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Technology Stocks : Digital Equipment Corp. (DEC) -- Ignore unavailable to you. Want to Upgrade?

To: Mike V. who wrote (2678)	1/7/1998 5:59:00 PM
From: Neil_L	Respond to of 3276

A piece that came over the wire about earnings...I am also in the camp that thinks they will miss the estimates, even though they have been radically reduced lately. ===================================================================== Merrill Tech Call -4-: Outlook Rocky For Semi Equip Stks In the server and hardware sector, Merrill Lynch analyst Steve Milunovich said he expects upside fourth-quarter earnings from EMC Corp. (EMC), Lexmark International Group Inc. (LXK), International Business Machines (IBM), Sequent Computer Systems Inc. (SQNT), Stratus Computer Inc. (SRA) and Sun Microsystems Inc. (SUNW). He said he thinks earnings may not meet expectations at Digital Equipment Corp. (DEC), Data General Corp. (DGN), Silicon Graphics Inc. (SGI) and Auspex Systems Inc. (ASPX). Milunovich is looking for better results from IBM servers in the fourth quarter, but sees a slowing in hard disks, DRAMs and PCs. The analyst expects 8% year-over-year operating profit growth in the quarter from the company. The analyst sees little risk to Digital Equipment's fiscal second quarter, but said he may cut second-half estimates on the company. He said Hewlett Packard's high-end UNIX business is doing well, but the "bounceback in printers is muted." Merrill analyst Robert Stern said he thinks the fourth quarter estimates for semiconductor equipment stocks are "OK," with a "slight bias to negative surprises." But he said the deterioration the group began to see in December will continue for several months. While this may not hurt fourth-quarter results too much, it probably will affect earnings in subsequent quarters. Moreover, Stern said that while many capital equipment companies blame their troubles on the economic crisis in Korea, "the problems go beyond" Asia. Overcapacity also is an issue, he said. The analyst sees a risk to capital spending in Japan, the U.S. and Taiwan and thinks even the best semiconductor equipment companies "will see sequential declines in earnings and revenue" in 1998. Stern listed Applied Materials Inc. (AMAT), KLA-Tencor Corp. (KLAC) and Novellus Systems Inc. (NVLS) as his favorites in the sector, but said his optimistic outlook for even these companies is based on a two-year horizon. Finally, Merrill analyst Jerry Labowitz listed General Cable Corp. (GCN) as his "stock of the year" among specialty wire and cable companies. Labowitz also said he is cautious on the 1998 outlook for capacitor companies because of the Asian crisis and increases in raw material costs. -By Joelle Tessler; 201-938-5285 "Dow Jones News Service" "Copyright(c) 1998, Dow Jones & Company, Inc."

To: Mike V. who wrote (2678)	1/7/1998 6:02:00 PM
From: hossein hosseini	Respond to of 3276

Thanks Mike for researching this issue. My understanding is that when a public company has any information that will have "significant" material impact they need to share it. I could be wrong but I don't think there is any time limit. Look at Seagate today, just announced they will have a major restructuring charge and will have a "loss". Many companies don't follow these guidelines, remember Oracle. They waited until the annoucement date and gave a "lousy" results. As for shorting DEC; While I agree on the points you make about the lack of "high margin" products/services, I think the stock is in somewhat of a mid-point. I would consider it if it was close to its' highs (50's). On the other hand, these days, looks like you could make money shorting any tech. stock!!. What I like about DEC thread is the diversity of opinions. I learned long time ago (a hard way) not to fall in love with any stock. So as far as I am concerned, one should be able to make money from DEC both going "long" as we did when it was in high 20's to going "short" when it was in the 50's (I was too afraid to do it at that time). Good luck,

To: Mike V. who wrote (2678)	1/7/1998 9:57:00 PM
From: stock bull	Read Replies (1) \| Respond to of 3276

Ok, so does this mean that DEC will preannounce if they are not going to meet First Call's estimate, or some other published estimate? Or, does DEC determine "significant" to mean anything that they wish it to mean? Has, or has not, DEC previously preannounced? I for one am taking it to mean that DEC will meet estimates, or preannounce...sure hope I'm right. Stock Bull

To: Mike V. who wrote (2678)	1/8/1998 9:16:00 PM
From: John Sladek	Read Replies (1) \| Respond to of 3276

Mike: I know that several people have already posted on the pre-announcement topic, and I don't really want to beat a dead horse, but here is my take on it. If there are material changes in the company the management must inform the public. I would suspect that earnings falling short of analysts expectations is not considered to be a material change in DEC. It may have significant impact on DEC's share price, while not having a large effect on the company itself. "Singficant" should be measured with respect to the company. If DEC is going to announce a loss, rather than the expected profit, then this might constitute a significant event, since the company will be going from profitability to loss. If they are going to have a large restructuring (with associated write-offs), or sell one of their divisions, then they would also have to announce this. I'm not sure, but I suspect that the preannouncements related to earnings in the past couple of years would have been either because of the unexpected write-offs or unexpected reversals from profitability to non-profitability. I think that things like the press releases related to the Intel lawsuit and settlement are also an example of DEC making announcments of items that are significant to the company. Thanks for getting the info from DEC. Regards, John Sladek