Replies to post #151110 on Zeev's Turnips Patch-No Politics (ZEEV)

[ardent jd]

mlsoft, re: semi fundamentals

A few weeks back, I mentioned (I think to you) that my inputs suggested business was quite strong and well above expectations. Having put that out there, I feel obliged to say that more recent inputs have been less encouraging. I still think things are recovering, but maybe only in line with seasonals...and IMO expectations have caught up to or exceeded reality. Just FWIW, and I hope this is of some use.

[jdaasoc]

ml I told you wireless surveilance cameras were coming. I just didn't realize it was to the schools. Also, I just realized that outside contractors getting our tax dollars will probably employ low paid South Asians to be on other end monitoring the video.



Sony Unveils e-Surveillance: The New Face Of SecurityComprehensive Turnkey Solution Running on IP Infrastructure Offers Digital Video Capture, Real-Time Viewing, Remote Monitoring/Management, Recording and Archival Retrieval
PR NEWSWIRE - September 15, 2003 09:00
NEW ORLEANS, Sep 15, 2003 /PRNewswire-FirstCall via COMTEX/ -- (ASIS, Booth #2032) -- Sony Electronics today unveiled the security industry's first end-to-end IP-based surveillance system, called e-Surveillance.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020313/SONYLOGO )

Sony's IP Surveillance Solution built on Cisco Infrastructure runs this turnkey solution. It is comprised of fixed-view and pan/tilt/zoom IP addressable cameras with built-in web servers and Ethernet ports, Sony's Real Shot(TM) camera recording and video management software, and a scaleable network attached storage server to record and archive video. The e-Surveillance system helps to create a coordinated security effort so authorized administrators, police offers, fire departments or other responders can now view live video and control the cameras via the Internet from a PC or select handheld devices with WiFi wireless access.

"This complete solution is based on proven technologies, industry standards and protocols," said Robert Ellis, general manager for IP solutions for Sony Electronics' Business Solutions Division. "It represents a new epoch of security systems comparable with the advent of closed circuit television." e-Surveillance grafts the functionality of traditional security systems onto the robust information infrastructure of the Internet, as well as academic, corporate and government data communications.

A Complete Line of Products to Create a Custom Solution

Sony's comprehensive e-Surveillance solution is comprised of an extensive line of IP network cameras, a Network Attached Storage server, Real Shot camera management software and the company's SSM monitor line-up. Teamed with the IP networking expertise of Cisco Systems, the sum of these parts comes together to create a scaleable solution for today's needs that can evolve in the future.

Network Video Cameras

The new Sony SNC-Z20N fixed-view network color video camera joins the SNC-VL10N and SNC-RZ30N pan/tilt/zoom cameras to provide remote monitoring. The camera's embedded web server allows up to 50 simultaneous viewers to monitor remote sites through a powerful auto-focus 25x optical zoom lens with 12x digital zoom. The camera includes a 100 Base-TX (RJ45) interface and has web server capability with an assignable IP address. These features coupled with the camera's built-in firmware allow the user to control the camera by PC or select handheld devices and view live images over a network. These IP cameras generate JPEG data files, which can be accessed, monitored, recorded and printed anywhere on the network by authorized personnel -- key advantages during emergency situations or to help reconstruct events from archived material.

Network Application Server

Sony's Network Application Server, model FSV-M5, is a 19-inch rack-mountable storage system built on standard Windows(R) 2000 server operating systems and includes an Intel Pentium 4 processor (3.06Ghz), 512MB memory and 1TB hard disk capacity. Coupled with Sony's "Real Shot" video management software, it allows for the management of up to 16 cameras and can record and archive video up to one month. Also, the server has built-in redundancy with four RAID hard disks. This feature allows for high data security and protects against losing video data from a hard disk crash.

Video Management Software

Sony's Real Shot camera management software comprises a complete, easy-to-operate control center for initializing, programming and managing cameras, capture rates, alarm events and responses.

