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

To: Kenya AA who wrote (47953)	2/13/1999 1:22:00 PM
From: Roads End	Respond to of 97611

K..Today's mention in Barrons...Steve Bickerstaff, who runs the TCW Galileo Core Equity fund, contends that the best companies in almost any industry are extending their lead and that those with a true competitive edge deserve a healthy share-price premium. The best companies are seriously competitive outfits getting a lift from deep-seated changes in the economy and consumer behavior -- "secular changes," in Wall Street-speak. "That's why I own Intel, not Advanced Micro Devices; it's why I own Dell Computer, not Compaq," he says.

To: Kenya AA who wrote (47953)	2/13/1999 1:24:00 PM
From: Roads End	Respond to of 97611

Barrons #2.... The Dell debacle Friday wasn't spurred by any momentous announcement by the company. What happened was that an analyst at BancBoston Robertson Stephens, Daniel Niles, put out a note saying that Dell had a "soft" finish to its latest quarter, which ended January 31. The result, Niles predicted, was that Dell's revenues would total $5.2 billion for the three months, below his original expectation of $5.5 billion. Niles left his fourth-quarter profit estimate unchanged at 31 cents, but his concerns about "intensified" competitive pressure in the personal-computer market jolted Dell's stock. Dell has risen ninefold in the past few years, not because it makes demonstrably better PCs than Compaq Computer or IBM, but because of its highly successful direct sales approach. But with Compaq, IBM and Hewlett-Packard now gunning for Dell and seeking to emulate its selling style, Dell's edge may be dulling. Dell stock is vulnerable to any evidence of an eroding competitive edge because of its high multiple. Before its drop Friday, Dell was trading at 100 times estimated profits in its just-concluded fiscal year and at 72 times projected 1999 earnings. For the week, Dell was off 11 1/2 to 89 7/8, but it's still up 22% in 1999. The Dell drama should resume Tuesday when the company is due to report its quarterly results.