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To: SargeK who wrote (36499)	2/2/1999 9:50:00 AM
From: Teddy	Read Replies (2) \| Respond to of 95453

Something to think about: Geneva Steel Shows the Flip Side of Success By James J. Cramer 2/2/99 12:15 AM ET Back in the days when economics made sense and the stock market represented the nation's bricks and mortar, the steel industry ruled as the ultimate Gross Domestic Product. The relationship was so etched in stone that at one point, if I had known that the fourth quarter would produce 5% GDP growth, I would have filed a 13d position in Geneva Steel (GNV:NYSE), the only integrated steel mill west of the Mississippi. But these days the only filing going on with Geneva is the Chapter 11 kind: bankruptcy. Despite the strongest U.S. growth in years, Geneva was losing $5 on every ton of hot rolled steel it made. Unlike the Net companies, it could not make it up in volume. The reason? Dramatic overimporting of steel at low prices from Asia. Yep, it turns out that the southeast economic crisis had an impact, an impact so great that Geneva's stock went to near-zero Monday, the day it filed for bankruptcy. This despite a weak dollar that should have discouraged imports and an economy that would seem to need limitless amounts of steel to support the booming western portion of the nation. The irony is that in many ways the decline of Geneva is the flip side of the success of the Net. There is any amount of money to give to fledgling Net companies but no money for companies with $700 million in sales. Amazingly, Geneva survived the recession at the beginning of the decade, dropping to 10 bucks, and then roared back to $20 after the Gulf War. It then got cut in half again in 1992 but ran right back up to 20 in 1994. It peaked right about the time when the Fed was done with its 1994 tightenings. And it has been downhill ever since. It never even blipped up during these last four years of prosperity, despite the cost advantage it had over everyone else because of its Utah location. Why bother to recount the hazards of some dumb old rusty steel mill? Because less than a half dozen years ago people traded Geneva like they trade Applied Materials (AMAT:Nasdaq) or KLA-Tencor (KLAC:Nasdaq) or Western Digital (WDC:NYSE) now. I would no sooner believe this company could have ended up in bankruptcy then as I would believe that one of these heavy industry players would ever get hurt -- even though they all got clocked on fears that Asia's decline could be the end of them. Never forget that these things we trade are, in the end, paper -- whether they represent steel, or brick, or voice and data. And paper has a way of getting trumped by other, more powerful, elements.