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

To: Night Writer who wrote (84814)	9/19/2000 6:38:25 PM
From: Elwood P. Dowd	Respond to of 97611

Here's the info from the CC link. El Summary of Bear Stearns Semiconductor Conference Call By: Bear Stearns 9/19/00 10:33:00 AM Visit the CNET Brokerage Center for daily reports from the top Wall Street analysts. Bear Stearns Has Just Concluded A Technology Team Conference Call Focussing On The Semiconductor Industry The call was led by Semiconductor analyst Charles Boucher (boo-shay) and included PC analyst Andrew Neff, semiconductor equipment analyst Robert Maire, wireless equipment analyst Wojtek Uzdelewicz (voy-tek use-duh-leh-vich) and Bear Stearns' head of Asian technology research Gurinder Kalra. Here are the highlights: * Tone of call generally constructive * Obvious concerns are generally known - (Spot prices for DRAM, wireless handset weakness, telecom service companies spending levels - Weakness in August back to school PC sales) * We are positive on 2H PC demand * We do not believe semi/semi equipment cycle is over * We are at low end of street for wireless unit sales for 4Q (street range 110 to 140MM units) * Nokia has been aggressive on low end pricing - we believe this is negative for MOT and ERICY * Reg FD probably is becoming more of a factor for the tech group Companies Discussed below: AAPL, GTW, DELL, CPQ, HWP, MU, INTC, NOK, ERICY,NSM, TXN, MOT For further detail look at analyst bullets below: From Charles Boucher: General Semiconductor Industry - fundamentals remain strong: PC and DRAM market affected by weaker than expected back-to-school * PC and DRAM: weakness seen as short-term * Demand picked up in Sep, Q4 should be strong positive for INTC and MU Wireless * expectations adjusted down, market still healthy * backlog adjustments behind us NSM and TXN will continue strong growth despite wireless, analog demand very strong Telecom Capex * demand strong, current visibility is good well into next year which continues to bode well for Comm IC companies Overall: expecting positive reports in Q3 from semiconductor companies with bullish guidance heading into Q4. From Wojtek Uzdelewicz: * The news out of TXN this morning that revised downward its wireless unit forecast is in line with our thinking that wireless units will be below expectations - we believe for Q3 consensus is at 100MM units, we are in mid 90's - for Q4 range is 110 to 140MM (we are lower end of this range) - biggest market driver is Europe at 40% of market - comps are difficult and there are no new product drivers until Q2:01. * Wireless infrastructure - outlook still robust - NT, ALA still indicate that demand is strong. * NOK - company is being extremely aggressive on low end phones - company is trying to take market share - we believe NOK comes in line to slightly better this Q * MOT, ERICY - we believe these companies are at risk and could come a little light this Q - NOK cost cutting hurting them * Wireline - we believe US capex will slow from current 50 - 60% to high 20% in '01 - we believe there will also be a mix shift favoring optics. * A further gating factor will be the "bandwidth barons" ability to access the capital markets next year - 2Q:00 capital expenditures exceeded revenues. From Andy Neff: Macro points * Reg FD concerns may account for tech stock weakness * See strong second half -- six factors driving demand * Consumer was driver last year; corporate driver this year * Corporate: Y2K hangover ending, Windows 2000 cycle, signs of pickup in Europe * Consumer: typical seasonality, product cycles, Pentium 4 cycle * Major themes: Pentium 4 (GTW); Mac OS X (AAPL) * Seasonally -- want to own tech in 2H * Current tone -- as expected -- * September is always the cruelest month in terms of anxiety -- will there be a strong 4Q -- there always is * Corporate strong, consumer okay in US -- Asia/Japan strong -- Europe slow, but expect pickup * Not seeing the pricing moves or inventory actions that would imply weakness * Component availability -- mixed bag -- have to treat info with grain of salt -- public negotiation/positioning * Company comments -- 2H favors consumer plays -- GTW, AAPL * AAPL -- BUY * business on track, multiple new products, expanding distribution, more to come (Mac OS X) * GTW-- BUY * business tracking to expectations, multiple catalysts -- Pentium 4, iAppliances, OfficeMax * DELL -- BUY * most perplexing, business seems on track, but low confidence on our part * should benefit from corporate, windows 2000, * CPQ -- BUY * turnaround progressing; becoming an enterprise story -- key is Wildfire Alpha server * HWP -- BUY * business remains strong despite SCI comments -- see accelerating growth, expanding margins -- * Pricewaterhouse near-term concern because of uncertainty -- also rumors on Xerox From Robert Maire * MU - DRAM capacity still well within balance with demand - spending on DRAM production has only accelerated in the past one or two quarters and won't be seen in the market until the beginning of 2001 * August is seasonally the weakest month but spending is continuing, we expect a slightly down book to bill to be announced this week for August with a possible flattening or even a bounce for September * Korea & Japan are accelerating spending while Taiwan is moderating, the increases or offsetting any other moderation * Mixed signal test and production still continue to be one of the strongest areas of business owing to the move to consumer and wireless devices * Checks with most companies suggest that Q3 is well in line - the only major disappointments have been self-inflicted - Agilent and PRI Automation - Demand remains very robust Bear Stearns is not responsible for any recommendation, solicitation, offer or agreement or any information about any transaction, customer account or account activity contained in this communication. Email this story to a friend Click for printer-friendly format Related News U.S. Senate Passes Bill to - Bloomberg U.S. Senate Sends Clinton - Bloomberg Joel Klein to Leave as U.S. - Bloomberg Intel Debuts New Gear to - Bloomberg Intel Steps Up Marketing - Bloomberg Investor Dispatch: HTML edition Investor Dispatch News.com Dispatch All Newsletters More from CNET Investor: Market Update \| My Portfolio \| Broker Reports \| IPOs \| Splits \| Play the Game Use The Fastest Way to Sell Service Plans Online from WarrantyNow! CNET Services: Stock Quotes • Tech Auctions • Tech News • Free Downloads • Search • Games • Latest PCs • Business Solutions • Hardware Buying Advice • Find a New PC • Find a Web Host • Find an ISP • Compare Prices • Cool Toys • Web Bui

