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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 210.00-2.0%Jan 7 3:59 PM EST
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To: Mani1 who started this subject3/29/2001 9:24:21 AM
From: dhellman of 275872
 
Tech Data call has good news (PC demand) & bad news (European weakness) for Microsoft (MSFT; $55.56; C-2-2-9)
Jun01E $1.77; 02E $1.93
www5.fs.ml.com
MSFT
• Last night’s earnings call from Tech Data revealed information on overall IT demand,
European demand, and PC demand - all key issues for Microsoft.
• The bad news is that Tech Data’s revenue forecasts suggest weak overall IT demand: the
company is forecasting a 5% Y/Y revenue decline for the April quarter.
• Moreover, weakness has spread to Europe, where revenue growth decelerated to
low/mid single digits in Feb/March from 18% in Jan. Europe accounts for 20% of
Microsoft revenues.
• On the bright side, Tech Data mgmt. singled out desktop PC demand as an area of
strength vs. other IT products. (Networking products, e.g. routers, were especially
weak).
• Compared to Desktop PCs, notebook PCs and servers were relatively disappointing.
However, these products are less important for MSFT than Desktop PCs, which
accounted for 80% of total PCs in 2000. PC units drive 40%-50% of total MSFT
revenues.
• We believe the comments on PC demand add weight to the view that the PC cycle may
have bottomed. However, we believe it is still too early to “call the bottom” - especially
if emerging weakness in European IT demand dampens prospects for a PC rebound
there.
(H. Blodget/J. Baldauf)
Intra-Day Special Note
MSFT
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