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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: marvin litman who wrote (6011)	12/6/1997 9:20:00 PM
From: uu	Read Replies (2) \| Respond to of 64865

Marvin: <off topic> > I noticed in todays newspaper ads some of the prices for hard drives. They seem very low compared to a few months ago. Could it be that the party is over? What do you think? Here is what I think will happen. And note that this is just my opinion and it may sound too speculative to you! Despite the disk drives being so cheap right now I have a strong feeling they are going to get much cheaper for the next 2-3 months as South East Asian companies (e.g. especially those in Korea) will try their best to export all their inventory of products to no other place but the US at extremely cheap prices (thanks to the currency devaluation that have taken place). This means nothing but lack of robust earnings, revenue and most important of all profit margins for the US disk drive makers. However I believe similar to how financial institutions would soon assimilate their counterparts in the South East Asia region, US high techs may also start doing the same. This will benefit them in 3 distinct ways: 1. Elimination of their competitors overseas through buy outs at extremely cheap prices (thanks to the currency devaluation). And this is feasible right now thanks to the economic pressure these regions are facing and thus forcing the local governments to not only intervene to stop, but to encourage such buy outs! This will give US high techs a more global monopolistic power thus resulting in higher (much higher) revenue growth for them. 2. The buy outs will allow the US high techs to dramatically expand their production and manufacturing costs in the South East Asian countries (e.g. Korea) where cheap labor and material are as easily obtained as the Oxygen in the air! This will result in higher profit margins at the expense of lower production cost. 3. Because of the expansion of the production and manufacturing of the US high techs in that region of the world it will be a boost to the local economies of those regions. Thus ultimately the same companies that assimilated the local companies will be the savior of the local economies in that region. This will of course mean nothing but the continued growth in the global economy as a whole and therefore a continued growth for the US high tech products. Also because of the massive attack of exports from the South East Asian countries to the US at dirt cheap prices, the Segates and WDCs of the world will continue to experience extreme price competition with each other. This may also cause for consolidations to take place among the US high tech firms (e.g. Segate buying QNTM, or QNTM buying WDC, or a combination, etc.). Having said all this I still continue to believe that it is not yet a good time to buy the shares of companies such as SEG, QNTM, or WDC. I believe because of the short term price war competition (as I believe to take place as explained earlier) the possibility of SEG, QNTM, and WDC going down for another 5-10% (or at best staying at the same level) are much more likely than their prices to move higher. However once this consolidation (within the US and overseas) to take place - sometime after Q1 of 98 - the prices should start to go up dramatically. As much as I would love to average down for example my SEG shares from their current $40 average price, I think I am going to wait for another 1-2 months or so. Anyway, this is just my take on the situation and I can very well be way off with everything stated! As always just my humble opinion. Regards, Addi Jamshidi