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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (6586)	10/29/2011 1:19:36 AM
From: marc ultra	2 Recommendations Read Replies (3) \| Respond to of 10065

MGJ <The semis are the building blocks of the economy and are the first to rebound or fall depending on economic conditions. That said, we are both aware of the Intc results. Intc is not only a bell weather for the semiconductor market but for the overall pc market as well. The PC market and INTC has very little relevance these days in terms of the US economy. The areas of growth in the US in terms of PCs had become laptops and particularly net-books which are now giving way to tablets and smart phones in terms of consumer products. These tablets and smart phones have mostly analog chips in them and also and use flash for memory. A simple look at INTC's revenue breakdown by geography in their latest report says what's going on with them : Asia Pacific x Japan 57%, Americas 21%, Europe 13% and Japan 9%. So basically their microprocessors are mostly going into computers in places where huge numbers of consumers are still buying those things like China and Brazil etc. and the US is just a a non-growth piece of that 21% Americas so INTC tells us little about the US economy. I listen to the CCs and and/or look at the results of most of the analog chip makers like TXN, ADI, LLTC, MXIM, ISIL as well as have a lot of money stuck in a microcap back-end test equipment company that is levered mostly to analog. I say stuck because the stock is illiquid and the company has seen its sales come to a standstill as nobody is ordering their quality test handler equipment. The same is true for a competitor of them COHU that has been mentioned here. It gets ordered when analog chip companies are making a lot of chips that all need to be tested but the analog chip makers themselves have all cut back and as I think I said before were basically talking about their cost cutting measures as they wait for demand to return. All of the companies indicate they think end demand or worry about it is the problem. This is the stuff that goes into the electronics Americans buy and things are just plain bleak. Many of the things analog chips go into are in secular growth phases like smart phones and tablets and demand is simply not there. I wasn't really making the connection between this chip downturn and the economy but now that you brought up INTC I'm suddenly wondering if this analog chip recession may be a leading indicator for the US economy. The outlooks for these companies had all seemed bright coming into Q4 and into Q1 '12 and it's all gone now. As to GDP it says what happened in that previous 3 months and is in not a leading indicator but a lagging or at best coincident indicator. As far as the jobs report what we see is a hemorrhaging of public sector jobs and those are mostly good pay, good benefit jobs that are disappearing and that's on top of the poor private sector job situation. Now that I've had to go through this stuff I see things really are kind of bleak.