Dear Readers:
I need your help. I'm confused.
I have this nagging feeling that the personal computer industry has, almost overnight, become like the TV industry. Or as one friend says, the auto industry. Instead of being a growth business, it's now a replacement business. And its suppliers are, well, suppliers to a replacement industry.
IntelINTC, for example, is like an engine maker. Or picture-tube maker. Even before the current tech wreck, Intel's growth had been slowing. Several years ago, you may recall, it actually missed its earnings estimates as its growth sharply slowed. But investors were willing to forgive, because ...
it was Intel! That, as Fred Hickey of the
High Tech Strategist newsletter recalls, was "before they discovered the magic elixir of investment gains." (Something this
column has noted again and again.) But even as Intel's top-line growth looked OK, its semiconductor architecture growth remained tepid at best.
So, here's my thought, and the source of my confusion: Right now, with the sky falling, it's easy to dump on
any company, including a titan, and very real company, like Intel. There is no debating the merits of Intel and its greatness. But I keep thinking that we're at an important inflection point in business cycles and we've crossed the line at which Intel and its customers have (in Internet time) become regular cyclical companies with regular cyclical growth rates. Intel will have its ups and its downs. It will have some spectacular runs when it is perceived to be undervalued and cash rich. But other than that, its glory days are forever over.
What I want to know is what will make me look back and regret ever saying this? Why am I misguided? I'm very serious and I think there is no better time to start this discussion than
now! Shoot an email to
hgreenberg@thestreet.com. Looking forward to reading your responses.
Reality Check No.1: Interesting ad from
Fidelity Investments on Page A-5 of Thursday's
Wall Street Journal. It shows the phenomenal growth rates of aggressive funds for one, five and 10 years. Look at the end date: Sept. 30. Can't help but wonder how those returns would look if they were from 12/31/99 to now! (Hint: We're looking that up right now and will get back to you in a bit with an answer.)
Reality Check No. 2: "I live right in the middle of the formerly booming high-tech corridor between Tysons Corner and Dulles Airport, and now that extends to Leesburg," writes
Phil Dunton of McLean, Va. "Anyway, things are crumbling very fast here, almost overnight.
"I have never seen such a nasty recession come on so fast, and I've been around the block a few times. In fact, this area has been almost recession-exempt in the past. Every day, another one hits the wall,
PSIXPSIX,
TGNTTGNT,
MRCHMRCH and on and on it goes. The smaller dot-coms are falling like flies. The managers of these companies are kids and they know only good times. Now they don't have a clue about what is going on, sort of like these bullish tech investors and analysts. They are like deer in the headlights. It is a very ugly picture and bound to get much worse."
Reality Check No. 3: "Regarding
GatewayGTW: Three weeks ago I placed an order for a desktop with a price tag of around $5,500," writes
Julius Mohacsi, of Tampa. "They told me that I should receive the shipment within five days. Since then I called in five times -- their answer was always the same: "
UPS is just about to pick up your package and you should receive it in two days". I got tired of their fairy tales and yesterday I demanded to be able to talk to a supervisor. I was told that my order was on hold because Gateway doesn't have the right video card for the monitors! What does it mean: They are either flush with orders (which I highly doubt) or they are very disorganized. (Their customer service also stinks. I tried to reach the order-taker guy three times a day and he never called me back.)
"Anyway, yesterday I canceled the order. I turned to
DellDELL: brand new line (8100 series) of computers just became available, cost a little more than Gateway's stuff with 40% more speed (Pentium 4, 1.4GHz) and 30% more memory (1024Mb RDRAM). I specifically asked the customer rep to make sure that Dell has the necessary parts in inventory. He even talked to his boss -- and Dell sent me an email guaranteeing delivery on Dec. 7 at the latest.
"This was my first attempt to do business with Gateway -- and the last one. Guaranteed."
Execution is everything, and one thing Dell knows how to do is deliver ... one reason it is destined to be a survivor.
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