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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: SirVinny who wrote (105588)	2/27/1999 12:38:00 PM
From: OLDTRADER	Read Replies (1) \| Respond to of 176387

Good.For a start keep in ind TODD BAKER of H&Q went to a Hold on DELL on 6/30/98 at 63.wbm-

To: SirVinny who wrote (105588)	2/27/1999 12:39:00 PM
From: calgal	Read Replies (1) \| Respond to of 176387

I am sure you have all seen this, but here it is for those who have not. How Bad Are Computer Industry's Sales Problems? by Jed Graham First Dell Computer and Hewlett-Packard fell short of their fiscal fourth-quarter revenue numbers. Now Compaq Computer is telling industry analysts that some of their revenue projections for its first quarter are too optimistic. The latest revelations led CS First Boston analyst Michael Kwatinetz to pose this question in a Friday research report: "Since Compaq appears to have had a shortfall in January, the question arises: "How is the industry doing?" For the past three weeks, Wall Street has been reigning in its expectations for the PC sector. Yet few convincing signs of weakness have appeared - except in the stocks. Compaq shares tumbled 5-5/8 to 35-3/8 on Friday. The No.1 PC maker's stock has now fallen 30% from its January 27th high. Investors have soured on DELL, one of the best stocks of the 1990s. It's lost 27% since Feb. 1. The weakness has extended to the entire PC hardware sector. Intel slid 7-13/16 to 199-15/16 on heavy volume, despite the much-awaited release of its Pentium III processor. Other component makers also took a beating amid concerns over pricing and PC demand. Micron Technology sank 9-3/16 to 57-5/8, Texas Instruments 7-1/16 to 89-3/16, Altera 6-3/8 to 48-5/8 and Sanmina 5-5/16 to 52-1/4. Chip-equipment makers came under even heavier pressure. It's not surprising that the stocks should pull back after their strong advance from October to January. But sentiment has clearly turned against these hardware-related sectors more than the rest of the market. Compaq Estimates Cut Friday's sharp sell-off came after CS First Boston and Merrill Lynch cut earnings estimates for Compaq. Merrill Lynch's Steve Milunovich says the company indicated PC sales have been soft to small and midsize businesses. Earlier in the week, Milunovich said in a research note that PC industry revenue growth had slowed to 3% to 5% a year due to falling computer prices. (this is what I originally thought Cramer was referring to in his column) Dell's efforts to grow several times faster than the industry rate "will prove hard to achieve, perhaps resulting in pricing pressures." Kwatinetz cut his first-quarter revenue estimates on Compaq to $9.8 billion from $10 billion and his profit estimate by a nickel to 31 cents a share. First Call's consensus forecast had been 35 cents. By late afternoon, First Call reported that 10 analysts cut their earnings outlook on Compaq, a number of them who were already below the consensus view. But some industry analysts say the signs of weakness don't appear too troubling. Compaq's apparent revenue shortfall is more a result of inflated forecasts, says Piper Jaffray analyst Ashok Kumar. Compaq's late fourth-quarter shipments helped it make its numbers for that quarter but may have heightened expectations for the current quarter. Kumar, who was among the first analysts to warn that Dell's revenue would fall short, says he's not adjusting his revenue forecast of $9.6 billion for Compaq and believes the company has a chance to meet estimates. One factor that could lead the company to come up short is the weakness in Brazil's currency and economy, Kumar notes. A weakening global economy and a decline in computer hardware spending leading up to 2000 could present problems later in the year. One Month Trend? Lighter-than-expected sales in a single month didn't shake Wasserstein Perella Securities analyst Stephen Dube's belief that the PC industry is healthy. "I don't think there are any signs of serious trouble in the industry," he said. But he added that the best years for the industry may be behind it. Still Hewlett-Packard and IBM appear inexpensive at current prices with a rebound in their businesses from a weak 1998, he says. Another reason Kumar isn't convinced of significant woes in the PC industry is that Intel, a tech bellwether, hasn't cut its projections for the quarter. On Friday, market research firm PC Data released a report showing 43.9% of PCs sold in the U.S. retail market in January came with AMD's K6 chip, overtaking Intel's 40.3% share for the first time. But Intel said last month that it would move aggressively to regain its lead in this market. Microsoft is another tech bellwether that hasn't reduced estimates, says International Data Corp. analyst Christine Arrington, who is expecting strong sales for it and Intel in the first half of the year. Intel's Pentium III release may be one reason January sales didn't get off to a robust start and could help sales going forward, she says. PC sales are usually stronger in the second half of the year. But that may shift to the first six months of this year as companies work to become Year 2000 compliant, Arrington says. "Companies don't want to be working to install new equipment as the deadline approaches."