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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (25892)	11/1/1998 12:52:00 AM
From: zsteve	Read Replies (2) \| Respond to of 70976

frm this week's Barron's: for full story: interactive.wsj.com ........... By several accounts, personal computer sales showed robust growth in the third quarter. According to DataQuest, worldwide PC unit sales rose 13.7% in the July-September period, with 18.2% U.S. growth; International Data Corp. found a similar trend, reporting 15% worldwide growth, 14% in the U.S. But trouble looms. There's a small but growing fear that sales of PCs, mainframes, software and various other technology goods will be muffled by the Year 2000 problem. Not the much-publicized software glitch, but rather, slower spending on technology goods in the second half of 1999 and into early 2000, as corporate information technology departments brace themselves for the fallout of the dread Y2K bug. In the October 10 Trader column, we noted that Forrester Research sees personal-computer sales accelerating early in 1999, before slipping into Y2K-related paralysis until at least mid-2000. Forrester, in fact, expects PC revenues in 2000 to drop 14% from 1999 levels. Other analysts are picking up similar signals. Gartner Group has been warning clients of a "nuclear winter" for technology spending in late 1999 and early 2000. In a recent commentary, SoundView Technology Group mused that a better term for the impact on technology spending budgets might be Millennium Flu. Like Forrester, SoundView argues that PC sales actually may pick up in early 1999, as companies replace some of the estimated 60% of installed PCs that aren't Y2K compliant. Enterprise software companies like PeopleSoft, SAP and Baan already are seeing a Y2K-related slowdown. Soundview reckons that mainframe and server hardware and software outfits will suffer, as well. Anticipating the onset of Millennium Flu, SoundView has trimmed earnings estimates on IBM, HewlettPackard, Sun Microsystems, Computer Associates, BMC Software, Compuware, Oracle, Platinum Software, Siebel Systems and Sterling Software. The Street has turned decidedly more bullish on semiconductor stocks in recent weeks; the Philadelphia Stock Exchange semiconductor index has rallied more than 43% off its early October low. But not everyone believes the worst is really over. Erica Klauer, semiconductor analyst at BT Alex. Brown, observed in a recent report that order strength in September and early October has been related more to inventory replenishment than to a surge in end-market demand. She also notes that most of the strength seems to be coming from PC-related parts, while chips for disk drives, monitors, printers, telecommunications equipment and other applications have yet to recover. Finally, Klauer sees early signs that 1999 could be a tough year for IT spending, particularly given recent troubles in the banking and financial sectors, which represent a healthy slice of technology outlays. Overcapacity, she says, remains a problem. Concludes Klauer: "We think a turnaround may be farther off than expected." ............