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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (13409)	2/24/2003 1:01:20 PM
From: Sully-	Read Replies (1) \| Respond to of 89467

From this weekends Barrons: "What's unique about the current time is that we are in a structural, or secular, bear market. In the history of the broad stock-market indexes, there have been only two declines comparable to what we have seen since 2000: the declines of 1973-1974 and 1929-32, both of which were farily extraordinary events. They were the precursors to major structural shifts, both in the economy and in the investing climate, and so that has to be a consideration in any analysis of what will happen in the world in the next 12-15 months. In the next 12 months or so we are likely to see some stabilization of capex, but we are very, very reluctant to bet on any growth. The bulls on the economy would say replacement demand is going to drive capex in the next 12-18 months. But consider a sector like microprocessors. It is a simple sector to look at because one supplier is so dominant, in effect, it's the entire market, and that's Intel. If you take Intel's revenue since the beginning of it's history in the early 80s and presume some percentage of revenues each year comes from replacement demand of the installed base and the rest from new sales, you end up with a very simple model of how the personal computer market has developed. In 2002, Intel had sales of around $27 billion. If you assume the PC has an average life of 4 years, that mean every year roughly 25% of the installed base gets replaced. The $27 billion revenue number in 2002 is almost exactly 25% of the installed base. That's telling. It shows there has been no real growth. PCs are being replaced at the rate you would expect them to be replaced. The idea of getting a surge in capital expenditures because of replacement demand could well be a myth. It is very unlikely to happen." Raj Gupta