mike was right on target... again...
Hardware stocks hit on PC price note
Merrill analyst points to revenue trend over unit growth
By Emily Church, CBS MarketWatch
Last Update: 10:00 AM ET Feb 25, 1999
Movers & Shakers
Futures Movers
NEW YORK (CBS.MW) -- Computer hardware stocks fell 1.7 percent
Thursday after an influential Merrill Lynch analyst raised the prospect of a PC
price war.
In a note to clients, Steven Milunovich cast the
spotlight on top four PC makers Dell Computer
(DELL), Compaq (CPQ), Hewlett-Packard (HWP) and
IBM (IBM).
"We're concerned that vendor's growth objectives the
next few years will be hard to achieve, perhaps
resulting in pricing pressure," Milunovich said.
Even as unit growth looks to be around 15 percent for
the next few years, the real issue for PC makers is
the likelihood of falling prices, he said.
"The bigger change is in declining average selling
prices (ASP) the past two years," he said. Revenue
growth was just 6 percent in 1997 and 1 percent last
year, according to Dataquest, he said.
"Our concern is that the recovery in ASPs predicted
beyond 1999 may not occur, causing disappointing
dollar growth for the vendors and the onset of price
wars.
"If the industry dollar growth remains in the low-to-single digits, will the top
vendors meet their aggressive targets? Probably not," he said. |
