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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Dorine Essey who wrote (66062)	9/18/1998 9:27:00 AM
From: Boplicity	Respond to of 176387

PC industry on comeback trail By Binti Harvey, CBS MarketWatch Last Update: 4:16 PM ET Sep 17, 1998 NewsWatch LOS ANGELES (CBS.MW) -- As global economic uncertainty sends shockwaves through the broader technology sector, investors may be wise to refocus their attention on computer hardware stocks, analysts say. Industry observers say preliminary reports and recent information indicate those much-maligned computer and chip manufacturers may be poised for a blowout third quarter. "We typically expect a seasonally strong third quarter, and it looks like it's turning out to be that way," said Ashok Kumar, PC and chip analyst for Piper Jaffray. Investors pummeled PC and component manufacturers in the second quarter as bloated inventories and pricing pressures depressed profits. However, PC makers and analysts have maintained that strong back-to-school and Christmas season sales would resuscitate the industry in the second half of the year. "[PC makers] are expected to record 5.4 million shipments worldwide in the third quarter, compared to 4.96 million in the second quarter," said Erin Lawrence, PC analyst at Dataquest. Early positive reports indicate that the industry is well on its way to delivering a second-half recovery as promised. Analysts say a combination of tighter inventory management and surging sales have put the group back on track. Chipmakers' bullish outlooks may be the most important sign of improvement in the industry, Kumar believes. Earlier this month, Intel Corp. (INTC) forecastÿ 8 to 10 percent sequential revenue growth in the third quarter based on strong demand from U.S. and European computer makers. Analysts had been expecting flat to slightly higher sales. Thursday, influential Merrill Lynch analyst Thomas Kurlak said Advanced Micro Devices Inc. (AMD) has recorded better than expected sales of its K6 chip, and noted that renewed demand is boosting average selling prices for microprocessors. See related story. "Intel's pre-announcement of positive sales is the key," Kumar said. "It indicates the industry is doing well." Analysts have also received good progress reports from Dell Computer Corp. (DELL) and Gateway Inc. (GTW) in recent weeks. Speaking at the NationsBanc Montgomery Securities stock conference in San Francisco, Dell Vice Chairman Kevin Rollins said the company expects the personal computer industry to continue growing at an annual rate of about 15 percent for the next few years. Rollins' forecast assumes significant acceleration in the second half of the year, as the PC industry grew 11 percent in the first quarter and only 8 percent in the second quarter. "Dell is seeing no signs of pain," said Steven Singleton, technology analyst at Robert Van Securities. Singleton also pointed to strong sales of Apple Computer Inc.'s (AAPL) iMac computer, targeted at consumers. "The iMac has had faster sell-through than any otherÿ product,"ÿ Singleton said. Analysts also said encouraging reports by computer retailers have contributed to a rosier outlook. Leading computer and electronics retailer Best Buy Co. (BBY) reported stellar second-quarter results and the Street expects CompUSAÿ (CPU) to report slightly better sales next week. "My general sense is that business continues to get better gradually," said Salomon Smith Barney analyst Maureen McGrath. "There's no question that the unit demand is there, it's still going to be up double digits." PC-related indexes have regained ground over the past several weeks, including the Goldman Sachs Computer Hardware Index, the Philadelphia Semiconductor Index and the severely-damaged Disk Drive Index. Thursday, selected chip and disk-drive issues climbed despite a broad slump in technology shares. See Silicon Stocks To be sure, the industry continues to battle the negative impact of weakening global economies on its revenue. However, analysts expect strength in North America and Europe to sustain profits. "Although government and retail sales were strong in the third quarter and Christmas sales are expected to be strong, those numbers will of course be North America-centric," said Kumar.ÿ