Tech: And You Think Q4's Going to Be Bad? - Barron's 20 comments
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Barron's Tech Trader Eric Savitz dusts off his crystal ball and gazes into the future, one quarter at a time. Warning: His ball seems to have a bad cold:
- Q4 earnings reports are going to be miserable. Savitz counts 65 times over the past two weeks in which his blog has covered an earnings warning, layoffs, bankruptcy threat, or otherwise grim tidings.
- If you think Q4 was unthinkably bad, wait until Q1. "End-market demand is so bad that workers are being sent off on unpaid vacations of two to four weeks."
- If you are thinking the first quarter looks bad, wait until you see the rest of the year - particularly for chip stocks. Analyst Mark Lipacis sees earnings for the semiconductor firms in his universe down a startling 78% vs. the Street's -27%.
- PC and mobile phone sales may be a lot worse than the -5% to -6% and -4% to -6% analysts expect -- like -10% to -15% and -20% respectively. At fault: the retrenching consumer.
- Some familiar names may not make it through the year: Qimonda (QI) needs a cash infusion (note: it got it - today!). Charter Communications (CHTR) may salvage the company, but its $21B in debt means shareholders are likely to be wiped out. Nortel (NT) has hired bankruptcy lawyers. Other companies in peril: Palm (PALM), Advanced Micro Devices (AMD), Motorola (MOT), Sirius XM Radio (SIRI).
::::::::::::::::
While Savitz is frigid on the tech sector in 2009, a group of 12 big name Wall Street strategists see markets doubling their present 18% gain from lows over the coming year. Here's a summary of this week's cover story.
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This article has 20 comments:
There goes his chances of being on cnbc any time soon!
Once earnings get adjusted lower to something more realistic that matches the reality of our current malaise, the masses may understand that this market still has enough downside remaing to drive the Pacific Fleet through it.
This is one of those "Our Iceberg Is Melting," moments where the ones who are successful are those who recognize the change and adapt. Those vendors who offer units with readily available replacement parts, easy software compatibility and flexible service plans are going to be successful. Those firms that insist on proprietary software and parts are going to see their market share disappear. This is going to be an interesting time because some firms that became truly massive over the course of the last 15 to 20 years may disappear rather quickly while Open Source will make a comeback. I also wouldn't be surprised if we see a pushback against technology.
The Baroque era of European history was characterized by tremendous ornamentation in all things: music, architecture, clothing, etc. The Baroque era was succeeded by the Classical era, a period of relative minimalism in European culture. We've been living in a technologically baroque age. Don't be too surprised if we see a push towards a quieter more old fashioned existence-one that doesn't include so much beeping and buzzing and pointing and clicking.
The way to succeed in tech nowadays isn't to push new features or try to generate perceived needs for the stuff your engineers just thought up, it is to focus on performance, reliability and economy.
And when (not IF) that occurs, the crosshairs will be squarely centered upon Micro$oft.
I was also thinking of companies like Dell that use proprietary internals. I had to replace the motherboard on my Dell recently and because the case had a unique geometry, I couldn't use an off the shelf motherboard, I had to get the original Dell to fit the case or else run into cooling problems. That part happened to cose more than twice what a comparable Asus board would have cost. That sort of thing isn't going to fly with value oriented consumers.
I definitely expect the Open Source development movement, which is really a throwback to the early days of collaborative sharing and DARPA-net in terms of spirit will pose a real threat to tech entrepreneurs billionaire fantasies.
On Dec 21 11:33 PM Homer II wrote:
> Lilbob said, "... Those firms that insist on proprietary software
> and parts are going to see their market share disappear. This is
> going to be an interesting time because some firms that became truly
> massive over the course of the last 15 to 20 years may disappear
> rather quickly while Open Source will make a comeback."
>
> And when (not IF) that occurs, the crosshairs will be squarely centered
> upon Micro$oft.
Microsoft is history, and has been. Their model (for OS's) for example relies heavily on complication. Sell the same consumer the same OS fie times in a row. The only reason they are "around" at any degree is that it takes a long time to eat an elephant one bite at a time.
Open source, and simplicity are going to experience their chance to shine more and more.
All the Microsoft fanboys out there have to do is TRY and think of what MS has coming in one year, two and even four. The answer is nothing that competition already dominates.
Entertainment is also retrenching, and with that XBOX got left in the cold on the HD reproduction stage, not to mention America in general (thanks a lot Sony).
Where is microsoft? Only legacy business software.
On Dec 21 05:05 PM sr9web wrote:
> Looks like AAPL might be a good short...
This is essentially saying that tech is maturing. Perhaps...IMHO, it all depends on how bandwidth hungry we all get. I agree that HDTV is reaching the "who cares" point, but what about live video streaming? True video on demand? This alone would require an exponential infrastructure commitment, i.e., another tech boom, and it is not even imaginative. I think tech has hit a big pothole, but I wouldn't discount it 5-10 years out. Else, I agree that it will probably get hit a lot harder than most people currently predict in the short run.
On Dec 22 11:15 AM Red Green wrote:
> LilBob is exactly right. Not just tech but all products and services.
