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Technology Stocks : PC Sector Round Table -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (703)	8/8/1998 6:47:00 PM
From: Frodo Baxter	Read Replies (4) \| Respond to of 2025

Nice fantasy... here's the reality. techweb.com Worldwide semiconductor sales in June fell 14.1 percent compared to the same period last year, according to the Semiconductor Industry Association (SIA), located in San Jose, Calif. Wow! Is this because of Asia? Nope. In the Americas, sales fell to $3.2 billion this June, nearly 16 percent less than corresponding figures from a year ago. I think I've formulated my grand unified theory of tech. I won't actually spell it out in some silly treatise du jour, because no one will be willing to pay me 3 grand for it. But I'm sure y'all are familiar with the elements in Larryworld... a) the only cheap tech is dead tech b) tech is expensive and cash flow negative c) Asian bubble economies are leveraged, have no productivity growth, and are not economically sane; this doesn't diminish from the fact that Asian tech is cash flow negative as well d) all tech are commodities; this is not to say that tech is easy or cheap to make, only that these barriers can be easily overcome with the not-so-gentle application of money e) because of b, c and d, virtual integration never works f) Intel is an exception. Intel does not make commodities; they drive markets. Thus, they are successful at virtual integration because they are able to extract economic rents from the products they sell, even those that are commodities (i.e. motherboards) g) hopes that the Asian flu will fundamentally alter the economics of Asia are naive (how many of you can stomach throwing these economies into a time warp of a couple or three decades? that is what zero productivity growth implies) h) Japan's problems can't be "solved". It doesn't matter how much they reform banking, stimulate demand, deficit spend, or cut taxes. What's really needed is something to substitute for the presumed productivity growth of post-war Japan that has now been determined to be nonexistent. This, by the way, is impossible. i) earlier periods of undersupply were symptomatic of the adolescent nature of the industry, and unlikely to be repeated (note: I'm not sure I believe this, but it sounds controversial, so what the heck)