what's your take on the following two articles -
Bloomberg News
Sat, 18 Aug 2001, 12:23am EDT
Prudential Says Buy Microsoft on Dell Report: Call of the Day
By David Wells
New York, Aug. 17 (Bloomberg) -- Prudential Securities Inc. analyst John
McPeake says investors who unloaded Microsoft Corp. shares today made a
mistake.
McPeake said he's betting that many people shed the stock because Dell
Computer Corp. last night said personal computer sales will be flat or may even
fall 5 percent this quarter from last quarter. Microsoft shares opened lower and
fell as much as 4.8 percent.
Dell is the largest maker of PCs. Microsoft's operating system is used on more
than 90 percent of PCs. So, it makes sense that investors would sell Microsoft
shares if Dell says computer demand is stalling. What some investors are
missing is that Dell's forecast is actually more positive than Microsoft's own
predictions, McPeake said.
``A misread of Dell's earnings report may cause weakness in Microsoft shares,''
the Prudential analyst said in an interview. ``We would use that as a buying
opportunity.''
The way McPeake sees it, if desktop software sales rise 0.6 percent
year-to-year -- a figure he extrapolated from Microsoft's outlook offered on July
19 -- then the number of personal computers being sold would fall 7 percent from
last quarter to the current quarter. That's two points better than Dell's worst-case
scenario.
Dell's forecast that PC demand won't pick up until ``spring of next year'' has also
caused some confusion, McPeake said.
While that may be true for Dell, it won't necessarily be true for other computer
makers, the 36-year old analyst said.
quote.bloomberg.com
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August 18, 2001
High Cost of Reserving an Xbox
Games: Console will be bundled with software at many retailers, raising price to $499 to
$1,200.
By ALEX PHAM and ABIGAIL GOLDMAN, TIMES STAFF WRITERS
Consumers expecting to pay the $299
suggested retail price for Microsoft Corp.'s
Xbox video game console may be in for
some sticker shock.
Beginning next month, many retailers will
be requiring customers to pay from $499
to as much as $1,200 to reserve an Xbox
console that, like it or not, will come
bundled with games, peripherals and
warranties.
The reason: Microsoft will provide additional marketing money to
merchants that agree to include the software giant's games in their
bundles. That's because Microsoft's games carry higher profit
margins for the Redmond, Wash., company than those published
by third-party companies such as Activision Inc. and Electronic
Arts Inc. The plan is angering consumers.
latimes.com |
