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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (6766)	8/13/2003 10:28:46 PM
From: robert b furman	Read Replies (2) \| Respond to of 25522

As a servant to markets,I have been on the side of too much inventory. In this scenario there is almost no solution but pain and no or very low profits. The one thing I can tell you is I swear to never get in an over inventoried situation again. Once bit twice shy. It is a human response that is quite reliable. Once burned one holds back and waits for Mr Market to prove to you,that expansion is economically justifiable. This is where I perceive chip makers to be now.Demand for chips has recovered ,but pricing has not.Most chips have been all but commoditized. Those daring souls that have kept up with linewidth shrinks and state of the art manufacturing processes are far and few - and there are many reports that confirm capacity has been sparingly added and accordingly getting tight. It is my forecast that these few aggressive investors will be slow to "add capacity" as they will intentionally want to create a production bottleneck. It will be the profits generated from a shortage of production capacity that will fund capital expansion. As a dealer who constantly strives to stock niche vehicles that are not in other dealers inventory,I can guarantee you that the best business situation to hope for or create is one of shortage. The grosses are exceptional AND short lived.Upon an awareness of certain chips bringing and commanding exceptional profits - the usual overcapacity is not far down the road. This is and always will be the "Law of the Jungle" in electronics. To anticipate that this imbalance will never again resurface is as naive as to think that reward will never come to the brilliant who invest in the face of uncertainty. For those bold enough to have already made and implemented the investments,the larceny of restricting production to create a shortage (while a competitive advantage still exists) is but the childs play that remains after bold men have already acted. In the face of economic recovery ,and its associated and somewhat lagging demand,it would be simplistic to hold back investment - while waiting for economic confirmation. Believe me those in the industry are well ahead of waiting for earnings to be announced. DUH!!! That is why those who take intuitive risk, make the big money that is if they can wait out the bumps,headfakes and time delays.GGG JMHO Bob