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 : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Captain Jack who wrote (83099)	6/29/2000 8:39:00 PM
From: hlpinout	Read Replies (1) \| Respond to of 97611

Compaq Computer Falls on Excess Inventory Concerns (Update2) 6/29/00 3:46:00 PM Source: Bloomberg News Houston, June 29 (Bloomberg) -- Compaq Computer Corp. shares fell 13 percent after an analyst cut his rating on the stock because of concerns that a buildup of unsold machines will hurt second-quarter sales at the No. 1 personal computer maker. The stock fell 3 13/16 to 24 1/2 on the New York Stock Exchange. Trading of 33.8 million shares made the Houston-based company the most-active NYSE issue. The stock rose 1 to 25 1/2 in after-hours trading after Compaq disputed the analyst's statements. Salomon Smith Barney Inc. analyst Richard Gardner cut his rating on the stock to ''neutral'' from ''buy,'' and said he expects Compaq shares to reach $25, down from a forecast of $45, because of the inventory concerns. ''We believe that Compaq's (retail) channel inventories are the highest among major retail PC vendors,'' Gardner said in his report. Compaq has lost corporate PC sales to rival Dell Computer Corp. and is focusing on cheaper consumer machines when many customers are buying expensive PCs with features such as digital audio players, said David Bailey, an analyst with Gerard Klauer Mattison & Co. ''The buildup in the channel inventory would be a symptom of a longer-term problem,'' said Bailey, who rates Compaq a ''hold.'' ''It could cause a shortfall in the second quarter.'' Bailey said the company is struggling with distribution issues that have dogged it for several years. Because it still sells most corporate PCs through distributors, it can't match prices with Dell, which sells directly to customers, Bailey said. Compaq spokesman Alan Hodel said the company hasn't seen any changes in inventory. ''We are comfortable with channel inventory levels,'' he said. ''Compaq's channel inventory has been low and in some cases near stock-out levels.'' Late today, several other analysts, such as Merrill Lynch & Co.'s Steve Fortuna, disputed Gardner's inventory predictions. In a report, Fortuna said he expects Compaq's second-quarter sales to be about $10 billion, a 5 percent increase from the year-earlier quarter. Lennie Buenaflor, an analyst for the Boswell Report, which tracks PC sales by surveying managers of 200 electronics retail stores, said data collected through last week didn't indicate a glut of unsold Compaq machines. ''We're not seeing it,'' she said. ''If it has occurred, it happened after we collected our data.''