and "multimarket oligopoly questions" in the literature of strategic managment. MAybe best known is the book by Brandenburger/Nalebuff. Cary, I really sympathize with your asessment : "Re: "What is technology but the practical application of science to commerce and industry?" The application of science to reinventing our world" That is typically correct. However I would add that it's true in the long run only. In the short run diffusion of the generated "stock" of inventions is more important I think .. the "absorptive capacity". This is the reason why I often belittle those vision-less business-"leaders" that are more cocnerned with massaging the next quarterly earnings to the guidance they provided. I would ask all firms NOT to give guidance anymore. tHat's the problem of analysts and investors to do. The future is not settled - so what's all this stuff about ? And to hit the numbers in a difficult environment capital spending, business investment is cut back. BAH ! Better cut off the gravy train. No guidance and business is back to its roots - to provide superior VALUE for the future (for ALL future periods not just the next). Anyway this crunch sort of reduced the "absorptive capacity" of firms. And this is a longterm growth engine - an important one.. Some final observations: While I think that as technologists that most of us are, tech has a value in itself and its potential may be limitless to offer a "tomorrow" more to our invidiual liking and a road to empowerment, as investors we have an obligation to asess the commercial viability of technologies we invest on. That's a difference and a tough lesson for us. It was a tough lesson for me as well, believe me.. best rgrds CROSSY BTW: I hope my strategic "blunder" did not disturb you. If you are interested in the current research streams on strategy in the time after Alfred D. Chandler puslished his classics on Strategy and Structure I can only point out that this theoretical field has been very active in generating meaningful analysis. A great synposes on the research streams is a powerful article in itself called "Theory and resarch in strategic management: swings of a pendulum" by R.E. Hoskisson, M.A. Hitt, W.P. Wan and D. Yiu in Yearly Review of Management) Journal of Management May-June 1999 v25 i3 p417(4). Here's the article: findarticles.com Christensen's Book is called "The Innovator's dilemma" Nathan Rosenberg's book I referred to is called "Exploring the black box Technology, economics and history" all are a great read..