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

To: Dorine Essey who wrote (151674)	1/20/2000 11:56:00 AM
From: calgal	Read Replies (1) \| Respond to of 176387

Dorine, Hi! Here is some PC News! :) Leigh PS, Okay, I will pray for Hillary! cbs.marketwatch.com Corner Hardware learns the hard way Post-Y2K worries make PC stocks attractive By Colleen Bazdarich, CBS MarketWatch Last Update: 10:02 AM ET Jan 20, 2000 Personal Finance News Join the discussion SAN FRANCISCO (CBSMW) -- We all thought Y2K worries were over. "My view is that those kind of events -- for long-term investors -- do give a buying opportunity." Philip Rueppel, Deutsche Bank Alex. Brown Not in the tech sector, where millennium bug ghosts promised to haunt earnings season. The good news is that investors who fretted about inflated 2000 readiness costs should feel a little like we all did as the clock churned past midnight on New Year's Eve -- pleasantly let down. Reports from IBM Wednesday showed that while December quarter revenue did drop by almost a billion dollars from last year, the drop was still less than analysts' expected. See related story. Analyst Philip Rueppel of Deutsche Bank Alex. Brown predicts further good news from the PC sector, especially in the growing e-business area. He is bullish on the sector long term and believes that post-Y2K earnings fears and other short-term problems make these stocks cheap and attractive for the buy-and-hold investor. CBSMW: So these stocks seem to have had their ups and downs this year. Rueppel: So far this year they have. There are still lingering concerns over understanding what effect Y2K had on spending patterns in 1999 and how that will change in the year 2000 now that we are past Y2K. On one side there are those that believe that corporate infostructure was built out pretty significantly in 1999 and therefore it is going to be difficult to see growth in 2000, and then on the other side there are analysts like myself who believe that 2000 will be very strong as corporations continue to invest to upgrade their computer systems to support Web-related activities and corporate Intranet and e-commerce. CBSMW: So you're seeing growth moving to different areas or a shift in interest? Rueppel: That is correct. With the PCs, we don't see too many bumps in the road with the corporate replacement cycle and we also see very strong consumer demand. That could also somewhat shift to what I'll call appliances later in the year that are tuned for particular applications like Internet access. But overall, the general economic health of the U.S., as well as the rest of the world, indicates that there is still going to be lots of spending in technology and in particular on the infostructure names in the hardware side. CBSMW: So IBM released a decent earnings report but... Rueppel: There is still some concern about what their topline will actually amount to because of the Y2K problem and its affect on mainframe spending. Overall I believe their outlook for 2000 is going to be very good because they are in a great position to help their customers supply the infostructure for e-commerce and their Web-related business as well as offer the services to integrate those capabilities with a customer's existing internal system. I think IBM (IBM: news, msgs) is in a very good position to benefit from spending by the traditional businesses as they move to embrace Web technologies. CBSMW: How do you think the chip shortage that we've seen recently will affect these stocks? Rueppel: I think any kind of shortage or disruption in the supply chain is very short term in nature. We have already heard in a lot of instances many of the shortages that were derived from the Taiwan earthquake are pretty much behind us. And recently some of the shortages that particular customers of Intel (INTC: news, msgs) saw, they're rapidly moving to address those in the first part of this year. My view is that those kind of events -- for long-term investors -- do give a buying opportunity. CBSMW: So who do you have your "buys" on then? Rueppel: In the PC space we continue to prefer the direct business model, so I like Dell (DELL: news, msgs) and Gateway (GTW: news, msgs). On the server side, or the big systems companies, which I will put Compaq (CPQ: news, msgs), Hewlett Packard (HWP: news, msgs) and IBM in, we like IBM, given its increasing exposure to services and software and its e-commerce-driven initiatives. CBSMW: What should be we be expecting from the earnings we're going to be seeing from Gateway? Rueppel: Gateway has previewed its results earlier this month, which fell short of initial expectations given the problems that Intel had supplying them in December. So there shouldn't be any surprises from Gateway. Longer term, I think they're uniquely poised to benefit from the consumer spending on computers and the adoption of Internet or the drive towards getting consumers hooked up to the Internet, whether it be through appliances or deals that they have like the one with AOL (AOL: news, msgs). CBSMW: Sun is reporting too. Rueppel: Sun Microsystems (SUNW: news, msgs) is going to report an outstanding quarter. They're probably the best positioned company from a technology perspective to supply the backbone computing element -- the servers -- for the Internet and have had very strong business within the ".com" segment. I think that is going to be reflected in the fourth quarter. CBSMW: But you don't have a "buy" on them? Rueppel: I have a "buy." I just don't have a "strong buy" because compared to every other name that we talked about, Sun's valuation is a little more extended. CBSMW: Any advice for the long-term investor who wants to get into this sector? Risks particular to this sector? Rueppel: There are certainly risks in every technology sector, especially from new technologies emerging and supplanting older technologies. I think the big risk today is figuring out which companies will be able to provide infostructure for the emerging applications like e-commerce and provide building blocks like storage and appliances rather than just traditional computers. So it is always important to watch out for technological changes. That is true whether you are looking at business-to-business software companies or the hardware infostructure companies. Colleen Bazdarich is a personal finance reporter for CBS MarketWatch.