***Off-topic***
Clark,
Ohhhh. Sorry. I was kind of in a rush today, I'm guessing this is my excuse, since I can think of none better right now -g-. (I'm reasonably light-hearted, really.) And we always talk past each other, why should this day be any different -g-??
Aki,
Some CPQ info below, maybe it helps. These guys were out in front of this one -g-, oui?
RESEARCH ALERT - Nomura cuts Compaq <CPQ.N>
NEW YORK, March 9 (Reuters) - Nomura said Monday it lowered its rating on shares of Compaq Computer Corp to buy from strong buy/
Analyst Daniel Ries lowered fiscal 1998 operating earnings to $1.03 per share from $1.65 per share and 1999 earnings to $1.73 per share from $2.08 per share.
"Current inventory problem is too large to be solved by the end of this quarter, so the June quarter is also impacted and will fall well below current expectations," he said.
Compaq entered March quarter with excess channel inventory and has continued to build inventory during quarter, he said in a research note.
Stock falls 2-7/16 to 25-1/4.
13:29 03-09-98
Copyright 1998 Reuters Limited. All rights reserved.
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RESEARCH ALERT - Goldman cuts Compaq <CPQ.N> EPS
NEW YORK, March 9 (Reuters) - Goldman Sachs said on Monday it lowered its 1998 earnings estimate on shares of Compaq Computer Corp to $1.00 per share from $1.63 per share, but maintained its recommended list rating on the stock.
Lowered 1999 estimate to $1.75 per share from $2.05 per share.
Further details not immediately available.
Stock falls 2-5/16 to 25-3/8.
12:43 03-09-98
Copyright 1998 Reuters Limited. All rights reserved.
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RESEARCH ALERT - SoundView cuts Compaq <CPQ.N> EPS
NEW YORK, March 9 (Reuters) - SoundView Financial Group Inc said on Monday it lowered its 1998 earnings estimate on shares of Compaq Computer Corp to $0.74 per share from $1.71 per share but kept its short-term hold and long-term buy rating.
Analyst Mark Specker lowers 1999 estimate to $1.59 per share from $1.88 per share.
Stock down 2-7/16 to 25-1/4.
13:20 03-09-98
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RESEARCH ALERT - DMG cuts Compaq <CPQ.N> EPS
NEW YORK, March 9 (Reuters) - Deutsche Morgan Grenfell said on Monday it lowered its 1998 earnings estimate on shares of Compaq Computer Corp to $0.85 per share from $1.70 per share but maintained its accumulate rating.
Lowered 1999 earnings estimate to $1.35 per share from $2.05 per share.
Further details not immediately available.
Stock down 2-4/16 to 25-7/16.
12:13 03-09-98
Copyright 1998 Reuters Limited. All rights reserved.
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RESEARCH ALERT - J.P. Morgan cuts Compaq <CPQ.N>
NEW YORK, March 9 (Reuters) - J.P. Morgan said on Monday it lowered its rating on shares of Compaq Computer Corp to market perform from buy and reduced its 1998 earnings estimate on the stock to $1.00 per share from $1.75 per share.
Analyst Daniel Kunstler said company's pre-announcement of a near-break even first quarter is considerably worse than he had expected.
"Since we cannot see our way clear past $1.00 in earnings for the whole year, and that any 1999 earnings profile for Compaq isolated from Digital Equipment Corp <DEC.N> is now academic, we believe that investors should proceed gingerly with regard to the Compaq story," he said.
But Compaq will do what it takes to preserve its market position, including stuffing the distribution channel in order to crowd rivals off the shelves, he said.
PC market is also showing some softness, he said.
Stock down 2-5/16 to 25-3/8.
11:57 03-09-98
Copyright 1998 Reuters Limited. All rights reserved.
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RESEARCH ALERT - Compaq <CPQ.N> cut to buy
NEW YORK, March 9 (Reuters) - Cowen & Co said it lowered its rating on Compaq Computer Corp to buy from strong buy.
No further information was immediately available.
Compaq was off 2-5/16 at 25-3/8 in morning trading.
11:28 03-09-98
Copyright 1998 Reuters Limited. All rights reserved.
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RESEARCH ALERT- Robertson Stephens cuts Compaq EPS
NEW YORK, March 9 (Reuters) - BancAmerica Robertson Stephens said on Monday it lowered its 1998 earnings estimate on shares of Compaq Computer Corp <CPQ.N> to $0.60 per share from a range of $1.55 to $1.60 per share.
Analyst Daniel Niles said lowered Compaq 1999 earnings estimate to $1.05 per share from a range of $1.85 to $1.90 per share, but kept long-term attractive rating on stock.
