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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Don Earl who wrote (153)	12/26/1997 1:56:00 PM
From: George Papadopoulos	Respond to of 9980

Forbes 12/23/97 The doomsday theory Don, did u say "panic" overkill by the media? By Jerry Fleming IMF-dictated reforms lead to curtailment of a large part of Korean capital expansion plans. The potential for Korean bankruptcies leads to financial losses for equipment firms, such as occurred last spring when the Thai-based SubMicron memory factory was canceled. Forget profits, Korean chipmakers happy to book revenues, do so by aggressive price cuts. A 51% decline in the South Korean won gives them enough wiggle room. For example, Samsung can now sell a 16 MB chip at 4,500 won or $2.50. ($1=1,800 won), versus 2,300 won when the exchange rate was 1:800 a few months ago. The Korean-induced pricing pressure severely lowers the profitability of Japanese, Taiwanese and U.S. chipmakers. Korean price cuts lead to a price war as Japanese, Taiwanese and U.S. chipmakers compete to match Korean chip prices. Kiss profits good-bye. Weak Asian currencies drive down the value of the yen to 140-to-150 to the dollar resulting in weak sales and earnings for U.S. firms' Japanese subsidiaries (which sell in yen). The products of Japanese semiconductor equipment makers like Advantest become competitive. Wall Street estimates and ratings will be reduced in the coming weeks, since many of the equipment makers are rated "buy." Applied Materials, which denies seeing any cancelation or push outs, is rated a "buy" or a "strong buy" by 21 of 27 firms surveyed by research firm IBES. Only six analysts have a "hold" rating on the stock.

To: Don Earl who wrote (153)	12/26/1997 2:00:00 PM
From: George Papadopoulos	Respond to of 9980

Forbes: The Eastern Exposure I do not subscibe to Forbes magazine<g> By Om Malik Asia's woes will haunt U.S. technology companies through much of 1998. The malaise, which is likely to begin with the semiconductor equipment makers (see Dominoes are falling), will climb up the technology food chain, from memory chipmakers to personal computer and server makers. PC hardware vendors The exposure of the stand-alone PC hardware companies is limited when it comes to Asia, and the group of four largest PC makers depends heavily on North America and Europe for much of their revenues and profits. The group will see no real benefits from Asia in the near term, but over the longer term, rising Asian currencies mean that the components assembled in Asia would become cheaper, thus lowering the overall cost of manufacturing a personal computer. PC hardware companies Third-quarter 1997 global revenues by percent North America Japan Asia-Pacific Europe Apple Computer 53% 18% 6% 21% Compaq Computer 58 3 6 28 Dell Computer 71 4 3 22 Gateway 2000* 87 N/A 5 8 *Merrill Lynch estimates. Source: Company reports. Computers/large systems The server hardware makers like Hewlett-Packard (HWP) and International Business Machines (IBM) have a significant exposure in Asia-Pacific and Japan. Sales to Asia (excluding Japan) are around 2%. The Southeast Asian economies have been the engine for high growth for many of this group's members. Japan Asia-Pacific Auspex 12% 0 DataGeneral 4 2% Digital Equipment 8 10 EMC Corp. 5 4 Hewlett-Packard 10 6 IBM 12 8 Lexmark 1 10 NCR 12 8 Silicon Graphics 10 13 Sequent 5 7 Stratus 28 8 Sun Microsystems 12 4 Unisys 8 11 Sources: Company reports; Merrill Lynch. Computer services The computer services group has extremely little exposure to the Asian and Latin American markets. Of the group, Electronic Data Systems (EDS), Galileo International (GLC) and First Data (FDC) have less than 10% exposure. Merrill Lynch analyst Stephen McClellan notes that this group is an attractive investment sector for those looking to avoid Asian risks. Asia exposure (% sales) Automatic Data Processing (AUD) Under 5% BISYS Group (BSYS) 0 Computer Sciences (CSC) Under 1 DST Systems (DST) 0 Electronic Data (EDS) Under 5 First Data (FDC) Under 10 Fiserv (FISV) 0 Galileo International (GLC) Under 5 HBO & Co. (HBOC) 0 Paychex (PAYX) 0 Paymentech (PTI) 0 The SABRE Group (TSG) Under 5 Sterling Commerce (SE) Under 3 SunGard Data Systems (SDS) Under 5 USCS International (USCS) 0 Sources: Company reports; Merrill Lynch. Server & enterprise software Initially many thought that enterprise software companies were a safe haven in this current technology downturn, but the recent disaster at Oracle (ORCL) says otherwise. Unless Oracle is just using Asia as the fall guy, others like Sybase and Informix are in for a rough ride as well. Asia/Latin America Exposure Baan Company (BAANF) 13% BMC Software (BMCS) 6.4 Computer Associates (CA) 10.0 Informix (YFMX) 17 Oracle Corp. (ORCL) 15 PeopleSoft (PSFT) 7 Sybase (SYBS) 17 Sources: Company reports; Merrill Lynch.