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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (20595)	6/19/1998 11:40:00 AM
From: David Rosenthal	Read Replies (2) \| Respond to of 70976

Ramsey, These human resources maneuvers are extremely expensive, especially in the high tech arena. I think when companies like NVLS utilize this strategy, they are at the end of the ropes and certainly are not anticipating a near term turnaround. You are right that they are hunkering down and this is nothing but a veiled earnings warning. The way they are handling it is part of the game of managing Wall Street, which NVLS does well. Let's say you know that business is drying up for an indefinite period of time. You decide to cut costs. How do you handle the earnings news? If you put out a direct earnings warning you know that your stock will be blasted. However, let's say you make an announcement of layoffs to control costs. Then when you finally announce reduced earnings you can say that industry conditions are currently weak but that you took decisive action a month or so ago to respond. You wrap up the price of the layoffs as an anticipated one time charge and pitch that you have costs under control for the weak environment and that you are still well positioned to take advantage of things when business picks up. Making the announcement this way should play out better in the market. Dave

To: Ramsey Su who wrote (20595)	6/19/1998 3:06:00 PM
From: Teri Skogerboe	Read Replies (3) \| Respond to of 70976

Ramsey, Re: "On the other hand, when staff reduction are necessary because there is a lack of business, it is a disaster." I agree that it is at a minimum not at all good for near-term prospects. And you're right, it is so amazing to me that so many different interpretations of company announcements can be made. And the fact that very intelligent people can honestly and vehemently argue their case that the US market is either a buy or a sell. Your comments were very interesting, and I tend to agree with everything you said. My time is very limited this week, so I am constantly posting in a rush. Another thing, there was a post on the Blood thread earlier in the day (I believe) that said TSMC was cutting CapEx by $300M, I believe this is the correct figure. An example about different interpretations, when I read Jtech's post yesterday that included this comment, "also, asia in perspective-GE HAS BIGGER MARKET VALUE THAN THE WHOLE ASIA EXCLUDING JAPAN." This was my off-the-cuff, immediate reaction.... There are those who would say that Jtech has just described an excellent reason that Asia is a screaming buy and US stocks are a sell. Is GE really worth more than ALL of the Asian companies combined? So much of market valuations are based on the prevailing sentiment and let's face it, America is in a major love affair with US stocks. There is an old Wall Street adage that goes something along these lines... "When cash is trash, cash will soon be king." Further, market value can change in a very big hurry. Asia represents one-third of world GDP and ~ two-thirds of the world's population. I'm very stale on my population facts, so, someone may need to correct this comment (if anyone cares). But bottom line is that many of Asia's markets have been trounced to the point that they have wiped out 10-12 years of gains, so maybe a comparison of market values is out of place, or at a minimum, when I make these comparisons, I end up thinking that if Asia can get its act together, it's a screaming buy. the big "if". So many ideas, so little time -g-. Teri