First Reference Site

This summer, the Grossmont Union School District in San Diego County was the first to put the e-Surveillance system to the test. Following two separate campus shooting incidents in 2001, school administrators sought an innovative, cost-effective approach that could utilize the high bandwidth IP infrastructure of their new Cisco System. Ninety days into this pilot program at two of the district's 11 campuses has revealed far greater applications and opportunities than originally imagined.

Warren Williams, assistant superintendent for information and technology services for Grossmont, noted that besides fostering a safer learning environment for the district's 24,000 high school students, the district offices report that vandalism and inappropriate use of school facilities and resources has dropped significantly. He noted that cost savings from maintaining the physical plant and insurance premiums have been some of the unexpected returns from the initial investment.

Editor's Note: For press releases and digital images, please visit www.sony.com/news. Customers looking for more information regarding the nearest Sony authorized dealer or service location should call 1-800-686-SONY.

SOURCE Sony Electronics Inc.

[basserdan]

*** Stephen Roach (9-15-03) ***


Global: Another New Paradigm

Stephen Roach (New York)
September 15, 2003

As the US economy now shifts gears, hopes of a full-blown global upturn are in the air. Our economists in the US and Japan have raised their sights as the incoming data flow has moved to the upside. So far, they are largely alone in reworking their numbers, but there are hopes that revival may spread elsewhere around the world. This raises a key question as to the character of any potential upturn in the global business cycle: Can the world break the mold of the US-centric growth dynamic that has been in place over the past seven years? The answer could well be decisive in determining the sustainability of any recovery in the global economy.

It all starts with “traction” -- whether reflationary liquidity injections engineered by the fiscal and monetary authorities can spark the time-honored forces of self-sustaining economic recovery. While this concept is best understood on a country-specific basis, little attention is given as to how it works on a global basis. Two options frame a broad range of possible outcomes -- the first relying on cross-border trade linkages and whether asynchronous growth from one country or region has spillover effects on the rest of the world. The other extreme is that of the synchronous global recovery -- a growth dynamic that is more dependent on the autonomous vigor of domestic demand in the major economies of the world. The ideal outcome, of course, is for both sources of growth to come into play, as trade induced-rebounds in economic activity spark employment and income generation -- the sustenance of domestic demand growth. That’s normally what it takes to power the cumulative, self-reinforcing dynamic of a full-blown global recovery.

Therein lies a key challenge for today’s extraordinarily lopsided world economy. As I noted recently, the latest figures indicate that the United States accounted for fully 96% of the cumulative increase in world GDP growth (at market exchange rates) over the 1995 to 2002 interval (see my 2 September essay in Investment Perspectives, “Do Imbalances Matter?”). Global traction, in this context, is very different than would be the case if the world economy were more balanced. In my view, mounting imbalances in the US and in the broader US-centric world economy put the onus of recovery much more on the global domestic demand model. America is no longer in the position to keep powering the world ahead. That’s an unmistakable message from a gaping US current account deficit -- a record 5.1% of GDP in 1Q03. Current-account surpluses elsewhere in the world -- especially in Asia but also in Europe -- are the mirror image of a non-US world that is lacking in autonomous domestic demand. At work is a set of extraordinary tensions in the global economy. As the IMF has stressed, the disparities between nations with current-account deficits and those with surpluses have never been larger in the post-World War II era (see the Preface to the IMF’s World Economic Outlook: September 2002). A synchronous global recovery, in my view, cannot occur in such an unbalanced world. A global rebalancing is necessary.

That is not a view widely shared in the United States or elsewhere in the world. Yet convictions are deep that the US-centric global growth model that has been in place over the past seven years has the potential to pull it off again. Most believe that America’s current account deficit is not a serious problem -- that it’s driven more by an insatiable demand for dollar-denominated assets by return-starved investors elsewhere in the world. As long as the United States has the world’s most flexible, entrepreneurial, and innovative system, goes the argument, an ever-widening capital account surplus -- the flip-side of the current-account deficit -- is viewed as quite sustainable. Nor have the recent flows of foreign investors dispelled this notion. In the second quarter of 2003, foreign ownership of the outstanding stock of US Treasuries hit a record 46%, more than double the share of about 20% prevailing at the onset of the last synchronous global recovery in the early 1990s. At the same time, central banks remain massively overweight in dollar-denominated assets; the dollar portion of official foreign exchange reserves held at close to 75% though 2002 (latest data available) -- more than double America’s share in the world economy. With global asset allocators voting with their feet, why can’t a US-centric world simply stay this course?

