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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (40873)	3/29/2004 10:01:00 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70330

07:08 Rising inventories worrying tech investors again -- WSJ The WSJ's "Heard on the Street" column discusses the tech sector's increasing inventories. When J.P. Morgan analyst Chris Danely downgraded the semiconductor group a few weeks back, some investors were instantly reminded of a similar downgrade of semiconductor stocks in July 2000 by John Joseph, now director of research at Smith Barney. Not long after his downgrade, semiconductor stocks, which were among the last holdouts when tech stocks collapsed, began their own free fall. According to the article, evidence is popping up across the tech sector of building inventories and the ripple effects have hit tech stocks. At the top of the list are contract manufacturers who assemble and supply components to big vendors such as Cisco and Hewlett-Packard. The next step, investors fret, is that the contract manufacturers will, in turn, reduce orders to semiconductor co's. Among the contract manufacturers whose shares have been hit are Jabil Circuit, Celestica, Solectron and Sanmina, all of which jumped at the beginning of the year but have been on a steady decline since mid-Jan. Investors also point to signs of a buildup of cellular-phone inventory at wireless carriers. Inventories at Cingular, for instance, more than doubled at the end of last year, compared with the year before, after an anticipated replacement cycle wasn't strong enough to absorb a buildup in inventory. "What is different between now and 2000-2001 is we haven't seen demand collapse," says Fred Hickey, who publishes a tech newsletter, High Tech Strategist. "It's not unusual to have an inventory buildup and if demand holds up it gets flushed out," he says.