What, no hand clapping?
Are you kidding me? Several months ago, when the world was saying "tech is back," I had a pretty simple message: watch those inventories, watch that optimism. Company after company started jumping up and down about a technology recovery that to me just didn't seem that likely given the massive amount of pre-existing idle capital base from the 1990s spending binge that still either needed to be liquidated or put into use. "Oh, no," quoth the raven, "spending is back."
Technology company shares responded with gusto to the sentiment that it was safe to go back into the water. Some of the old standbys were saying just a month and change ago that the "action" in companies like Broadcom
Cisco didn't start singing campfire songs in its conference call, saying that it saw continued strength, that it would continue hiring, or any such thing. Instead, that 9% increase in inventory -- now sitting at $1.2 billion -- foretells that Cisco is going to be under pressure to sell to a worried customer base with the potential for nearly zero growth. This matters not just to Cisco, but to all of the companies that sell to end users like Cisco, like Solectron
Not a happy report for a whole host of companies -- Cisco most of all.
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Bill Mann owns none of the companies mentioned in this article.