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To: phbolton who wrote (44465)	3/27/1999 2:53:00 PM
From: Earlie	Read Replies (2) \| Respond to of 53903

PHB: Wow, the glut-environment-that-never-existed is apparently continuing to do its thing. (g) If investors think things are a bit difficult now, wait until summer. In all my time in the field, it's never been like this. Bulls may choose to remain bullish, but current stock prices across the entire PC/semi industry have no relationship to what is going on in the field. Here are a few observations. - For anybody who touts the belief that memory supply will lag demand this year, you are in dreamland. Please go visit anybody connected with the sales side of the industry before uttering such trash. Supply is already overwhelming demand and it gets worse every day. Earlier, I projected that prices of 64 Mbit chips would see high $6.00 pricing before Summer ends. If this keeps up, that forecast will have to be lowered. Unless MU can find a miracle process, company losses will resume this quarter, simply because all-up costs are not declining as quickly as are the selling prices. For those who might disagree, I would suggest that they have a look at the impact of interest costs for starters. - It is now obvious that the PC "channel stuff" that occurred at the end of the year was a beauty. Much of the channel is still not clear (see Compaq's new "channel incentives" as an example). Few investors seem to have developed the concept of subtraction, as in SUBTRACT the time (a full quarter) that has already been spent in trying to open up the distribution arteries, from the time remaining in the year during which new sales might be made. Hard to have a record year when you start off with only 9 months during which new sales can be made. Yes, some product always dribble through (especially inexpensive bottom-end product for which there is still hot demand), but the middle and upper end products suffer from channel constipation. - Micros are also in glut, especially Intel's. Don't suggest to anybody that you might be a buyer of micros, as a dump truck might be quickly backed up to your front door. (g) - motherboards are also in over-supply. Nothing big yet, but it is growing. - Most of the component suppliers are also worried about the lack of demand. They have already absorbed the nasty lessons that relate to "glut" last year, and have been careful about inventories ever since. Nevertheless, they continue to say "Show Me The Buyers." - PC demand is slipping at every price point except the bottom. Net PC revenues will not be just negative this year, they will be SERIOUSLY negative. - profitability in the PC sector has been under pressure for several quarters. It is intensifying. Losses will be the norm this year for most box builders. - So far, this has been, BY FAR, the worst warnings period I have ever experienced in the PC/semi sector. In spite of this, I note that the semi and box builder indexes remain elevated. The degree of over-valuation is truly historic in this sector. My expectation is that one of the big tech darlings will own up to serious problems and trigger a massive sell-off of the whole tech sector. Should this occur, the market would follow. The tech stocks are far too "over-owned". Best, Earlie