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

To: Tony Viola who wrote (27411)	12/24/1998 12:25:00 PM
From: Jeffrey D	Read Replies (1) \| Respond to of 70976

To all, what better way to enter the holiday season than knowing that AMAT picked up a cool 20M yesterday to add to their sales numbers this quarter. A nice present for us all. More importantly, I hope this post finds you and your families in good health. I wish all of you the the best this holiday season and a healthy and successful new year. Jeff << Applied Materials and ASM have restructured the Note, with ASM paying $20 million on December 23, 1998, >>

To: Tony Viola who wrote (27411)	12/28/1998 5:58:00 PM
From: Tony Viola	Read Replies (1) \| Respond to of 70976

Ian, here's an opinion by DLJ that the Ingram and Inacom down quarters are due to a change in procurement methods for PCs. I don't think it has been posted here yet. If correct, it is good news for Intel, AMD, the boxmakers and, in a stretch, AMAT and the equips. Hell, it's even good news for the economy (well, except for Ingram and Inacom). ___________________________________________ INGRAM MICRO INC.: 08:19am EST 23-Dec-98 DLJ Securities (Kevin A. McCarthy) INVESTMENT VIEWPOINT Significantly disappointing news was delivered last night by two leading US computer distributors. Ingram Micro and Inacom both preannounced fourth quarter revenue shortfalls. Both blamed the revenue shortfall on the changes in vendor incentives which in effect have shifted PC procurement away from distribution and directly to PC OEMs. PC OEMs, such as Compaq, are making it increasingly easier for resellers and end-users to purchase PCs directly rather than source product through wholesale distribution. In addition, PC OEMs have reduced the levels of inventory price protection which in turn reduces a distributor's ability to stock product. Without stock, distributors have less to offer their reseller customers. We do not believe IM or ICO Q4 shortfall reflects softening in US corporate PC demand but rather a shift in procurement habits. We do acknowledge, however, that tech stocks are due for a round of profit taking and this 1-2 punch may be enough to derail the festive tech tape. KEY POINTS We are reducing our 1999 EPS for IM to $1.64 from $1.73 and our 2000 EPS estimate goes to $2.00 from $2.05. IM announced that its Q4 revenues would increase less than 20% versus expectations of 30-35%. The vast majority of the $700 million shortfall ($500-600) was due to lower than expected sales of PCs in the US. Approximately $100 million of the revenue shortfall was due to weakness in Latin America. We believe the bulk of the PC sales slowdown at IM and ICO can be explained by the rapid shift in PC procurement. For many years, IM served its reseller base by stocking branded PCs and acting as a primary source of supply. As major PC OEMs scaled back on inventory price protection in order to compete more effectively with direct suppliers, IM began to stock less product. At the same time, PC OEMs were increasing the ease in which resellers and end-users could purchase PCs directly. Under this scenario, the need for resellers to purchase from wholesalers has diminished. The suddenness of this shift is dramatic and leaves one feeling a bit uneasy about the current state of affairs. IM effectively lost 1/3 of its US PC business in one quarter. Growing concerns over the strength of end-product demand in US commercial accounts will surely mount. One should note, however, that product sales through traditional distributors have slowed throughout the second half and most of the US strength has been driven by retail and the rapid growth of on-line marketers. The ability to buy PCs direct through phone or Internet, which generally by-pass the channel, is no longer limited to Dell customers.