Niles cuts Dell Computer Corp <DELL.O> fiscal 1999 earnings estimate to $3.30 per share from $3.55 per share.
Dell fiscal 2000 estimate lowered to $4.15 per share from $4.50 per share.
Keeps market perform rating on Dell.
Compaq stock down 2-9/16 to 25-1/8 and Dell off 4-1/8 to 65-1/8.
11:01 03-09-98
Copyright 1998 Reuters Limited. All rights reserved.
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RESEARCH ALERT - Compaq <CPQ.N> 1998 EPS view cut
NEW YORK, March 9 (Reuters) - Credit Suisse First Boston said Monday it lowered its 1998 earnings estimate and price target on Compaq Computer Corp.
Credit Suisse removed Compaq from its Focus List, but maintained its buy rating on the company.
The 1998 earnings estimate went to $1.00 per share from $1.75.
The target price went to $38 from $42.
Compaq was off 2-4/16 at 25-7/16 in morning trading.
10:39 03-09-98
Copyright 1998 Reuters Limited. All rights reserved.
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RESEARCH ALERT - Bear Stearns keeps buy on Compaq
NEW YORK, March 9 (Reuters) - Bear Stearns said on Monday it kept its buy ratings on shares of Compaq Computer Corp <CPQ.N> and Dell Computer Corp <DELL.O> after Compaq said late Friday first quarter earnigns would be far below what Wall Street was expecting.
Further details not immediately available.
Compaq closed at 27-11/16 while Dell closed at 138-8/16.
08:28 03-09-98
Copyright 1998 Reuters Limited. All rights reserved.
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FOCUS-Compaq warns of first quarter below expectations
By Kourosh Karimkhany
PALO ALTO, Calif., March 6 (Reuters) - Compaq Computer Corp. said on Friday it expects its first-quarter earnings to be far below what Wall Street was expecting because of weak personal computer demand and plunging prices.
After the market closed, the world's biggest maker of PCs said its first-quarter sales likely will be about the same as last year's $4.81 billion and that it will only break even.
It was the third bellwether technology company in three days -- following Intel Corp. <INTC.O> and Motorola Inc. <MOT.N> -- to warn of weak first-quarter results. There now is strong evidence that the worldwide computer industry, one of the engines of economic growth, is facing fundamentally lower demand, analysts said.
"There is real trouble in the sector," said John Rossi, managing director at investment bank BancAmerica Robertson Stephens. "We're looking at a pretty tepid market this year."
Demand from Asia has collapsed amid the region's economic troubles, corporate buyers are putting off purchases until Microsoft Corp. releases a new operating system late this year, and corporate technology departments are throwing all their money at fixing their Year 2000 glitches, Rossi said.
That caught Compaq by surprise. The Houston-based company was expecting robust sales in the first quarter, so it dropped prices and pushed lots of PCs to resellers and distributors late in the year. But the resellers are still burning off old inventory and are not buying any more.
In a conference call with analysts, Compaq <CPQ.N> said European sales were on plan, Asian sales were weak and Latin American sales were fine. But North American sales, particularly among corporate buyers, were weak because of collapsing sales.
"We found that the North American commercial market was very price competitive," said Earl Mason, Compaq's chief financial officer. PC vendors were slashing prices aggressively to make way for new products, while demand was weaker than the industry expected, Mason said.
He said the company does not yet know how long it will face these conditions, but it is moving quickly to increase promotions and cut prices to get sales going again.
Wall Street had expected Compaq to earn 35 cents a share for the quarter ending March 31, according to a recent survey of analysts by Zacks Investment Research.
"We're talking about a huge sales miss here, well over $1 billion," said Steve Dube, analyst at Wasserstein Perella Securities. "It's cataclysmic from Compaq's point of view."
Several analysts said they planned to slash their earnings estimate for Compaq and lower their rating on its stock. The stock, as well as much of the rest of the market, will suffer on Monday, analysts said.
"The likelihood of additional pre-announcements is high, so the likelihood of investors running for cover is also high" for the next few months, Dube said.
Compaq's dismal forecast was a big surprise to some analysts because the company had managed to report better-than-expected results in the fourth quarter, when concerns about Asia's economic troubles were highest.
But personal computer prices steadily have been eroding in the past three months.
"There's very little in the market that's priced about $2,000," said James Staton, analyst at market researcher Dataquest.
What's more, corporate buyers, which usually are willing to pay top-dollar for high-end machines, have been putting off purchases in anticipation of Microsoft's release of Windows NT 5.0, expected in late 1998 or early 1999.
The falling prices have forced market researchers to slash their growth projections for the PC industry to about 10 to 12 percent for the year, down from 1997's growth rate of 16 percent, analysts said.
