Wide-Eyed Acolyte-Weights: In fact, if Mr. Bedard had paid any attention to what Circuit City (CC - commentary - Cramer's Take), Ingram Micro (IM - commentary - Cramer's Take), CDW Computer Centers (CDWC - commentary - Cramer's Take), Tech Data (TECD - commentary - Cramer's Take), or Dell (DELL - commentary - Cramer's Take) (you know, the people who actually sell PCs) had said, he would know that this is pure nonsense. But of course, that didn't not stop him from passing along his views, nor did it stop idiots from believing him. Here is a company that can't figure out its own business well enough to make any money, and now it's presuming to forecast an end market that's growing to a degree of precision -- i.e., a couple of percentage points -- which folks in the end market can't even seem to get right.
The net of it is that now Micron is going to make more parts this quarter. What's particularly hilarious about that is, lately, when they've made more parts, they've wound up losing more money. Last quarter is kind of insightful. Micron had revenues of about $785 million, and its cost of goods sold, just for reference, was about $1 billion. Micron lost about $619 million on that $1 billion before interest costs. So, that should give you some idea of what kind of a basket case this company is.
As I was gathering these facts this morning, none other than Kevin Rollins, the COO of Dell, reiterated the point that I am making when he said his company sees no pickup in demand for technology. I bring all this up to underscore just how speculative the environment is, and to show just how little thought goes into the way supposed professionals manage other people's money.
Presuming Big Blue's Blue Skies: And, a slightly different example will show how little thought goes into dead-fish recommendations. This morning, one of them from Merrill Lynch upped his opinion of IBM (IBM - commentary - Cramer's Take). Referring to an SEC investigation of IBM's revenue-recognition practices, he said he'd "be surprised if the findings have any significant negative impact on the shares." The same dead fish, I am told, recommended that since many mutual funds were underperforming, they would have to buy tech to catch up, and suggested the shares of certain dogs and cats. (This, like the above, is second-hand, as I did not see the report.)
William Fleckenstein is the president of Fleckenstein Capital, which manages a hedge fund based in Seattle. Outside contributing columnists for TheStreet.com and RealMoney, including Mr. Fleckenstein, may, from time to time, write about securities in which they have a position. In such cases, appropriate disclosure is made. At time of publication, Fleckenstein Capital was short IBM, long IBM puts, although positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy, sell or hold any security. The views and opinions expressed in Mr. Fleckenstein's columns are his own and not necessarily those of TheStreet.com. While Mr. Fleckenstein cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to bfleckenstein@thestreet.com.
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