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To: Mohan Marette who wrote (91398)	1/26/1999 1:44:00 PM
From: JRI	Respond to of 176387

OT 10,000 posts, Mo? You're not getting older, your getting RICHHHHHHHHHHHHHHHHHER,jajajaajajajaja (That was my combination D.Swiss/Elwood post. Hope you liked it!) Thanks again for your many contributions..Rock on!

To: Mohan Marette who wrote (91398)	1/26/1999 2:18:00 PM
From: Calvin	Read Replies (4) \| Respond to of 176387

Mohan, Is the bad news already starting to come out? ----- Compaq nagged by revenue concerns By Binti Harvey, CBS MarketWatch Last Update: 1:25 PM ET Jan 26, 1999 NewsWatch NEW YORK (CBS.MW) -- While Compaq Computer Corp. shares surged on its planned spinoff of Alta Vista Tuesday, analysts worried that the company will report revenue that falls short of targets in the fourth quarter. The leading computer systems manufacturer (CPQ) advanced 5.6 percent on reports it will spin off its Alta Vista search engine unit for as much as $2 billion. The buying spree triggered by the announcement may be short-lived, however. Compaq will report fourth-quarter results Wednesday, and although it is widely expected to post a modest upside surprise, analysts expressed concern that revenue will not meet projections. The average estimate of analysts surveyed by First Call is 37 cents a share, down from 42 cents a year ago. Compaq will report before the market opens Wednesday morning. "We have been looking for earnings of 39 cents on revenue of $10.75 billion, the former just a shade over the consensus, and the latter somewhat below management's $11 billion guidance exiting the third quarter," said SG Cowen analyst Richard Chu. Amid declining average selling prices for personal computers, revenue growth is acquiring greater significance as a measure of performance for computer makers. Although lower PC prices have increased consumer demand, unit shipments must accelerate substantially to sustain historic revenue and profit growth. "We believe investors will focus more on Compaq's top line than its bottom line results and believe outlook statements will dictate how the stock trades," said Kimberly Alexy, computer analyst for Prudential Securities. Despite PC unit volume growth of about 20 percent and significant market share gains in the fourth quarter, many analysts expect sales to fall short of management's guidance of $11 billion, projected at the end of the third quarter. Compaq's channel inventory management may also return to haunt the company. Analysts have conflicting opinions about the company's inventory levels exiting the fourth quarter. Piper Jaffray analyst Ashok Kumar believes that Compaq is "channel stuffing," or shipping excess inventory to the retail channel to inflate shipment figures. Compaq and other PC makers' profits fell prey to oversupply at the same time last year, as the companies waged an aggressive price war to reduce excess inventory. "We now estimate Compaq's PC sales-in level in the fourth-quarter is expected to be inflated by about two weeks of shipments," said Kumar. Alexy disagrees. "The fourth quarter marks the first quarter where PC sales into the channel equaled sales out," Alexy said. "Channel inventory levels have remained at between 3 to 4 weeks for the full quarter." On the positive side, Compaq will likely report impressive PC unit volume growth. The company remains the PC market leader, and the PC business is expected to have generated approximately $7.8 billion in revenue, driven by strong consumer sales in December. Analysts also expect strong gross margin improvement, from 24.9 percent in the third quarter to above 27 percent.