Well, here we go with some worries over how spending will be affected by Y2K. Paul Fox at NationsBanc Montgomery Securities seems to put the damper on what could've been a good day for storage stocks. So far, I haven't seen any seriously bad news from anyone except Compaq and depending on how you look that it can be explained away as company specific, we hope.
Apple came in with brilliant growth in earnings and revenues, Dell seems to think business as usual, HP may or may not be doing well depending on whether you listen to the CEO or investor relations, and finally Intel still seems to be cruising along.
So like have been saying for at least a year now, it seems likely that there must be some ebb and flow around the tidal pull of Y2K. It simply must have an effect. So, here we see Paul Fox citing concerns of Y2K. Is he the first or has he simply gone crazy?
Once you assume that there will be a break in the normal consistent buying patterns for storage, can you assume that these anomalies will be short-lived and if you look at the period of one year versus one quarter will you see the trend has remained true over the longer period.
It would seem likely that the market will not be very forgiving of one or two missed quarters. There should be the typical crashing reaction to a crisis of confidence followed by some sort of rationality that says we can see the world will return to normal next summer.
So I'd like to propose to the thread, again, are we going to see the market scared into a major sell off as Y2K concerns grow?
By the way, for those of you who may not have noticed, enterprise software vendors have gotten a big chop as their earnings have actually fallen and they've said it was due to spending shifts related to Y2K. In some cases, there seems to be consideration that equipment platforms will be replaced and therefore buying software this time is not wise. Not necessarily a bad scenario for hardware vendors.
Regards, Mark
RESEARCH ALERT - Montgomery cuts data storage cos
NEW YORK, April 15 (Reuters) - NationsBanc Montgomery Securities cut its ratings on four
makers of data storage equipment based on a survey that suggested a macro-economic spending
slowdown associated with Year 2000 repair work.
-- In a research note, analyst Paul Fox said he had his ratings to hold from buy for EMC Corp.
(NYSE:EMC - news), Seagate Technology Inc. (NYSE:SEG - news), Hutchinson Technology Inc.
(Nasdaq:HTCH - news) and Maxtor Corp. (Nasdaq:MXTR - news).
-- The analyst said a survey of 45 major companies to determine the potential for a freeze in new purchasing related to
repair of potential Year 2000 glitches, found that 30 of the companies, or 67 percent, would significantly slow or freeze
spending by the fourth quarter of this year.
-- As a result, Fox cut his fourth quarter earnings estimate on EMC to $0.51 from $0.59 previously. The consensus had been
$0.61, he noted. ''We would not be surprised to see some very good quarters (Q1 to Q3), particularly because there is
acceleration prior to freezes,'' Fox wrote.
-- EMC stock lost 10 percent to to 112, down 13 on the day, in composite U.S. stock exchange trading. Hutchinson gave up
2-19/32 to 20-7/8, Seagate fell 1/2 to 27-11/16, and Maxtor dropped 7/8 to 7-7/16.
-- In response to its stock's plunge, EMC issued a statement reiterating its expectation that its revenues and earnings will
grow in excess of 30 percent in 1999. It cited a survey of more than 250 corporate customers it conducted in the first quarter
of 1999 to support its bullish views.
biz.yahoo.com
|
