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

To: calgal who wrote (152509)	1/28/2000 1:32:00 AM
From: Sam Bose	Read Replies (1) \| Respond to of 176387

DELL a conundrum to Analysts, Investors, and Traders alike! Half-Hearted Selloff in Dell Points to PC Makers' Unfashionability By Eric Moskowitz, TheStreet.com Senior Writer 1/27/00 5:13 PM ET Thursday served up another suggestion that the PC makers are the graybeards of tech, slipping into their stock-market dotage as investors' gaze continues to shift to young, high-octane telecom and Internet stocks. Thus investors' lukewarm reaction Thursday to Dell's (DELL:Nasdaq - news) earnings warning Wednesday. In ultraheavy volume of 123 million shares, the stock slipped 7% after the company disclosed for the second quarter in a row that it wouldn't meet Wall Street's earnings estimates. The reaction duplicates the reaction to Dell's third-quarter warning of a few months ago, and stands in contrast to Qualcomm's (QCOM:Nasdaq - news) steep 16% drop Wednesday following its own profit warning. The relative restraint in the selloff also suggests momentum players are mostly out of the stock, raising the question of whether these stocks can expect a good run-up even if the companies do execute their business plans and if Windows 2000, for instance, has a successful launch. Hip and Irrelevant "I think the overall mosaic with Dell, Compaq (CPQ:NYSE - news) and Gateway (GTW:NYSE - news) is that the PC business is becoming less relevant, if not irrelevant," said Jeff Matthews, a money manager at Ram Partners. Ram Partners is short Dell. To wit: Even the PC makers that saw their stocks rally in the last year or so can attribute investors' enthusiasm to something other than their core businesses. Like disk-drive maker Seagate (SEG:NYSE - news), which jumped late last year as investors caught on to its VC relationships with a couple of New Tech highfliers, these companies are seen as caught in a commodity business whose next major phase is likely in some eyes to involve massive consolidation. "I might be long a few of those stocks, but I won't be for long," says one money manager who requested anonymity and is long Dell, Apple (AAPL:Nasdaq - news) and Compaq. "I like investing in stocks that will be strong three to five years from now and so do many of my colleagues." As in any maturing industry, consolidation has begun: Compaq recently bought most of computer distributor Inacom's (ICO:NYSE - news) assets, and rumors continue to swirl on the Street of a Hewlett-Packard (HWP:NYSE - news)-Compaq merger. Meanwhile, the recently strong PC stocks are seen as benefiting primarily from non-PC initiatives such as Gateway's beyond-the-box Internet strategy. Bletchey Park The one company that had the most evolutionary business model, Dell, is kind of an enigma right now to investors, who don't seem to know what to do with this former bellwether. Even analysts seem puzzled. Merrill Lynch analyst Steve Milunovich's office mistakenly put out a Dell downgrade alert Thursday morning, only to hastily replace it with an upgrade. Dell spiked up in December from 40 to 52, but fell back to 40 when investors correctly assumed that Gateway's Jan. 5 fourth-quarter preannouncement would affect Dell as well. H-P, meanwhile, is set to report its first-quarter earnings Feb. 16, and no one quite knows what to expect. Its stock has been running up in anticipation of a strong second half of its fiscal year, but former CEO Lew Platt promised investors a robust second half early last year and it failed to occur. The magic of new H-P CEO Carly Fiorina seems to be overshadowing any investor concerns over meeting earnings and revenue expectations this fiscal year, which ends in September. Work Cut Out But if recent PC earnings news means anything -- Gateway, Dell and IBM (IBM:NYSE - news) already have preannounced or reported weak earnings -- H-P is going to have one heck of a struggle to meet earnings expectations next month. Consensus estimates are for 78 cents a share, up less than 1% from the 75 cents a share it reported one year ago. Of course, a few quarters of Windows 2000-fueled growth could give PC makers another reason to crow in the second half of the year, says SoundView Technology Group analyst Mark Specker, who has a buy rating on Dell and whose firm has done no company underwriting. "It's really an interesting opportunity, but I don't think we're quite out of the woods yet." Woods? It's been more like a blizzard out there, with investors preferring to stay on the sidelines and wait for this PC storm to break. If it ever does.