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Technology Stocks : Wind River going up, up, up! -- Ignore unavailable to you. Want to Upgrade?

To: Peter R Smith who wrote (2297)	10/27/1997 1:37:00 PM
From: Snowshoe	Respond to of 10309

>>Looking to get in in the 20's, yes thats right thats where I think we are going short term.<< For trading purposes, I've had a mental target to pick up some WIND in the 28-32 range if market stabilizes before earnings. Not sure if you caught it it, but there is now a thread for WIND Technical Analysis at: exchange2000.com

To: Peter R Smith who wrote (2297)	10/27/1997 2:04:00 PM
From: Ronald Paul	Respond to of 10309

You are probably right. Reminds me of the "Hi-tech Spring Crash" when WIND lost more than half its value and dipped to 18 bucks a share then. Congrats to those that pick WIND up in the 20s if we see 20s near term. Those of us that are already heavily invested in WIND (like me) will have to wait this one out if possible. Good luck, Ronald

To: Peter R Smith who wrote (2297)	10/27/1997 3:00:00 PM
From: Allen Benn	Read Replies (5) \| Respond to of 10309

What is the impact of the Hong Kong market crash? That is the question someone emailed me privately, believing it not appropriate for the thread. He was wrong. Obviously it is appropriate. We all know Hong Kong's currency has been under attack by traders, and is being supported strongly by authorities, initially by increasing interest rates. High interest rates put pressure on the Hong Kong property sector as well as highly leveraged stock portfolios. Accordingly the Hong Kong stock market tanked, which in turn caused a flight of capital to United States for safety. Unlike previous successful attacks on Asian tigers, however, this one probably will fail in forcing a devaluation of the Hong Kong dollar. It is therefore ironic that, unlike the successful attacks on currencies, this one already has had significant residual impact on U.S. markets, and has yet to show signs of abating. Why does the U.S. stock market care one whit about property or stock values in Hong Kong, or even whether Hong Kong suffers a mild recession because of the cost of fighting a currency attack? The deepest Hong Kong recession imaginable cannot possibly derail the U.S. economy, so why the fuss? Hong Kong has merely brought into relief deeper problems that are very much a concern to the U.S. financial markets. I believe the world finally is waking up to some macroeconomics problems that have been glossed-over in Southeast Asia. Inefficient macroeconomics policies, and China's emergence as a low-cost producer with huge production potential, has resulted in over-investment both in China and the region. The attack on Hong Kong finally makes clear ominous possibilities for companies worldwide, including many in the U.S. These include multinationals exporting heavily to the Far East, but, even more, many technology companies that buy from and compete with Asian companies. The U.S. stock market has separated from the bond market, which means that the stock market is fixated on the fear of major earnings upheavals. U.S. companies' earnings can be affected by goings-on in Asia primarily because weakened economies will import fewer goods from the U.S. and/or excess capacity in the Far East will pressure margins for U.S. companies. The interesting aspect of crises like the Hong Kong sell-off is how long it takes for the financial market to get it right. The market's first reaction is to tank virtually all technology companies - in yet another flight to larger companies (with limited exposure to Asia) and of course to bonds. The market's second reaction will begin when it starts to separate expected winners from losers, providing ample opportunity for alert investors capable of discerning winners now. Which technology companies will be the losers resulting from over-capacity in Asia? Semiconductor producers, semiconductor equipment makes, disk drive manufacturers, and most companies that make products using these and similar products can expect pricing pressures to increase until the imbalances are corrected. An example of an exception would be a fabless semiconductor company fortunate enough to sell into niche markets poorly penetrated by Asian companies. On the other hand, pity the technology company that competes at the silicon level with plans to sell increasing product volumes to a fast-growing Far East. Unit sales will be down; dollar sales will be down even more after currency translations; and component inventory will need a heavy dose of devaluation write-off. Further, the cost of non-Asian components, for all customers, will need to be reduced drastically to remain competitive. Which technology companies will benefit from over-capacity in Asia? As a rule, software companies benefit from any over-supply of hardware components. Lower hardware costs spur on product sales benefiting software companies - especially software companies able to demand royalty-based pricing. Lower hardware prices also put pressure on product companies to quicken the pace and get to market as rapidly as possible. However, like almost all companies, most software companies are extremely sensitive to overall economic conditions, so any slowing of economic activity can be painful. WIND is one of very few software companies positioned to benefit from both accelerated hardware price reductions and any follow-on economic slowdown. WIND will not suffer materially from loss of sales or currency translations on sales in Southeast Asian, since only 14% of WIND's sales stem from the Far East, and most of those sales are in Japan, not the more-affected parts of Asia. On the plus side, the company will benefit greatly from aggressive hardware pricing forces on hardware companies, starting first with product license sales. Imagine the number of development teams being pushed by marketing to get quickly to market. How many will now take advantage of price reductions to design in advanced hardware components that in turn require the most sophisticated high-level development tools? Managers and engineers alike will not hesitate to scuttle roll-your-own RTOSs and homemade libraries in favor of commercial development tools with a full set of support libraries in the rush to market. Ron Abelmann made the point at the H&Q Technology Conference last spring that WIND can be expected to do very well during good times, riding the wave of ever-cheaper 32-bit microprocessors. But WIND will do just as well during slow economic periods, because of the added pressure on companies in such times to get new product to market, and of course because of the accelerated reductions in hardware prices. If this is hard to swallow, recall that IBM was considered recession-proof for decades until it crawled into the nineties overly dependent on mainframes. In short, WIND should have no trouble maintaining earnings, even if this crisis continues longer than most investors expect. Consequently, any fall-back in WIND's stock must reflect a non-discerning market, or one temporarily unwilling to give reasonable economic value to future expectations. Should the price continue to free fall, expect the company to shore it up with massive buybacks. WIND has the cash to sop up millions of shares at bargain prices, only to sell them back later at a huge profit. Allen