To all:..
Tuesday June 3 7:25 PM EDT
Comdex attendees see few signs of PC market slump
ATLANTA, June 3 (Reuter) - Despite signs of trouble among makers of personal computer components, executives on hand for the Spring Comdex show on Tuesday shrugged off suggestions that the PC industry could be heading for a general slowdown.
Instead, a sample of people by Reuters saw the financial performance warning issued last week by computer-chip maker Intel Corp (INTC) as being more an issue of new product logistics. Intel shares plunged after the company said second- quarter revenue would be 5-10 percent below the first quarter's $6.4 billion and its gross margin would fall below the prior period's 64 percent.
Some ascribed the chip-maker's problems to slower demand spawned by anticipation of the new Pentium II processor.
``The word has gotten out that Pentium II is around the corner. So all the guys slow down their purchasing of the original Pentium in lieu of waiting for the next generation of Pentiums to come over,'' said Tim Bajarin, president of the consulting firm Creative Strategies Research International.
``What will end up happening is that you will see Intel's earnings take the other direction when they catch up. Demand for Pentium II (in the United States) is huge. So once they put more chips in the pipeline, they will have the same thing in Europe and their numbers will be astronomical again.''
Intel's statement, which shook the stock market last week, was followed by a warning from Seagate Technology Inc (SEG), which said lower demand for its higher-performance disk-drive products would leave fiscal fourth-quarter revenues 6-10 percent below projections.
Some executives, such as MindSpring Enterprises Inc (MSPG) President Mike McQuary, conceded problems like those expressed by Intel and Seagate could indicate a change in the PC market.
``A lot of Intel's earnings are tied to new products, like the MMX and the Pentium II, and I think there's always been a huge appetite for people to get the latest greatest, largest hard drive or a faster chip,'' he said.
``Now a lot of people are becoming satisfied with the machines they have...There aren't so many new applications that require you to have a bigger, faster machine.''
On Tuesday, Intel Chairman Andrew Grove said the company was engaged in one of its most rapid product transitions ever as it moved to the Pentium II from the classic Pentium.
Christine Comaford, president of Internet startup company(PLANETU INC), said Intel may be having trouble keeping up with a PC market evolving towards a broader range of Web access devices, including computer-based television.
``They have got to diversify, they cannot just be desktop PC chipmakers any longer,'' she said. ``They should have their hands in all of those pies. The other PC makers need to start diversifying as well.''
------------------------------------------------------------------------
.Sophia |
