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To: Greg B. who wrote (10997)	6/1/1998 2:13:00 PM
From: dougjn	Respond to of 152472

Did you all see the article on the Asian mess in the Sunday NY Times magazine section? Really excellent, I thought. Long article, full of specific on the ground annecdotes. Used Korea as its main case study, but also some Thailand. (The reason was these were thought to be the best, rather than the worst, cases among the truly deeply hit Asian economies.) Sure doesn't look to me like any quick fixes even in the most responsive states, Korea and Thailand. The level of under water private indebtedness of the Chaebol in Korea appears to be really awe inspiring. Operated for five decades without real balance sheets or debt accountability. Could always get more loans. Profitless growth. Very little accurate profit/loss accounting. Sales growth without profit accounting was deeping ingrained in the political cultures. There was a deep faith assumption that if they continued to grow sales and take market share, their Asian values and competitiveness would inevitably lead to triumph, profits and prosperity. From the article: "The American consulting firm McKinsey & Company just released a study showing that with the same amount of capital and labor, Korean companies produced only half as much stuff as American firms." And, "Run-of-the-mill large Korean companies -- like large companies throughout Asia -- are now widely, suddenly, viewed as the worst-run on the planet, to be avoided at any cost." My guess is that the recently strong PCS phone sales in the face of these problems is whistling past the graveyard. A grabbing for the status of the busy, indespensible while collar worker, before the ax starts to fall ... And won't continue. The article really does make it look like these countries are facing a Great Depression....though it doesn't make any such grand or macro pronouncement itself. Not sure how important this will continue to be for the Q, but doesn't look good. Korea's real economy sure doesn't look to be turning around right away to me. Now maybe the expectations of a strong 4th fiscal quarter and thereafter for the Q don't depend on a strong Korean recovery by then, but I suspect they do. (Weaker on the ground Korean Asic and other purchases at that point wouldn't surprise me. The full effects of these kinds of upheavals take quite a while to work through.) Gregg, have you or anyone worked out how important Korea looks to still be by the end of this calendar year, and what the effects of a still weak, or weaker, Korea would then be? Does other stuff (dual mode Q phone, better handset margins) really fully offset continuing or increased Korean weakness by then, do you think? Doug