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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: re3 who wrote (57339)	4/25/1999 2:11:00 PM
From: accountclosed	Read Replies (2) \| Respond to of 132070

Eat our dust <g> Bay Street Beat: Toronto still dining on U.S. dust http://biz.yahoo.com/rf/990425/bm.html

To: re3 who wrote (57339)	4/25/1999 2:52:00 PM
From: Knighty Tin	Respond to of 132070

Howard, I don't think so. Here is a simplistic stab at it: There is too much supply of computers. Our mfrs. have become too efficient for their own prosperity. The only way to keep costs low is to kick out as many boxes as you can. Unfortunately, there is not enough demand to take all those boxes unless prices are cut drastically. Compaq is earning 100s of millions of dollars selling computers. But it is not earning as many 100s of millions of dollars as it was expected to. Others, such as IBM and Packard-Bell, are actually losing money due to this massive supply, weak demand imbalance. Hewlett Packard barely made money on PCs last quarter. Adding to the demand problem, and adding more throughout this year, is the Y2K problem. If you are worried about systems failing, you do not buy new systems. Also adding to the demand problem is that new PCs do not do very much better or different. There may be a new killer app out there somewhere, but I don't see it. Meanwhile, the learning curve makes the cos even more efficient at kicking out more boxes that cannot be sold for a decent profit margin. We were in a virtuous cycle where demand outstripped supply. We are now going into a vicious cycle where supply will always outstrip demand and demand will only be at a price unsatisfactory to OEMs. All the symptoms we talked about, channel stuffing, receivables dumps, etc., are just that, symptoms of the start of a basic supply/demand imbalance in the industry.