Compaq<CPQ.N>says Jan. pricing was tougher-analyst
NEW YORK, March 3 (Reuters) - Compaq Computer Corp. told a Merrill Lynch Technology conference the pricing environment was somewhat tougher in January, and Merrill said it lowered its near-term rating on the stock to accumulate from buy.
Earl Mason, Compaq's chief financial officer, gave an update Monday on first quarter business in January, saying the pricing environment in North America was slightly tougher than originally thought, Merrill analyst Lucy Painter said.
The company did not give any change in earnings guidance for the quarter, but Painter lowered her December 1998 earnings estimate to $1.80 per share from $1.85 per share.
A Compaq spokesman said on Tuesday the Merrill report was generally consistent with trends the company saw in January.
Painter maintained her long-term buy rating on Compaq.
"North America's sell-through is quite strong, although the company noted that the pricing environment is a little tougher than originally thought," she said in a research note.
Mason also told analysts Japan and Asia remained weak in January, as expected, Latin America was mixed, and that the European business was strong and on target with an aggressive plan, she said.
Painter said in a research report her downgrade was based on the more aggressive pricing environment in North America.
By mid-morning, Compaq's stock was down 1-5/16 at 29-3/4 in heavy volume of more than 10 million shares, the most active on the New York Stock Exchange.
Painter also noted the increased difficulty in forecasting due to the pending acquisition of Digital Equipment Corp <DEC.N>.
She reduced her first quarter estimate to $0.32 per share, from $0.37 per share, and lowered her price target to $34-$37 per share form $45 per share.
"We believe Compaq's multiple will be hindered over the next couple of months and the stock should trade at more of a discount due to intermediate-term uncertainties," she said.
11:06 03-03-98 |
