Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : PC Sector Round Table -- Ignore unavailable to you. Want to Upgrade?

To: Pierre-X who wrote (1037)	10/15/1998 5:38:00 AM
From: CPAMarty	Read Replies (1) \| Respond to of 2025

HP: Y2K spending will hurt growth news.com

To: Pierre-X who wrote (1037)	10/15/1998 11:35:00 AM
From: Mark Oliver	Respond to of 2025

TRIDENT REPORTS 1Q99, FUTURE BRIGHTENING -- Trident Microsystems reported its 1Q99 financial results for the quarter ended September 30. 1Q sales were $23.876M, a decrease of 38% from $38.539M from 1Q98, but an increase of 24% from $19.275M for 4Q98. The basic loss for 1Q99 was $2.709M or 21 cents basic loss per share. This compared to a loss of $5.307M or 41 cents basic loss per share for 4Q98, and net income of $3.073M or 24 cents basic earnings per share or 21 cents diluted earnings per share for 1Q98. "Although this quarter's results reflect continuing economic problems in the Asia Pacific region, we are seeing the beginnings of an upturn for Trident worldwide as unit sales of our desktop and notebook products are increasing," stated Frank Lin, Trident's president/CEO. "We are experiencing a strong increase in unit shipments for our 3D desktop device, the baseline AGP 3DImage975, while shipments of our 2D desktop products have declined as anticipated. We are also experiencing increasing unit shipment volume of both 2D and 3D embedded memory notebook devices." Trident Microsystems: 650 943-3761. Sure seemed like all these guys got a big red target painted on their backs when Intel bought Chips and Technologies. They say things are looking up, but I wonder. Neomagic seems to be holding it's own. Regards, Mark

To: Pierre-X who wrote (1037)	10/15/1998 12:59:00 PM
From: Mark Oliver	Respond to of 2025

Interesting notes from Lehman Bros on what are/were fears that Compaq had been stuffing the channel. ***************************************************************************** * Over the past 2 days, reports of Compaq stuffing the channel have caused weakness in Compaq shares. * Our checks indicate that these fears are unwarranted. * Compaq and its channel remain constrained for sufficient product as a result of both component and execution constraints impacting both Compaq's PC sales as well as the sales and margin levels for the channel. * We do not believe there was any channel stuffing during the quarter. Rather, for resellers/distributors which were on the verge of making sales out quotas, we believe Compaq shipped some additional product to help channel partners meet these goals. Such product was not subjected to any extended terms or abnormal price protection measures. * We view recent weakness in the stock as a buying opportunity. ***************************************************************************** Compaq Weakness Unwarranted Over the past 2 days, rumors that Compaq stuffed the channel have triggered weakness in Compaq shares. We believe this weakness is unwarranted and represents a buying opportunity for the shares. Analyst reports indicated that Compaq offered a buy-in to the channel (estimated at approx. $100MM). And while this number is arguably insignificant for a company that will likely report 3Q sales of $8-9 billion, it prompted concerns that Compaq had taken a giant step backwards reverting to its prior stuffing measures when sales were weak. First, our checks do not support a 3Q stuffing scenario. In fact, Compaq remained severely constrained on product (see October Monthly Monitor note from 10/1/98) causing, in our belief, the company to fail to fully realize its PC sales objectives. These constraints negatively impacted Compaq's channel partners causing them to experience weaker revenue and margin results in the quarter. Margin weakness was, in part, caused by the channels' inability to achieve targeted "sales out" objectives leading to reduced vendor incentives. This product did NOT offer any extended terms or unusual price protection measures. We believe Compaq awarded certain channel partners which were on the verge of achieving these sales out objectives with additional product to help meet such targets. This was not at all a traditional buy-in where Compaq assumes the inventory risk and attempts to stuff the channel with large quantities of inventory to meet sales targets. Again, there remains insufficient product to stuff the channel even if Compaq had such an objective. And perhaps more importantly, we believe that Compaq is unlikely to take such a step backwards recognizing the damage such a move would have on its credibility. We continue to acknowledge, however, that Compaq has additional progress to make in order to reduce price protection to the next level. This step will largely be a function of the company's ability to 1) procure sufficient components, and 2) execute under BTO/JIT conditions. At this time, availability remains constrained and continues to impact growth rates for both Compaq and its channel partners. Outlook and Investment Recommendation We continue to believe that while the growth for Compaq's core PC business remains constrained, bottom line results will be above our $0.05 expectations. We continue to find the shares under-valued and believe that the recent weakness is unwarranted and represents a strong buying opportunity. We re-iterate our 1-Buy on the shares.