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To: Jim McMannis who wrote (58372)	6/20/1998 10:10:00 AM
From: gnuman	Read Replies (1) \| Respond to of 186894

Analysts Debate Whether Warnings Signal Slowdown In Server Market Dow Jones Online News, Friday, June 19, 1998 at 16:17 NEW YORK -(Dow Jones)- Shares of Sequent Computer Systems Inc., a maker of powerful server computers used in business networks, fell sharply Friday after the company warned it will post a surprise loss for the current quarter because of less-than-expected orders from a big customer. Shares of Beaverton, Ore.-based Sequent (SQNT) were off $3.125, or 20%, at $12.3125 in Friday afternoon dealings. Earlier in the day, the stock had traded as low as $10.50. Sequent late Thursday said it would lay off 200 to 250 workers and report a loss for the second quarter because of reduced shipments to Boeing Co. and weak sales overseas. Excluding accounting charges, the firm expects to post a loss of $11 million to $12 million, or 25 to 35 cents a share, on revenue of $185 million to $195 million. The mean estimate of analysts surveyed by First Call had been for earnings of around 24 cents per share. The company also will take a one-time restructuring charge of $55 million to $60 million. Sequent reported earnings of $8.6 million, or 23 cents a share, on revenue of $211 million in the year-ago period. Sequent's warning came on the heels of a similarly bleak outlook from Marlboro, Mass.-based Stratus Computer Inc. But analysts differ on whether the warnings involve company-specific issues or mean bad tidings for the overall market for servers, the powerful computers that coordinate and manage networks of PCs. Since Sequent, Stratus and Data General Corp., which has also posted weak results, are second-tier vendors, some analysts don't think conclusions can be drawn about the market's health. All three make computers based on the older Unix operating system. "In general, the server business is very healthy," said Wasserstein Perella Securities Inc. analyst Stephen Dube. "IBM, H-P and Sun are in strong positions." Some analysts believe that the second-tier players' problems can be chalked up to losing market share to the first-tier vendors. Merrill Lynch & Co. analyst Steven Milunovich said he's beginning to suspect that Sequent's and Stratus' problems have implications for the rest of the server manufacturers. "Every company has its own explanation (for weakness in the second quarter), but I'm becoming suspicious that the computer market may be weakening," Milunovich said. "You could argue that these are smaller vendors losing share, but Asia seems to be getting worse, and we're hearing the first signs of potential softness in Europe," he added. "The server business has been healthy, but that may be changing." In the past several days, analysts have adopted a more cautious second quarter outlook on other hardware companies because of the Asian economic turmoil. Servers aren't yet as reliable as hardy mainframes, but their growing popularity in corporate America has created a booming market that outpaces the growth in the competitive desktop business. While the U.S. PC industry grew 20% in the fourth quarter of 1997, PC-server demand rose 58% before slowing recently because of an inventory glut. Still, the PC server market is expected to grow 22% this year. The Big Four of the server industry - Compaq Computer Corp. (CPQ), International Business Machines Corp. (IBM), Dell Computer Corp. (DELL) and Hewlett-Packard Co. (HWP) - have carved up a formidable 74% share of this business. But the market is changing. Dismal first-quarter results from Compaq and others confirmed fears that the pricing pressure that consumed desktop PCs has also reached the market for lucrative server machines. What's more, Japanese powerhouses Hitachi Ltd. and Toshiba Corp. are entering the U.S. server market with big plans. Hitachi and Toshiba unveiled their first servers earlier this week at New York's PC Expo. They join another Japanese giant, NEC Corp., that has been trying mightily to boost its fledgling U.S. server presence since entering the market about 18 months ago. Copyright (c) 1998 Dow Jones & Company, Inc. All Rights Reserved.

To: Jim McMannis who wrote (58372)	6/20/1998 4:03:00 PM
From: Steve Porter	Read Replies (1) \| Respond to of 186894

Jim, It's a double glut, too much size and too many drives. I can't quiet agree with you there.. I have 17+ gigs online in my machine at home right now.. why well cause I have 95 and NT, CorelDraw 8, Office 7, Visual c++, Visual j++, visual basic, visual source safe, norton utils, mountains of source code, visual age for small talk (okay I could delete that one I suppose ;-) ), adobe everything, mountains of multi-media files.. in short I only have about 4 gigs free spread across the 2 OSes.. and although that may sound like a lot of space, my normal working project size is between 100-200MB when workign with AV stuff.. so it's not a lot of extra space. So to get back to the point, I don't think the sizes are too big. I think there are too many low quality manufacturers out there. While I like fujitsu's price/performance ratio, they can't touch an IBM, Maxtor or QNTM for performance. That's why most major OEMs are using: IBM, Maxtor and QNTM and not fujitsu. Remeber it doesn't matter how much capacity Fujitsu has if the OEMs don't want their drives. Steve