> How many people would like an automobile that is priced economically
> and get good mileage. No GPS, no side airbags, (in fact, make airbags
> optional for those who want them)--a heater, A/C, steering wheel
> and gas pedal. I'd take it over the expensive status symbol cars
> of today. This economic collapse is going to change the way a lot
> of people think and look at the world--or course, there are going
> to be some who will demand government step in and take more from
> those who earn it and give it to the deadbeats. Behold what is about
> to come.
On Dec 21 04:21 PM HiSpeed wrote:
> "Barron's Tech Trader Eric Savitz dusts off his crystal ball and
> gazes into the future, one quarter at a time. Warning: His ball seems
> to have a bad cold"
>
> There goes his chances of being on cnbc any time soon!
>
> Once earnings get adjusted lower to something more realistic that
> matches the reality of our current malaise, the masses may understand
> that this market still has enough downside remaing to drive the Pacific
> Fleet through it.
On Dec 22 10:23 AM sl62 wrote:
> Note to Eric Savitz...
>
> Go hide in your closet like Jeff Macke and all the other p%ssies.
> Lions and tigers and bears, oh my! The truth is, if more people would
> stop being p%ssies at the sight of bad news, the shorts wouldn't
> be able to have their run of the place and john q. public wouldn't
> suffer so much wealth destruction. Scared stiff longs who pulled
> all their money out of the market and went to hide hide their closets,
> knees a knockin', sold the rest of us out and left us for dead to
> take all the body blows and carnage. Thanks you big money A-HOLES.
On Dec 22 04:47 PM Terry Huebert wrote:
> Geoff has a point of view and I respect that. It doesn't hurt to
> listen to what he has to say.
Having said that, I do find the Posts here both interesting and insightful. LilBob, your view of tech is forward in its thinking but, remember that not everyone wants to deal with the "workings" of a thing, they just want it to work, simplistically. Throw away products that can be recycled are a part of this genre. The day of changing a "Tube", and I am being facetious, are a thing of the past. Do it your "Selfers" also have a place but are not mainstream. The simplicity in Form and Function that you talk about is the norm, for everyone not just 40 "sumthins". Looking Good is not good enough, even with tech. It has to look good and be exceptionally well designed in its Function to survive our open access consumers. The day that one device can sit on a coffee table, that everyone in the room can make work, is the day that we truly have a new world.
On Dec 22 07:53 PM cos1000 wrote:
> I'm not much of a fan of Eric Savatz, or Barron's Tech Trader, and
> reproducing it here doesn't indicate much but a slow day on the Tech
> News Front.
>
> Having said that, I do find the Posts here both interesting and insightful.
> LilBob, your view of tech is forward in its thinking but, remember
> that not everyone wants to deal with the "workings" of a thing, they
> just want it to work, simplistically. Throw away products that can
> be recycled are a part of this genre. The day of changing a "Tube",
> and I am being facetious, are a thing of the past. Do it your "Selfers"
> also have a place but are not mainstream. The simplicity in Form
> and Function that you talk about is the norm, for everyone not just
> 40 "sumthins". Looking Good is not good enough, even with tech. It
> has to look good and be exceptionally well designed in its Function
> to survive our open access consumers. The day that one device can
> sit on a coffee table, that everyone in the room can make work, is
> the day that we truly have a new world.
As far as the car with diagnostics anyone can read, that is already here. The readers are on the shelf at AutoZone.
Cars with no frills? Get a Toyota Corolla.
And BTW I am a baby-boomer. I helped invent this stuff starting with the PDP-11 and heat shield tile glue.
Yale Engineering PhD 1978.
That can be said for the automotive industry, too! I lust for the simple cars of yesteryear that I could fix and service in my drive way.
On Dec 21 10:34 PM LilBob wrote:
> The real problem with tech is that we've reached a point in development
> where user's are able to derive enough social utility from devices
> they already own that new products aren't as appealing. Everyone
> should have seen this coming. There's a growing Open Access movement
> out there for older software that uses up less of a Personal Computer's
> system resources, high definition television has exceeded the point
> where the average 40-something is able to perceive the difference
> between a DVD movie and a high-def DVD movie, and people have in
> large part come to the realization that "constant connectivity,"
> can be tremendously annoying.
>
> This is one of those "Our Iceberg Is Melting," moments where the
> ones who are successful are those who recognize the change and adapt.
> Those vendors who offer units with readily available replacement
> parts, easy software compatibility and flexible service plans are
> going to be successful. Those firms that insist on proprietary software
> and parts are going to see their market share disappear. This is
> going to be an interesting time because some firms that became truly
> massive over the course of the last 15 to 20 years may disappear
> rather quickly while Open Source will make a comeback. I also wouldn't
> be surprised if we see a pushback against technology.
>
> The Baroque era of European history was characterized by tremendous
> ornamentation in all things: music, architecture, clothing, etc.
> The Baroque era was succeeded by the Classical era, a period of relative
> minimalism in European culture. We've been living in a technologically
> baroque age. Don't be too surprised if we see a push towards a quieter
> more old fashioned existence-one that doesn't include so much beeping
> and buzzing and pointing and clicking.
>
> The way to succeed in tech nowadays isn't to push new features or
> try to generate perceived needs for the stuff your engineers just
> thought up, it is to focus on performance, reliability and economy.