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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Nadine Carroll who wrote (26695)	3/14/1998 9:34:00 AM
From: Earlie	Read Replies (3) \| Respond to of 132070

Nadine: Good comments. IDC and the other market research organizations are known for always putting out optimistic reports,....understandable, given who pays their rent. I have a small file of laughable IDC and other PC related market research company "reports", which I keep just to remind myself of their bias. Here's just one example from mid 1996 DRAM chip prices are expected to stabilize this year, after having slid sharply at the beginning of the year, a top analyst at market research company Dataquest said Tuesday. Speaking at a seminar, principal DRAM market analyst Jim Handy said continued strong growth in PC sales should support DRAM prices throughout the year and lead to a normal DRAM market in 1997. "We think it's very unlikely that DRAM prices will collapse", he said.....etc, etc,.... I wouldn't quibble over the difference between 2-3% and 5% in added N. American penetration due to the cheap boxes, except to note the positive bias one should expect from the market researchers, and to note that most reports last summer spoke of a 40% N. American PC penetration. My figures are from the field. I do know that retailers, resellers and producers were looking for much greater added penetration through the Christmas period, and things have declined since. It's also worth noting again that the box builders were all counting on big sales into Asia this year, which is simply impossible now. With respect to placing bets now on who will win the price wars, I'd argue that : - the publicly traded box builders are currently priced for a rosy future rather than a price war environment. Their stock prices will crater as their earnings come off, based on BOTH declining earnings and reduced growth multiples. Why not wait and buy them at much lower prices 6 months from now. An added advantage, ...the survivors will be evident. - The difference from previous price wars include a much larger supply base, a smashed Asia, and no new sales drivers. With respect to business buying, aside from saturation, there will be cutbacks in capital budgets this year, as a result of Asian pricing pressures, which are already starting to show up. 1998 is not going to be a banner year in the majority of businesses. Best, Earlie

To: Nadine Carroll who wrote (26695)	3/14/1998 6:29:00 PM
From: Skeeter Bug	Respond to of 132070

>>I think it's premature to consider the market saturated, especially if $599 PC's come out this year.<< nadine, hp has a p166, 1.2 gb, 16 mb sdram, 33.3 for $499. i guess business was so good they went from $800 to $499 without stopping at $599 ;-) >>IDC just predicted 13.5% world-wide pc growth in 1998. Granted, the growth rate is slowing, but most makers of "commodities" would love such a market<< nadine, what are the assumptions. if pc prices weren't collapsing then there would be zero growth rate and maybe even a decline. last december the above box was $800 and "cheap." now it is $499 2 months later. nobody would like to see wheat grow at 13% a year due to 40% price cuts in two months. >>Question: if there is a price war coming, doesn't it make sense to place bets on the companies that you think will be standing when it's over?<< it makes sense to buy them when there is blood all over the streets and they carry a decent valuation. nobody wants to wait 3-7 years before they achieve parity with their purchase price do thay? just some thoughts. good luck.