Yep, if you look off into the distance, you can see it. A little bit at a time, we're seeing the end of something that likely should never have started -- the notion that the technology industry was in the midst of some massive rebound, the beginning of the "next bull market."

We've noted that many of the biggest tech companies, such as Hewlett-Packard (NYSE:HPQ), Intel (NASDAQ:INTC), and Cisco (NASDAQ:CSCO), have had spiraling inventories over the last few quarters. Naturally, those who are quite positive on the industry have an explanation: Inventories rise as companies anticipate an increase in sales. This, of course, is correct. A company caught short with insufficient supply in the face of rising demand risks sending its customers off to competitors to fill their orders.

But the risk in rising inventories is that sales do not continue to improve. This has already started happening; in the second half of the year companies such as Intel have stated that customers were delaying orders, and as a result these companies were going to burn off inventory to respond to the "soft spot" in sales. The implication is that the softness in technology spending is short-term in nature, a problem that would work its way through in a quarter or so.

Recent supplier warnings tend to confirm what I had thought all along: It's not the soft patch that is short-lived, it was the spike that was temporary in nature. On Tuesday, integrated circuit manufacturer Xilinx (NASDAQ:XLNX) warned that its guidance was too high and then dropped a bombshell -- in a quarter it had previously set aside to burn off inventory, its days inventory outstanding actually rose substantially to 155 days. For those of you who are playing the home game, that's nearly a half-year's worth of products sitting on the company's shelves. This at a time when the company says sales are down dramatically from its Asian clients because of "excess inventories held by U.S.-based customers."

But who are Xilinx's customers? Well, to start with, another company that warned recently, contract manufacturer Celestica (NYSE:CLS), which also said that its inventories are growing. Celestica's big customers? Cisco and IBM (NYSE:IBM) are among the biggest. Who else is warning? Cypress Semiconductor, Altera, Texas Instruments (NYSE:TXN), and LSI Logic have each made a trip to the confessional as of late. All of these companies have to some degree been ramping up their production in advance of continued improvements in technology sales, either from replacement cycles or from new sales. That they're each sitting on tons of product hoping that the hair ball will clear should be more than a little disconcerting.

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Bill Mann owns none of the companies mentioned in this story. He is waiting for prices to drop before he replaces his current PC and is sure that they will do just that. Please check his profile for a list of current holdings.