Still, some investors said there are plenty of bright spots in technology.
"We're hoping a few of the babies get dragged down with the bathwater," said Neil Hokanson, principle of Hokanson Capital Management in San Diego. He said he plans to buy high-quality stocks like PeopleSoft Inc. and Cisco Systems Inc. as their stocks get dragged down with the rest of the market.
Compaq's chief rival Dell Computer Corp. <DELL.O> also said its business remains strong.
"Our demand in major markets is firm and no different from normal seasonal patterns for us," said Michelle Moore, Dell spokeswoman.
20:15 03-06-98
Copyright 1998 Reuters Limited. All rights reserved.
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Compaq: Bad Sales Wiped Out Profits
By DAVID E. KALISH
.c The Associated Press
NEW YORK (AP) - Sending the latest jolt through the technology industry, Compaq Computer Corp. on Friday warned that flat computer sales and price wars would wipe out its profits in the current quarter.
Compaq, the world's largest maker of personal computers, said it had cut prices of its business desktops more steeply than expected due to intense competition for corporate customers.
Its warning came two days after Intel Corp. and Motorola Inc. said that their quarterly results also would fall below expectations and further raised the possibility of a slowdown in the technology industry.
Compaq chief executive Eckhard Pfeiffer said the company has resorted to aggressive price cuts to trim bloated inventories. Like other PC makers, Compaq is trying to dramatically reduce warehouse stocks so that it can bring new products to market faster and avoid the costs of cleaning out old inventories.
Before Compaq's warning that it would just about break even in the current quarter, analysts had expected Compaq to report a $525 million profit, according to a survey by First Call Corp. A year ago, the Houston-based company earned $387 million on sales of $4.81 billion.
The disappointing outlook was released after the stock market closed. Compaq's shares had gained 50 cents to $27.62 1/2 on the New York Stock Exchange.
But in after-hours trading, Compaq fell $2.50 to $25.12 1/2 and led other big high-tech names lower. Dell Computer Corp. was down $6.75 from its close to $131.75, Microsoft Corp. was down $2.56 1/4 to $80, and Intel was down $1.37 1/2 to $76.75, according to Dow Jones Newswires.
The financial warning could have negative implications for Compaq's agreement to purchase Digital Equipment Corp. Under the deal, Digital shareholders would get $30 a share in cash and 0.945 Compaq shares for each Digital share. The deal was expected to be completed in April or May.
Compaq said it was viewing the April-June quarter with caution as well.
Compaq's trouble in the market for business computers illuminates why Intel is having troubles meeting expectations. Intel, the largest maker of computer chips, said its slow sales were partly due to PC makers that were forced to sell from existing stocks of computers instead of buying chips for new computers.
The Intel warning late Wednesday sent the stock market swooning on Thursday, arousing fears that the booming computer industry may be slowing. Motorola on Thursday also warned of a disappointing quarter, blaming low prices for computer chips and mobile telephone equipment in Asia.
However, industry analysts generally say Intel and Compaq are being hurt by inventory problems, rather than sagging demand industrywide.
On one hand, some businesses may be cutting back on buying plans because they are waiting for machines with more powerful Intel microprocessor chips as well as for the latest upgrade to Microsoft's Windows 95 operating program. Windows 98 is due out later this year.
In addition, some of the falloff in sales of business machines may be due to an unusually tough comparison with the first quarter of 1997, when companies bought record numbers of computers.
Compaq's aggressive price cuts were expected to have a wider impact on prices for business computers, forcing rivals to also push down what they charge.
But many of the Compaq's problems appear to be specific to the company, said Kevin Hause, an industry analyst with International Data Corp.
Compaq appears to be having more problems than competitors in paring its stocks of old computers because its management is attempting to do so many things at once.
At the same time Compaq is trying to streamline its distribution process, the company is completing its merger with Digital. The deal was worth $9.6 billion when it was announced in January and is the technology industry's largest merger ever.
Only last year, Compaq bought Tandem Computers in a $3 billion stock deal that doubled its sales force.
Compaq is also trying to speed up sales of more powerful business computers. Its goal is to be among the world's top three sellers of a range of machines, not just PCs, by 2000.
''Management is spread perhaps a little thin and is distracted by very large tasks and goals they've set for themselves,'' Hause said.
Compaq chief financial officer Earl Mason acknowledged that the company was trying to accomplish several major goals at once.
''We don't deny that we're trying to do an awful lot,'' Mason said in a telephone interview. ''I would say to you we have good solid plans to make things happen and we feel we can get it done.''
AP-NY-03-06-98 1836EST
Copyright 1998 The Associated Press.
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