An Advance Warning for Stockholders: An actual example of things to come

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What has happened since the earthquake in Taiwan should be carefully considered by anyone who has investments in stocks. The case of Hewlett Packard is an example of what could happen economically to thousands of business come Y2K, for which the earthquake has provided a remarkable analogy, perhaps a wake up call to those who can perceive the similarities.

Hewlett Packard: A case history for the Y2K / Earthquake analogy

Whether or not you believe the Y2K problem has been fixed you should think about the interconnectivity involved in the supply chain to these businesses, and this example of what effect this can have on earnings and stock prices if even a brief interruption occurs.

It is also important to keep in mind that because this earthquake happened in Taiwan its effects were particularly significant to some of the high technology businesses which happen to be concentrated in that area. When Y2K hits it is not going to be selective, it will affect all types of businesses in all areas of the world, and an interruption in a supply chain is an interruption in the normal economic flow no matter where it occurs.

I believe this example is a red flag for investors to think seriously about what will happen if there are hundreds or thousands of simultaneous interruptions in the supply chain. It might be the last real-life warning you'll get before it is too late.

-- @ (@@@.@), October 02, 1999

Answers

For those who don't want to download the whole article here's the gist of it:

Hewlett-Packard Sees Pressure On Q4 Sales

By Andrea Orr

PALO ALTO, Calif. (Reuters) - Hewlett-Packard Co. (NYSE:HWP - news) shares lost nearly 5 percent Friday after its new chief executive warned of lower sales due to manufacturing problems after last week's catastrophic earthquake in Taiwan.

snip...

Specifically, she said last month's earthquake in Taiwan would also cause some disruption ``in some elements of our PC supply chain.'' Fiorina said that the PC business has been doing well, outpacing market growth, but the situation in Taiwan could limit its gains.

-- @ (@@@.@), October 02, 1999.


I read on some other forum a real interesting article called "nuclear winter" or something like that. Anyhow, this guy was warning of profit warning due to come out in the techs in the coming few weeks. Think that he was citing oversupply as the reason. (could anyone post a link to this article?)

@, your post is correct, still, what a wonderful excuse, blaming revenue and profit problems on the earthquake. ww

-- wayne (wwitcher@mvtel.net), October 02, 1999.


Wayne,

What you say is absolutely true in many cases. Certain incidents which really should not intefere with productivity if management has the foresight to be prepared are often used as an excuse for their laziness or incompetence. I don't doubt that there are hundreds of businesses out there just looking for an excuse to get the stockholders off their backs. That's what could make the Y2K situation even more problematic for the stock market. It will also be used as an excuse to raise prices, which may be good for short-term earnings, but bad for the overall economy in the long run.

-- @ (@@@.@), October 02, 1999.


Y2K

The MOTHER of all 3 day storms!



-- G (balzer@lanset.com), October 02, 1999.


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