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

To: vegetarian who wrote (2748)	1/20/1998 7:56:00 PM
From: Tom M	Read Replies (2) \| Respond to of 3276

Well the usual pros & cons analysis has been missing from this thread since the earnings report. I'd take that as a sign of extreme caution, especially since I don't think there's been one post since the earnings report where someone has made a convincing bullish argument for the current timeframe. I don't consider the buyout @ $70 mentioned as something to bank on as the buyout talk has been around for years. If a buyout doesn't happen, where are we going from here? -The press releases mention DEC beating First Call estimates of .43 with their .45, but wasn't that a lowered estimate? Also, the street took that very well considering the Zacks consensus estimate on the day of earnings was .48. -DEC was extremely vague in referencing Asia in their original release, and gradually came out with another two press releases during the day that added negative light to their Asian impact. -DEC now WARNS they'll be about 1/3 off on their next quarter, or expects .45 vs .64 estimates. Asks analysts to lower estimates. 1/3 off on earnings is usually accompanied with downgrades, & 1/3 off in price. I'm very skeptical of the street's generousity & expect they're telling clients to sell into the rally before the downgrade. Of course maybe the rally is real so just take my opinion as fodder for discussion. -DEC announces up to 50% price cuts. I like the sound of it to gain market share but I think we all know you can count on any stock going down a bit when they announce price cuts which in turn put pressure on margins. This also didn't happen. -MSFT today announces a beta NT 5.0 for mid-year, with the final release scheduled for 6 to 9 months from then. This means NT 5.0 could very likely not show its 64bit/Alpha advantage untill 1999. (last year MSFT stated they'd have NT released in late 1997) -What are the odds the Intel/Fab deal won't go through? I don't know, but what are the consequences: DEC gets fab back, doesn't get "all that cash", may have an expensive upgrade to .18 micron to keep Alpha alive, keeps employee expense it planned on reducing, & loses future product discounts already counted on to bring in Q4 (see below) -In summary, DEC beat this Q's lowered estimates (unless you were going by Zacks), DEC warns they'll be 1/3 short on the next Q3, and says they expect to come in close to the estimates for the year by making it up in Q4 due to "deals" which may or may not close in time for that quarter. (anyone else think it's interesting that the original esitmates for this year were made well before the "deals" even existed yet now the "deals" are counted on to make Q4?) If the street is cutting DEC slack for the first time, I think they know something we don't. If that's true, has anyone noticed signs of accumulation in the lows? Sincere Pros & Cons discussion please. thanks in advance, Tom