Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: jim kelley who wrote (145644)	10/23/1999 4:41:00 PM
From: Ian@SI	Read Replies (1) \| Respond to of 176387

According to Barron's and Dell, no Y2K slowdown. IBM is just continuing to lose share... Ian. ++++++++++++++++ OCTOBER 25, 1999 Y2K Problem? Just Don't Ask Microsoft or IBM By Mark Veverka So, what's it going to be? Is it going to be an "awesome" fourth quarter for the computer box-makers or one plagued by millennium-bug malaise and lingering fallout from the temblor in Taiwan? Well, it just depends on whom you listen to. Last week, the titans of technology -- Dell, Microsoft and IBM -- were talking as though they were doing business on different planets. In a week flush with earnings surprises and pre-announcements, an already schizophrenic market was confused even further by a barrage of contradictory messages about near-term prospects for PCs and the software that runs on top of them. Yet amid all the clamor, one thing rang clear: dynamic random access memory (DRAM) supply is scarce and its inflated price is taking its toll. "There are certainly a lot of conflicting data points regarding demand for personal computers," noted Carson Levit, a managing director of Soros Fund Management in New York. "I think there is more uncertainty in technology now, because of Y2K and Taiwan, than there has been since the start of the Asian crisis," Levit added. The cacophonous cavalcade started early last week when Dell shocked the Street by warning it was going to miss its third-quarter earnings expectations by about three cents. The culprit: higher DRAM memory costs resulting from Taiwan-related shortages (see "A DRAM Shame!"). And while Dell was preoccupied with the Taiwan aftershocks, which were also being felt in Armonk, New York, IBM was doing a flip-flop of its own. After distinctly telling the Street that the millennium bug would not hurt IBM's performance during the second half of this year, Chief Executive Lou Gerstner Jr. blamed a lackluster rise in third-quarter revenues of 5.2% on the year 2000 dilemma. "We saw a Y2K slowdown toward the end of the quarter in our large servers, and to a lesser extent in services and operating-system software," he said. But if that weren't enough of a bombshell, here was the clincher. "Looking forward, we believe we will continue to feel the effects of the Y2K slowdown in the fourth quarter and early next year." Holy hardware! And then toss this into the mix: IBM also announced that it would stop selling its Aptiva PCs in most retail stores after Christmas. Of course, because of its mainframe and business computing concentration, it is understandable why IBM would be more vulnerable to a Y2K slowdown than a more consumer-oriented computer company, such as Dell. But try to comprehend IBM's explanation for poor performance against the backdrop of Microsoft's third quarter earnings report. The headline of the Redmond, Washington, software company's own press release totally contradicted the view of IBM. It read: "Awesome PC Demand Drives Outstanding Microsoft Results." Microsoft reported a 37% rise in diluted earnings of $2.19 billion, and Chief Financial Officer Greg Maffei said that the big quarter was driven by strong corporate demand for business-related software. More important, Maffei said there was nary a millennium worry in sight. "It does not appear that Y2K had a significant impact on results," Maffei said. "During the quarter, we also saw excellent PC unit growth, particularly in Asia, and we expect that trend to continue in the December quarter." So what's it going to be: excellent PC growth, a Y2K slowdown or a Taiwan-induced margin squeeze? And multiple-choice exams are supposed to be easy. So when in doubt, pick "all of the above."