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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: j g cordes who wrote (15952)	12/26/1997 10:21:00 AM
From: Tom Trader	Read Replies (2) \| Respond to of 50167

Jim, Iqbal and others following the ASEAN crisis--here is the perspective of some one visiting with me over Christmas He is an executive with one of the well-known US high tech companies that does business in Asia and he spends about half his time out there. First, no one including the management of these companies, has a REAL perspective as to precisely what the impact of the ASEAN crisis will be on corporate profits in the near and medium term. This has created major problems for the executives of these companies in figuring out how to plan in the context of this crisis. Since this crisis broke, this individual has reviewed three updates of the impact on his company's operations--each of them, worse than the one prepared earlier. The last one was completed a week ago. The real difficulty that they are having is that they are not able to assess the magnitude of the problem, how long-lasting the impact is likely to be and how many dominos are still destined to fall. For example, he reminded me that barely a month ago the emphasis was on Hong Kong and no one even mentioned South Korea as being a potential problem -- and yet since then we have seen a melt-down occur there. So how many more "S Koreas" are out there?? He indicated that the government officials that he and his counter-parts in other companies have met with are not so much in denial, as much as shell-shocked as to what hit them and what needs to be done to fix the problem. He attributes Mahatir and other Asian leaders unhelpful comments to this more than anything else. There is a marked reluctance to deal with the structural problems that have caused the difficulties. There is also resentment that is being encountered at the idea of a bunch of foreigners coming in and telling these governments what needs to be done. He also indicated that he agrees with these officials, to some extent, that "western" solutions may not be capable of being used wholesale in these economies. He believed that the ASEAN crisis is "containable" in terms of the impact on his company and that of most other US companies which do business there. They are watching Japan and to a lesser extent China very closely -- a major crisis in the former would be a whole different ball-game and would create an impact on US companies and particularly those in Europe that would send the the world markets reeling. He, and others close to the scene there, believe that that the situation in Japan is very dicey -- and that most US government, IMF and other European government efforts are concentrated on not letting the situation in Japan implode. Iqbal, he read the Forbes link that you posted and feels that the analysis was rather shallow. More to the point, he felt that given that the companies operating out there are constantly modifying their forecasts--it is very debatable that the financial media has an adequate sense of what is happening. He also indicated that your focus on revenues misses the point -- the focus needs to be on the impact that ANY reduction in revenues will have on PROFITABILITY since a x % decline in revenues will result in a significantly greater impact on profits -- given that many components of costs are not easily capable of being reduced. He heads back to Japan tomorrow and then Indonesia and Singapore -- and promised to call me at some point to respond to some other specific questions that I had in the context of positions that I am looking to take. I will share with the thread anything that is likely to be of general interest. Anyway--this is one individual's perspective--stated in the context of his knowledge and under the influence of more than a little holiday "spirit":)

To: j g cordes who wrote (15952)	12/26/1997 3:27:00 PM
From: Cyrus	Read Replies (1) \| Respond to of 50167

Jim I agree that not all of the acquisitions made will be a good fit. Asia is not out of the woods yet, as I understand the region the most important factor for reconciliation would be for Japan's banking sector to make major reforms. Are you familiar with this situation? What are your views on it? As you pointed out this is not only a US problem, but should effect Europe as well. It seems to me that many analysts are now pushing Europe as a good place for offshore investment. My thoughts are that Europe would be no better or worse than the US, depending on the sector you are interested in. Asian problems look huge now , I am trying to look down the road a bit and see if they will look the same in one or two years. With the devaluation of their markets, and their currency, I think some investments made at the right time could be good. In other words an opportunity to gain on the value of the investment and the currency. Have a good Christmas and a Happy New Year Darrell