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

To: rupert1 who wrote (48909)	2/19/1999 8:37:00 AM
From: Kenya AA	Respond to of 97611

Today's IBD .... Current ratings: Company - EPS - RS - IGRS - SMR - A/D CPQ - 42 - 86 - A - B - D (uh oh) DELL - 99 - 96 - A - A - D (ditto) MSFT - 99 - 93 -A -A -B INTC - 85 -92 - A - A - D CSCO - 96 -95 - A -A - D LU - 95 -92 -A -A - D EMC - 96 -97 -A -A - B If anyone is interested in current IBD ratings on any other issues, I will be happy to provide info. From the Top 10 - #6. Compaq Rated Microsoft 'Monopoly,' Memo Says Date: 2/19/99 The top PC maker, which has close ties with Microsoft, feared the software company's ''improper use of a monopoly position.'' That view came out in a Compaq memo released at the Microsoft antitrust trial. Officials wondered if Microsoft would retaliate if Compaq worked with rival software firms. Separately, Apple Computer claimed Microsoft's Windows was designed to trash Apple's media player QuickTime. 10. Dell Considers Jumping Into Low-End PC Market Date: 2/19/99 The average price of its computers currently is $2,350, down 10% from a year ago. Dell, which holds the No. 3 spot in the global PC market behind Compaq and IBM, has traditionally catered to the business market. Its possible push into sub-$1,000 PCs may mean sacrificing profits for sales. But low-end PCs now account for half the retail market. From the Mutual Fund section - Does Dell's Slump Signal Tech's Demise? Managers And Analysts Say A Correction Was Past Due Date: 2/19/99 Author: Dan Moreau When Dell Computer tripped up on disappointing earnings and revenue growth Tuesday, it confirmed rumors that began circulating last week that the mighty wealth-making machine might finally be showing some signs of mortality. It raised the specter, too, that the tech sector might also be fading. Sales were only up 38% and profits up 49% in the quarter that ended Jan. 29. That was well below the 56% average quarterly earnings growth of the last two years. Wall Street was merciless in its response. Shares that traded as high as $109 on Feb. 1, plummeted to $83 going into Friday. That's a big deal for mutual funds because Dell is no ordinary tech stock with a penchant for volatile behavior. With Microsoft, it is has been the principal driver of the S&P 500. The pair accounted for more than 10% of the gain in the market in 1998. Funds such as Legg Mason Value Trust owe much of its performance to Dell. It represents almost 9% of the fund's $8 billion in assets. It is second only to America Online among its holdings. When Dell sneezes, Value Trust is the kind of fund that catches cold. The fund's net asset value is off 3.8% from Feb. 12. ''Expectations were getting pretty aggressive,'' said Randy Befumo, an analyst at Legg Mason who follows Dell for the Value Trust fund. ''Dell missed its revenue estimates by only $200 million. That's a growth rate of 38% vs. 41%. But over time that is significant, and it shows that revenue growth is slowing faster than people were expecting.'' At the same time, said Befumo, Dell shares are still up 200% over the last 12 months. Share prices going into Friday stood above $83, about where they were at the start of the year. The S&P 500 index was down 0.4% this year going into Thursday. Befumo said Dell shares were fairly valued and the fund planned neither to purchase nor sell shares in the near term. John Leo, who manages Northern Technology Fund, said he thinks Dell stumbled in clinging too long to higher prices for the computers and systems it sells to corporate customers. Dell accounts for more than 7% of the fund's portfolio. ''They missed an opportunity to be more aggressive on pricing and let margins fall,'' he said. While he's cautious, he said he sees Dell's new, lower share price as bringing the stock closer to its fair value. ''But there is still room for more downside movement in the stock price,'' he said. ''This is still not a cheap stock.'' Does this signal the sea change in tech stock dominance? Leo said it is too soon to make that call. ''The first quarter is always tough for tech stocks,'' he said. ''We need some more data on personal computer sales before I see any signs of encouragement.'' Donald Selkin, chief strategist at Joseph Gunnar & Co., said the tech sector was due for a pause after the Nasdaq rose 14% in January. ''You can't sustain that, but they will regroup for a summer rally,'' he said. Leading drug stocks were holding up well amid the tech sell-off, including Pfizer, Merck and Eli Lilly and represented good defensive plays. He said his firm was also investing in the specialty retailers sector and stocks like Home Depot and Best Buy. Befumo said the tech sector still showed signs of robust health. Intel's launch of the Pentium III chip should push up personal computer sales. The new chip is set to be introduced Feb. 26. Despite a rocky week, tech sector holdings still dominate the market, according to IBD's industry price rankings. Going into Thursday, Internet-related stocks held the top four slots among the nearly 200 industry groups rated. Among the tech stocks, however, computer makers have slipped. Six months ago, they held the third position. A week ago they were ranked 24th. But this week they slid to 31 in the rankings. Tech funds tracked by IBD were up 1.8% going into Thursday. No other stock fund sector tracked by IBD or Lipper Inc. was in positive territory. Among sectors listed by IBD that are moving up sharply are Media-Cable TV, Transport-Air Freight and Communication Services-Advertising.

