It would be nice to think that stock prices are never manipulated by the companies that own the market abbreviation symbol. We all know that it is not so, but it is usually done in a way that is difficult to track down when you are outside the company. The economic downturn in the Far East, the so-called Asian Flu (which if we wished to avoid a terminological inexactitude we should really entitle Asean 'Flu, or the way it is spreading now, Australasean 'Flu?) has certainly hit a number of companies whose sales forecasts went through the floor. The worst hit are those who not only forecast sales but who already had major orders in-house that were canceled.

But something rather unexpected is going on; we now have companies who are taking advantage of the situation to put themselves on the same bandwagon; to pretend that they are also in the same dire position and will not make their quarter or annual numbers. How do I know it isn't so? I've been in their foundries, I've walked through their shipping areas and they are as busy -- if not busier -- than before the sickness hit. But some of them are laying people off, trimming budgets, doing all the things that you are taught in MBA classes to do when you need to cut back.

Why are they doing this? I think some of them are taking the opportunity to clean house while the analysts and the market will let them take a current, universally-applicable excuse. I think it even probable that a goodly part of the market knows it, understands it and tolerates it. But I think it grossly unfair to the investor who is not privy to such information to have the stocks he/she owns be manipulated in this way. Taking the hit now while there is a "reason" that people will understand and accept means that when Asia starts to come back the numbers will have to come back, and most of the affected stocks will bound ahead. If I was in the market I would be buying like crazy every company who just gaspingly issued a negative, moaning, croaking noise with their financials.

Jobs

To me one of the best bellwethers of our industry is employment. I see the signs of Silicon Valley about to start another of its seven to nine year downward cycles: Peak surplus in Sacramento, housing costs flattening, layoffs in the 5% region, slower restaurant business at weekday lunches, fewer cars in parking lots after 6 PM, lighter loads on some airline routes, more choice of vehicles in the rental car lots; these are some of the indicators I see.

But despite them there is no shortage of employment at the design level. Both in the semiconductor companies themselves, and in the OEMs, analog designers are still being actively recruited and hired. Bonuses for referrals are still being paid. There are still sign-up bonuses being paid, generous relocation packages being offered and starting salaries are still increasing.

There seems to be no sign of a downward spiral of any kind in our analog world; your company may be laying people off but they are almost certainly in the support areas or in marketing, places where they are anxious to cut expenses so that gross margins can be kept at the dizzy heights expected of our industry. Even those companies that really are suffering because of the Far East turndown are unlikely to be silly enough to get rid of design engineers who cannot be easily, or quickly, replaced when business comes back.

By: Paul McGoldrick
Sr. Technology Editor, EDTN

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