This is a lot of optimism, but it would be nice to see that Intel's problem is AMD, Apples problem is its own, and Dell's problem is Compaq.
Compaq has been improving its online sales and Commercial PC business coincident to the start of Dell's slowdown. This has to have some impact on Dell's business even if it's only on the margin side. Although, I'm sure sales have been impacted as well. Didn't Radio Shack recently say that PC sales have been strong (on the consumer side)?
Micron's quarter was strong despite the fact that the so called 'slow down' has affected others. This bodes well for the semiconductors, as well as, for the providers of finished technology goods. Look for a strong showing from other semi. companies as an indication of strong demand for technology.
I expect the build-out of the Internet to continue for years to come despite the struggling Dotcoms. The demand for technology by large Brick-and-Mortor companies as they move their operations to ERP, B-2-B, and Internet applications will far out weigh the loss of business by the Dotcom frenzy that resulted in a lot of small unsustainable companies. This bodes well for the rest of Compaq's business, from which the lion's share of their earnings comes from.
If we have turned the corner on interest rates increases, the weak Euro, and high crude prices, everything else should fall in place and the buyers will come back in, hopefully by the end of the month. Again, a lot of optimism.
NR
upside.com
David Albritton, a Compaq Computer (CPQ) spokesman, said the world's largest PC maker is seeing typical seasonal fluctuations but that Compaq saw good demand from education buyers during the quarter that just ended.
The challenge, he said, is to keep product demand fresh, and the company feels it has done that. "That puts us in a strong position," he said. Compaq is expected to release its quarterly earnings results Oct. 24.
Full text is below...
Questions about demand linger as warnings hit PC sector
October 06, 2000 12:00 AM PT
by Michelle Rushlo
Wave after wave of disappointing news has been washing over the computer sector, again raising questions -- but not clear answers -- about whether the PC market is softening.
In mid-September, personal computer maker SCI Systems (SCI) issued a profit warning for its quarter. Then, chipmaker Intel (INTC) issued its own earnings warning, followed closely by box maker Apple (AAPL). Since then, Dell (DELL) has also joined the pack, warning Wednesday that the first two months of its current quarter are likely to be about 3 percent below expectations.
"I think the demand is slow. That's pretty clear," at least in the consumer market, said Jason Wells, an analyst who covers Apple and Gateway for Wit SoundView.
The consumer market and the small- and medium-sized business markets are slowing, as is Europe, he said.
"Is the business reaching maturity? Could be," said Daniel Kunstler, an analyst at JP Morgan, after Apple's announcement.
PC buying slows
As the number of households without PCs shrink, those left become increasingly price sensitive, he said. Price sensitivity could also deter widespread second-PC buying.
Rob Enderle, vice president of desktop and mobile technology at Giga Information Group, said he believes business customers, too, are more reluctant to buy. They are starting to fight back against the notion that PCs need to be replaced every three years, he said. "They are basically saying we want a four-year machine."
While the cost of desktop hardware has fallen, the cost of installing it makes upgrades expensive, once companies consider the time it'll take to transfer an employee's files over and reconfigure the desktop properly, Enderle said.
"It's so disruptive and expensive to change," that people are waiting longer to buy new hardware, he said.
Bulls linger
Other industry watchers, however, remain bullish about the future of PC demand.
Stephen Baker, vice president of technology products at PC Data, a research firm that uses resellers to monitor sales, said that pricing and options have never been better in the personal computer market, and there is no fundamental reason for people not to buy.
He said about 60 percent of U.S. households have computers, and the number will probably top out around 75 percent. But there will be others that will become two-PC households as they add second computers for their children and other users.
"You have more than one television. Why wouldn't you have more than one PC?" Baker said.
Bruce Stephen, vice president of personal systems research at International Data Corp., agrees that demand growth will remain strong.
Parts of the market, like corporate desktops in the United States and Europe, have been sluggish, but Baker said that is probably because many companies updated their systems before Jan. 1 in preparation for potential Year 2000 problems.
Those companies are pausing to use those assets, he said, but demand will likely pick up again in the coming year.
Overall, IDC is forecasting PC unit demand will grow about 19 percent this year and a slightly lower 17 percent next year, Baker said.
What can fuel interest?
He said entertainment advances like DVDs and other entertainment features will continue to fuel interest in new consumer PCs in the United States and Europe. Other growth will come from emerging markets like China, India and Brazil, Stephen said.
David Albritton, a Compaq Computer (CPQ) spokesman, said the world's largest PC maker is seeing typical seasonal fluctuations but that Compaq saw good demand from education buyers during the quarter that just ended.
The challenge, he said, is to keep product demand fresh, and the company feels it has done that. "That puts us in a strong position," he said. Compaq is expected to release its quarterly earnings results Oct. 24.
Michelle Rushlo is a reporter at UpsideToday covering big-cap technology companies. If you would like to submit a letter to the editor regarding this story, email online@upside.com. |
