Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Jim Patterson who wrote (47828)	6/16/1998 12:28:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Jim, congratulations of the newest Patterson! Now back to business. You said As [Asian] currencies collapse, and companies flood markets with goods trying desperately to boost revenue and earnings, pricing will continue to implode for most good in most countries. Sorry, but your premise is not accurate. The collapse of the banking systems through much of Asia has removed a major source of income from those businesses -- currency arbitrage. Now they will be forced to deal with the underlying economics within their respective industries. What does this mean? It means that they can no longer afford to sell at prices below cost because there is nothing left to prop up their profits. Falling local currencies argue that imported good will be more expensive. The things that will be cheaper are labor and locally produced components. But these companies will need to adjust their pricing to reflect their cost structures. Either that or they will cease to exist. It makes no economic sense to sell goods below the cost of manufacturing them over the long run. It is now a matter of survival for many of these firms, and they can no longer justify their pricing by claiming that they were capturing market share that will be profitable in the future. TTFN, CTC

To: Jim Patterson who wrote (47828)	6/16/1998 12:43:00 PM
From: Lee	Read Replies (1) \| Respond to of 176387

HI Jim P., >>Re:<<A 10% impact on the US?>> I believe Morgan Stanley estimated in Dec. or Jan. that the affect of the SE Asian economic meltdown would affect US GDP by 0.5%. I can look it up if you require a URL. Apart from that, GDP in Q198 was 4.8% last I heard. So, if we are going to talk about the impact from this turmoil, it might be more accurately limited to either those businesses who derive significant income from SE Asia or those businesses who haven't a clue about currency hedging. If we limit our scope to those groups, then we have a small population which is affected by the SE Asian currency woes. I think it is a generalization to say that generally Q1 EPS growth was dented because of the Asian problems. Using the same premises, the Q1 or Q2 EPS growth problems are not widespread, i.e. look at BBBY, BBY, HD, or any company which benefits from strong consumer spending. You are correct that the reduced price of crude is still not a benefit for SE Asia since it is priced in dollars. But your statement about more currency collapse leading to market flooding of goods is inaccurate since S. Korea and Japan have done this for years and done it under their special government protectionism. If the market is flooded with certain products, and affects US manufacturers, don't you think it affects US Business because somebody didn't do minimal homework? For this reason, I think it is business specific and limited. Finally, the latest reports indicate that consumer bankruptcy proceedings have declined. However, you are correct in that more people count their net value based on market gains so a significant market decline would probably put the brakes on the roaring consumer sentiment readings we've seen lately. I guess the main message is that we can't even predict the weather with consistent accuracy so how on earth can we predict global economics with any certainty? Regards, Lee

To: Jim Patterson who wrote (47828)	6/16/1998 2:00:00 PM
From: JRI	Read Replies (1) \| Respond to of 176387

JP- A 10% impact on the US? First of all, that is a large impact. Second, What impact will Asia have on Europe? What impact will the European impact have on the US? Dell specific: US strong, Europe strong, Asia good That's all one really needs to know.... <<See we are just now starting to see the first real effects of the whole thing. The AP is experiencing its second wave of crisis; it should have one more after this. As all of this unfolds, the affects are felt wider and farther each time.>> Your scenario can only take place if Japan pursues a "beggar-thy-neighbor policy" over the next year, allowing the yen to continuously slide without action........Although a potential outcome, this is a real longshot...... Don't bet on a China devaluation.........remember, it is not a fully convertible currency......Asia Tiger Fund manager stated that pressure (currently) is on Remimbi (sp?) to get stronger, not weaker...based on money flows....I can't confirm this though.... <<Not many companies felt much in Q4, Q1 saw tough EPS growth, and now Q2 is in trouble.>> Aren't overall earnings supposed to be better this quarter? <<Q3 and Q4 will feel the affect harder and greater as the contagion spreads.>> Let get specific to PC's: 2nd half of year is the cyclical growth period...... Someone posted yesterday that Michael Murphy of Cal. Stock Newsletter sees ASP's rising in 2nd half year....IDC sees Japan sales growth 15-20% over last year's sales in 2nd half of year....For PC makers (other than Dell), the worse could be already over after the 2nd quarter concerning Asia worries....For Dell, Asia impact was ever-so-slight in Q1, and because of the weaker yen, may even be a plus in Q2.....Certainly, 2nd half of year will be fine for Dell, for Asia... I am really not interested in what happens to Coke, Seagate, or others... <<The world is on its way into a deflationary recession, and no one or no thing can stop it from happening.>> Well Jim, I guess we shall see.....I'm saving this for my Jim file..........Look forward to hearing back from me early next year! (I'll gladly buy you a beer if I'm wrong...probably one of those cheap Japanese imports <<gg>>) <<The US consumer is still strong, but many are going bankrupt as we speak. If the US market gets into trouble, The finical condition of the US consumer will change in a hurry.>> OK, I think we can confidently write-off any future sales to any consumers who are near-bankrupt without any measureable effect on Dell's bottom line right now....I am willing to do this.......So the point is mute...Dell sales- 12% consumer.....bankrupt, near-bankrupt consumer- ????? Pretty damn low....CPQ could get hurt, though..<<gg>> Congradulations again........Some things (many things) are much more important than our occasional disagreements....