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

To: Seamus McKenna who wrote (87816)	12/13/2000 6:28:31 AM
From: hlpinout	Respond to of 97611

December 13, 2000 Compaq Warns Revenue, Profit Will Disappoint in Fourth Quarter By GARY MCWILLIAMS Staff Reporter of THE WALL STREET JOURNAL Compaq Computer Corp. joined the pile-up of technology companies skidding on weaker computer demand, and warned that fourth-quarter earnings and revenue will fall well short of Wall Street analysts' expectations. The world's largest personal-computer maker said revenue for the fourth quarter will be between $11.2 billion and $11.4 billion, or about $1 billion below analysts' forecasts. It blamed the sales shortfall on lower-than-expected home PC, business PC and server computer sales. The projection means revenue will rise 6.8% to 8.8% from $10.48 billion a year ago. Just seven weeks ago, Compaq said it was confident of expanding revenue by 18% and confirmed analysts' forecasts for earnings of 36 cents a diluted share. Earnings -- before a $1 billion charge to write down high-tech investments -- should come in between 28 cents and 30 cents a diluted share, the company said. Compaq's warning comes after similar cautions from rivals Gateway Inc., Apple Computer Inc. and suppliers Intel Corp. and Advanced Micro Devices Inc. Compaq's shares fell to $20 in after-hours trading Tuesday. In 4 p.m. New York Stock Exchange composite trading, prior to the profit warning, its shares rose 53 cents to $20.77. The $1 billion charge largely reflects the crash in CMGI Inc., the Andover, Mass., Internet conglomerate whose shares have plummeted this year. Compaq owns about 14% of CMGI. In 4 p.m. trading Tuesday on the Nasdaq Stock Market, CMGI shares rose 25 cents to $11.88. Compaq acquired CMGI shares valued at $38 with its 1999 sale to CMGI of portal site AltaVista. It also plans a $75 million charge related to its purchase earlier this year of InaCom Corp.'s distribution operations. Michael D. Capellas, Compaq's chief executive officer, said the slowdown would trim the company's revenue growth and profit next year. He told analysts on a conference call that 2001 revenue is expected to rise about 10% over this year's lowered forecast, below the 14%-16% gains previously projected. While the Houston PC maker had expected home-PC demand to rise 15% from year-ago levels, it now believes home-PC sales will be flat with the third quarter's $2.13 billion in sales. "We've taken steps to cut production to make sure we don't have product we cannot move," Mr. Capellas said. Corporate PC revenue should rise just 3% from the third quarter's $3.48 billion level. Wall Street had been looking for a double-digit gain in corporate PC sales. Michael J. Winkler, executive vice president, said the corporate market has been slow to respond to Microsoft Corp.'s introduction of Windows 2000 software. "We're optimistic that in 2001, it'll come to fruition," he said. The company said it continues to see sales expanding in Asia and Europe on par with its plans. After Thanksgiving, the slowdown that began with consumers quickly spread to small businesses, and to Internet companies acquiring server computers to run their Web sites, Mr. Capellas said. "We've seen an erosion in confidence over the last couple of weeks" among such customers. In addition to lower PC sales, price pressures are growing in corporate desktop PCs and server computers, he said. Declining prices have been most severe among entry-level servers, where archrival Dell Computer Corp. has rapidly expanded its portfolio. Pricing should continue to affect the company's business for the first six months of 2001, he said. However, he cautioned: "We're not implying any dramatic shift." Write to Gary McWilliams at gary.mcwilliams@wsj.com

To: Seamus McKenna who wrote (87816)	12/13/2000 9:22:32 AM
From: MeDroogies	Respond to of 97611

Weird, but I kind've agree. I know this is a BS situation, but hell...it happens. I don't think it's the end of the world. As other warnings go, this wasn't all that bad (8-10%...). Besides, it sounds like things are moving along the way MC wants, and the industry weakness is the only problem. That, of course, is purely cyclical and I don't think will last. Last night's ruling should boost the market today, and continued "weakness" in the economy should add up to a rate cut in Jan (maybe Dec?). That will help, too.