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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: PCSS who wrote (43195)	1/12/1999 9:59:00 AM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

WSJ article on computer makers (part 1) by: soltrader (48/F/Toronto) 48969 of 48969 January 12, 1999 Top Computer Makers Broke a Slump With Strong Sales in Fourth Quarter By JON G. AUERBACH Staff Reporter of THE WALL STREET JOURNAL The top U.S. computer makers benefited from the booming Internet, Year 2000 compliance issues, strong demand for computer services and a weakening dollar in a robust fourth quarter, analysts say. The sanguine projections for the just-ended period follow several quarters of bad news fueled by sinking PC prices, Asian turmoil and inventory problems. The top companies are finally "starting to recover," says James Poyner, an analyst with CIBC Oppenheimer in New York. "The fourth quarter is frankly the first quarter of meaningful earnings for the entire year." Most of the nation's top computer makers got a boost from strong demand for servers and other high-powered computers used for the Internet, analysts say. "Internet computing is emerging as the growth driver for these companies," said Steven Milunovich of Merrill Lynch & Co. in New York. Another nudge came from the weaker dollar, which benefits U.S. companies that sell abroad. Although Asian problems remain, the situation finally looks to be picking up, as evidenced by recent big computer orders from Japan, analysts say. At International Business Machines Corp., the good news continues to be services. Big Blue's computer-services unit, which provides consulting, network installation and Web-site design, is expected to record about $23.4 billion in revenue for 1998, which translates to 21% growth. "It has been far away the biggest positive of the year," says Mr. Poyner. Gary Helmig of SoundView Technology Group Inc. says IBM's service unit is continuing to win big contracts. "It doesn't look like it's slowing down anytime soon." Other bright spots at IBM include its mainframe business, which is benefiting from strong sales of the recently released G5 mainframe. The company's PC business, hit hard early in 1998, is expected to have rebounded in the fourth quarter. Laura Conigliaro of Goldman, Sachs & Co. expects revenue at IBM to reach $25.9 billion, up about 9% from $23.72 billion. She reckons Big Blue's net income will reach $2.3 billion, or $2.46 a diluted share, up from $2.1 billion, or $2.11, in the year-earlier period. Compaq Computer Corp. is expected to show signs of growth after a string of disappointing quarters. Major problems in Compaq's PC business have abated as the company has reduced inventory levels in the face of continuing pricing pressure. Oppenheimer's Mr. Poyner expects sales of PCs to be strong, giving the company a "significant uptick in market share." However, with the average price of a Compaq PC at about $1,065, almost $300 less than the industry average, Compaq still faces margin pressure.