To me, it boils down to flows versus analytics. With all due respect to the consensus, I worry that this flow-based logic smacks of a bubble-induced mindset very reminiscent of the New Paradigm thinking of the late 1990s. It’s an effort to concoct a new theory to explain what up until now has been an extraordinary anomaly -- an unprecedented strain of US-centric global growth and its concomitant imbalances. Yet just as it was critical to scrutinize the assumptions that underpinned the new-wave analytics of the Great Bubble, it is equally important to lay bare the assumptions that are being made today in this dismissal of global imbalances.

As I see it, the model of a sustained US-centric global growth dynamic rests critically on a very stylized depiction of the world economy. It implicitly presumes that ever-mounting current account deficits in the world’s growth engine do not trigger a depreciation in the value of the US dollar. This is basically the functional equivalent of a one-currency model in an increasingly borderless world. As such, it also presumes that the rest of the world has an insatiable appetite for dollar-denominated assets. There are also obvious geopolitical implications of this stylized depiction of the world as well: America’s gaping and ever-rising current account deficit is basically being judged as a small price to pay for US geopolitical hegemony. In other words, as long as America takes care of the world’s security, its imbalances can be freely financed.

I just don’t buy it. Despite upward revisions to our global forecast, the world economy is still a very sluggish place. And such a sluggish global climate, beset by ongoing labor market distress, remains very much a zero-sum game as politicians now take the upper hand in driving the battle over market share. That’s why the Japanese have been intervening massively to stem the appreciation of the yen. That’s why European leaders are now sending signals that they believe it is unfair for the euro to bear a disproportionate share of any downward adjustment in the dollar. That’s also why the US Congress has now singled out China as a scapegoat for America’s jobless recovery. And that’s why negotiations over world trade liberalization all but collapsed at the just-completed WTO meetings in Cancun. A still sluggish world is listing increasingly toward trade frictions and the pitfalls of competitive currency devaluation. In my view, that underscores the mounting tensions that another bout of US-centric global growth would most assuredly produce. For that reason, alone, I believe that the global economy is now nearing the end of an extraordinary seven and a half year period of unbalanced growth.

If I’m right, that means that the key to global recovery lies less in the world trade cycle and more in the prospects for domestic demand in the non-US segments of the world economy. On that count, there’s still good reason to worry. Europe remains the most important concern in that regard. Given the region’s persistently high unemployment rate (8.9% in July), tax cuts have been the main lever to stimulate domestic purchasing power. But with budget deficits in the large European countries at or above the 3% cap of the Stability and Growth Pact, there’s limited scope for such action in the future. The European capital spending cycle probably has more upside than that of the US, largely because the region avoided the investment bubble of the late 1990s. But with a globalized world still facing excess capacity, that’s a limited source of growth, as well. Persistent structural rigidities in high-cost European labor markets round out the picture of a region that is lacking in internal, self-sustaining sources of domestic demand.

Nor am I particularly excited about the prospects for Asian domestic demand. Japan’s latest upturn -- the fifth such acceleration of its post-bubble journey -- looks as fragile as ever. Capex has been leading the way recently -- a particularly suspicious growth dynamic for an economy in persistent deflation and, therefore, awash in excess supply. Moreover, the case for sustained support from private consumption remains a real stretch in light of the likely restructuring and headcount reductions of Japan’s legions of zombie-like corporations. Elsewhere in Asia, domestic demand support remains very much a hope rather than reality. There’s talk of China as an engine of pan-Asian growth, but in my view, those hopes are entirely premature. The Chinese consumer remains predisposed toward saving -- hardly surprising given the ongoing massive layoffs associated with reforms of state-owned enterprises and the lack of a safety net supported by a national social security and pension system.

