renkluaf 12/5/2012 | 2:58:52 PM
re: A Red Flag in the Communications Sector? Hi Geoff,

The 72% was the number of companies from the universe of 87 communications companies. Wondering if the inventory build is just in expectation of a strong Q4 is always a question. But when you compare the DOI to the prior year level and factor in what a company may have said about its expectations for the following quarter, that should give you some idea as to whether or not the ramp up is justified. At least in the 3 examples I cited, that doesn't appear to be the case. Certainly someone like D-Link, it may well be given their high retail exposure.

Hope that helps,

gbennett 12/5/2012 | 2:58:52 PM
re: A Red Flag in the Communications Sector? Hi Bob,
Fascinating stuff, well done on an interesting article. I had two questions.

When you say 72% have reported, is that by number of companies or weighted by revenue?

I'm a total novice at economics, but it strikes me that your view might tend to be biased towards supply, as opposed to demand. I know one of the golden rules of economics is supposed to be that supply and demand are two sides of the same coin...

Actually, one other thought. Here in the UK we have a dreadfully congested road system. One of the most frequent sources of frustration is to sit in a queue of traffic (and making an assumption there's an accident or road works), only to get to the end of the congestion and there nothing there. We're told by the experts that this kind of bunching is a form of chaotic behaviour - one driver flashes their brake lights, and this causes a bunching down the line, etc.

Anyway, just some intellectual speculation while I'm drinking my morning coffee :-)

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