To: Night Writer who wrote (84814)	9/19/2000 6:42:10 PM
From: Elwood P. Dowd	Respond to of 97611

Dow Jones Newswires -- September 19, 2000 SmartMoney: Street Smart - OK Computer Dow Jones Newswires This story appears in the October issue of SmartMoney magazine. By Odette Galli Poor Compaq. Once the largest commercial personal computer maker in the U.S., this slumbering giant saw its profits slashed when competitors such as Dell and Gateway stole market share by selling PCs directly to customers. Then it fell behind Sun Microsystems, Hewlett-Packard and IBM in transforming itself into an "enterprise systems" company, with solutions, services and hardware to equip e-commerce activities. Plus, the consumer PC business was attacked at the low end by sub-$600 computers from upstart competitors. All this has left Compaq's shares down 37 percent from their 1999 high, and at a price/earnings ratio of 29 times 2000 estimated earnings of $1.08, a big discount to Dell's P/E of 41. Invest in this company now? We've got to be kidding, right? Not at all. The contrarian case for Compaq starts with CEO Michael Capellas. Within days of taking over from ex-CEO Eckhard Pfeiffer last year, Capellas pushed through a major restructuring, including a 12 percent layoff and the closing of over 3 million square feet of facilities space. More important, he is transforming Compaq into an Internet infrastructure player. "In two years, I want customers to say, 'I access the Internet on my Compaq - - and the Internet runs on Compaq,'" the CEO explained in a conference call with analysts in late July. For Compaq watchers, including Daniel Kunstler, a Wall Street Journal top-rated analyst at J.P. Morgan, that's exactly the right message."Capellas recognizes where the market is going and wants to participate," Kunstler says. Compaq's troubles date to its $9 billion takeover of Digital Equipment Corp. in 1998. At the time, it seemed to be the perfect way for Compaq to do battle with Sun, HP and IBM. Along with its 1997 acquisition of Tandem Computers, it turned Compaq into a one-stop shop for everything customers needed for e-commerce. The concept looked so good that in January 1999 we recommended Compaq as one of our 11 "Best Investment" stocks for that year. Copyright © 2000 Dow Jones & Company,

To: Night Writer who wrote (84814)	9/19/2000 6:45:47 PM
From: Elwood P. Dowd	Respond to of 97611

Great Article - Part 2 by: brazil1988 9/19/00 5:48 pm Msg: 183353 of 183362 If only it had worked out that way. The fact is, Compaq already had its hands full integrating Tandem, and DEC tripled its employee base. Not only that, there were product lines to be integrated and facilities to be consolidated. All this took longer and cost more than anticipated. To make matters worse, Compaq's commercial PC business faltered, posting an operating loss of over $400 million in 1999. The stock bottomed shortly before year-end at about $19. Capellas, 45, left Oracle Systems to join Compaq in August 1998 as chief information officer, and within a year he was named CEO. He immediately reorganized the company under four major business groups -- Enterprise Solutions, Consumer, Commercial Personal Computing and Global Services. To lower costs and increase direct sales, Capellas consolidated Compaq's distributors from over 30 to just four. Its commercial PC business, one-third of company sales, returned to profitability one quarter ahead of Capellas's target. The company is now selling 25 percent of its PCs directly and is headed for 40 percent by year-end. Although the stock has moved back up to $31.50, it's still 37 percent below its old high. "If you had a checklist for what new management set out to achieve, there are a lot of checks in the win column, yet the stock has been flat for the past six to nine months," says Kevin Rendino, manager of the Merrill Lynch Basic Value fund, which owns about $200 million worth of Compaq. "The stock should be $38, just based upon what they've done already." To get the stock higher, Capellas is pushing hard for revenue growth. "We expect to deliver strong, double- digit growth during the second half of the year 2000," he told analysts during the recent conference call. Walter Winnitzki, PC analyst at Chase/H&Q, upgraded the stock to a buy after the second-quarter earnings came in at 21 cents a share, compared with a loss of 10 cents last year. "Now that they have stabilized their financial problems, the company is positioned to accelerate its growth rate," he says. "That is not yet recognized by the market and will come together in the September quarter." New products -- like the iPaq, a commercial PC introduced last November -- are key. But even more important for growth is Compaq's success in Internet infrastructure, where Capellas has focused Compaq's enterprise-related businesses, which represent 55 percent of sales. In at least one part of this market, Compaq is the unrivaled leader. Its ProLiant line dominates the industry-standard server market with a 35 percent share, more than the next two competitors combined. And then there's storage, one of the fastest-growing tech segments. "The market opportunity is huge," says Kunstler. As more data is converted to digital form for use over the Net, businesses need more capacity to manage and store the data. Compaq, already a leader in this area, has added 30 percent more storage sales specialists this year to push its highly regarded StorageWorks product. According to Merrill's Rendino, all this puts "the wind at their backs in the second half of the year. If they achieve the double-digit revenue growth in the September quarter, I think the stock's a double." -------------------------------------------------------------------------------- Briefing Book for: CPQ More about CPQ: From leading business publications From The Wall Street Jo