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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Steve Porter who wrote (50636)	3/14/1998 10:33:00 PM
From: Brian Malloy	Respond to of 186894

To all, from Jubak Journal, may be of interest. Updates New Developments on Past Columns The Blue-Chip Safety Premium Six months. That's how long it will take to work out the inventory problems now savaging the stocks of PC makers like Compaq (CPQ) and the companies like Intel (INTC) that supply the guts of these machines. Last year, when Intel's chip sales slowed, analysts, investors and Intel management all blamed inventory reductions at indirect computer vendors such as Compaq that had announced plans to become more like direct vendor Dell (DELL). Dell, which builds a machine only when a customer orders it from the company, keeps very little inventory on hand -- equal to about a week of sales right now. Compaq, Hewlett - Packard (HWP), IBM (IBM) and other companies had inventories at their own plants equal to a month or more. Inventory equal to another two months of sales or so sat at resellers. It turns out that while the indirect vendors talked the talk last year, they didn't all walk the walk. Compaq seems to have made the least progress in the group. The company announced plans to cut inventory to three weeks of sales, but repeatedly missed internal targets. Inventory at Compaq now stands at near 10 weeks, or about four weeks at the company and another six weeks in the resale channel. Analysts expect that it will take Compaq at least six more months to hit its inventory targets. (IBM and Hewlett-Packard are thought to be in better shape.) That means sluggish orders for components such as Intel processors and Seagate (SEG) or Western Digital (WDC) hard drives until inventory levels reach their targets -- even though PC sales (in units) seem on track to grow by a solid 15% this year.