To: rupert1 who wrote (48909)	2/19/1999 8:41:00 AM
From: Kenya AA	Respond to of 97611

Sorry if already posted .... US: Compaq Gave Microsoft Secrets Associated Press Online - February 19, 1999 03:24 By TED BRIDIS Associated Press Writer WASHINGTON (AP) - Microsoft Corp. repeatedly has pointed to tiny Be Inc. when the software giant, during its antitrust trial, has needed examples of the competition it faces in selling computer operating systems. Denying the government's claim that it is a monopoly, Microsoft contends it cannot rest easy because of the possible success of Be's computer software, which even Microsoft praised as "designed with special capabilities" for software programs "certain to be major growth areas in the years ahead." So it was particularly dramatic Thursday when the government disclosed that the world's largest computer maker, Compaq Computer Corp., which is testifying in support of Microsoft, recently passed secret information to Microsoft that it obtained from Be under a confidentiality promise. Justice Department lawyer David Boies made the accusation as he tried to discredit Compaq's testimony. Compaq's witness, John T. Rose, a senior vice president, said he was unaware that his company had passed along to Microsoft any confidential information. But Jean-Louis Gassee, the chairman and chief executive officer for Be, based in Menlo Park, Calif., said in a telephone interview later with The Associated Press that Compaq had called him "a little embarrassed" about three months ago confessing what it described as an inadvertent disclosure to Microsoft. "Microsoft is such a threat to the livelihood of PC (makers), there is a climate of fear," Gassee said. "They will do things almost instinctively to propitiate Microsoft." Bois charged that "Microsoft has such power in the industry that Compaq feels it is in Compaq's interest to share the details of confidential negotiations." A lawyer for Compaq, William Coston, called the accusation a "cheap trial stunt." U.S. District Judge Thomas Penfield Jackson ended the matter after Rose denied any knowledge of a disclosure. But Jackson seemed content with assurances from Boies when he asked, "You have a good-faith basis for that?" Another Compaq lawyer, Tom Siekman, said outside the courtroom that the company "takes its obligations very, very seriously." "It's not appropriate to make an allegation of this kind in open court," said Siekman, who added that Compaq was investigating. The government alleges that Microsoft violated antitrust laws by using its monopoly power to dissuade Compaq and others from doing business with its software rivals. Microsoft denies it possesses monopoly power. Boies' allegation was not the only problem facing Compaq on Thursday. The judge openly questioned the credibility of a key piece of its evidence, saying a disparity over dates in a particular contract with Microsoft "makes no sense at all if this was a genuine agreement." Jackson noted that the agreement in question was dated August 1995 but was not signed or executed until June 1996. Compaq is widely believed to enjoy among the lowest prices for its Windows operating system that Microsoft charges any computer maker, but the actual costs are among the industry's most closely guarded secrets. The government showed e-mail Thursday disclosing that Compaq and Microsoft actually signed two new price contracts last spring, less than two months before the government filed its antitrust case. One contract, with more favorable terms toward Compaq, immediately replaced the other. Boies did not suggest a reason for dual contracts, but noted: "If you're not going to use the false (contract) then there's no reason to have it." The e-mail said Compaq wanted dual contracts "given Microsoft's concern that our agreement be 'defendable' to other (computer makers) and the Department of Justice." Rose asserted that Compaq was trying to hide details of the price it negotiated from its own employees. The government has charged that Microsoft's ability to use Windows prices to discriminate among computer makers illustrates its monopoly power. A Microsoft spokesman, Jim Cullinan, called it "outrageous" to suggest that the relatively low price for Windows given to Compaq was at all related to the company's offer to testify on its behalf during the antitrust trial.