Trade Shoes for SOX

This column was originally published on RealMoney on July 26 at 1:20 p.m. EDT.

I need you out of shoes and into SOX. That's my takeaway after hearing still one more disappointing report out of the shoe business, Timberland(TMB Quote), which could still go lower even though it has a great balance sheet and a ton of cash.

Yes, the competition in footwear has gotten extreme, just at the point when the competition in SOX -- or semiconductors -- has gotten more benign. I don't mean to belabor the metaphor, but the reason Texas Instruments(TXN Quote) is up and Timberland is down is because one business has shockingly lean inventories -- high-end semis -- and the other has shockingly high end inventories -- high-end shoes and boots. Timberland says it has good control over its inventory. But there is too much shoe inventory overall in the system, especially at the off-price stores.

I see no end to this conundrum other than more price-cutting in the shoe biz -- that includes Nike(NKE Quote), Reebok(RBK Quote), Timberland and Stride Rite(SRR Quote) -- and more steady pricing in semis. ...