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

To: tonyt who wrote (87137)	11/28/2000 1:51:33 PM
From: tonyt	Respond to of 97611

Compaq, Dell slip on negative analyst report (UPDATE: Previous NEW YORK, TECH-COMPAQ. Adds details throughout) LOS ANGELES, Nov 28 (Reuters) - Personal computer inventory levels are high and demand is lagging, a Wall Street analyst said on Tuesday in a report that sent the shares of Compaq Computer Corp. (NYSE:CPQ - news) and Dell Computer (NasdaqNM:DELL - news) down. Compaq fell by more than 7 percent, dropping $1.83 to $22.98 in afternoon New York Stock Exchange trading. It had fallen as low as $22.15 in early trade, before the company responded to the report from Salomon Smith Barney analyst Richard Gardner. ``We are comfortable with our channel inventory levels and are seeing supply constraints ease during the quarter,'' Peter Blackmore, executive vice president for sales and services, said. Dell Computer lost more than 6 percent on Nasdaq, meanwhile, falling $1-11/16 to $22-3/4. Apple Computer Inc. (NasdaqNM:AAPL - news) also lost ground, falling 1/4 to $18-7/16. Thanksgiving weekend sales and promotional activity for PCs appeared light, Gardner said. He also cited inventory build-up at most of the PC makers and greater competitive pressures. Gardner said high inventory levels and weak demand meant PC makers were stuck either building up stocks to meet fourth-quarter consensus expectations and consequently writing down inventory in the first quarter, or scaling back build-up plans for the fourth quarter and missing expectations. ``At this point we are expecting a disappointing December quarter for PC OEMs (original equipment manufacturers). Depending on holiday demand and quarter-end inventory levels, these disappointing results could continue into the first quarter,'' he wrote. Compaq was singled out in the report as having relatively high U.S. retail inventories. Gardner also noted that the declining value of the euro, component constraints on high-end servers and slimmer margins would pressure Compaq's fourth-quarter earnings. Gardner also said he was skeptical Dell would achieve its target fourth-quarter 6 percent sequential revenue growth, despite three downward revisions to that target. He noted, however, that Dell's aggressive reductions in prices, in line with falling component prices, was a competitive advantage. He said Apple might fall short of its revised guidance for fourth-quarter earnings, citing rebates and price reductions of $200 to $500 on several models. Apple warned in September it would miss fourth-quarter profit expectations by a third, blaming a sales slowdown