All in all, the world appears to remain as US-centric as ever. And that’s just the problem. Unlike earlier periods, another such burst of unbalanced global growth would occur in the context of a massive US current-account deficit. There’s another New Paradigm being put forth to rationalize why such an outcome may be possible, but it’s starting to smack of déjà vu. As was the case during the Nasdaq-led mania of the late 1990s, this has all the trappings of a flow-driven argument being used to justify powerful momentum swings in world financial markets. Like the last time -- only a scant three and a half years ago -- I fear this bout of denial could also end in tears.

http://www.morganstanley.com/GEFdata/digests/20030915-mon.html

[basserdan]

*** Gold related post (NEM/KGC) ***


Newmont's Kinross sale sends several signals

By: Tim Wood
2003/09/15 Mon 17:00 EDT

NEW YORK -- It is hardly news that Newmont [NEM] sold just over five-eighths of its legacy stake in Kinross [KGC], but the timing and meaning of the sale is worth unpacking.

Kinross initially fell heavily on the news this morning, but soon recovered as the impact was digested. Clearly, the market is enthused about the overhang of stock being cleared which will help boost tradability of the stock.

Until Friday’s sale, Newmont’s principals had made a point in their public appearances of calling Kinross undervalued. In that vein, they repeatedly sought to reassure Kinross investors that they would not be a weak hand; something Kinross needed as it bedded down its three-way merger with TVX and Echo Bay.

Yet the market clearly never took the Newmont assurances as permanent; a view justified by Friday’s divestment. Kinross suffered a capping effect that has now been significantly diluted. Simply put, Kinross has been one of the most highly geared-to-gold stocks, but has so far offered a tame performance because of the overhang as well as worse than ordinary quarterly results.

So why did Newmont sell? There are two primary reasons. Firstly, cold cash is never unwelcome and, second, the Newmont bosses are among the industry’s shrewdest traders of value, opportunity and risk.

The Kinross stake had essentially become dead money for Newmont. The overhang had becalmed the stock for most of the year – on an adjusted basis the stock only last month beat its December high. Similarly, Newmont’s inability to equity account the stake and Kinross’s reserves, made realized certainty more important than indefinite speculation.

Whilst it is true that Newmont’s effective realized price is much higher through the sale of some Franco-Nevada assets into Kinross, the point is that it has badly lagged Newmont. It would inevitably be traded since it would be accretive.

At the same time, Newmont is a bellwether decision maker by virtue of its sheer size and the reputation of Lassonde and his business partner, Seymour Schulich. The selling was, therefore, an interpretation of value – the trade marked the close of one of the best weeks for Kinross in months.

If you’re more than a casual investor in gold stocks, it is not an unhelpful hint. Will we look back on this period and see that Newmont called a top in current valuations, just as the gold price appeared to stall?

That does not mean Kinross or the whole market needs to be going to hell.

Newmont can certainly use the $218 million in cash it received. Although it is generating free cash from its operations, Newmont still needs to fatten its balance sheet, principally by reducing debt and improving key ratios toward a debt rerating. It can hardly be a coincidence that the Kinross stake almost equals the final cost of buying out the Yandal bondholders and hedge counterparties.

That will leave the Newmont cash pile largely unchanged aside from ongoing debt reduction. Going below a 5% stake also means Newmont can deal its remaining Kinross shares outside the glare of 13D filing requirements. Possibly, with the cap removed, Newmont may even provoke the sort of gains that allow its remaining 3/8 stake to become worth the clutch of scrip it has just ditched.

It is worth noting that Newmont has been surprisingly disciplined about not doing a rights issue or placement. A shelf registration remains untouched and if the company was going to go ahead with an issuance, it would have done so soon after the most recent failure to close above $40. That is very good news for Newmont stockholders who can only become more loyal as threats of dilution are reduced.

Finally, who couldn’t help notice that Griffiths McBurney & Partners is the co-lead on the deal. GMP’s profile continues to increase and not just among the junior set.

http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B285256DA2007711D2?OpenDocument