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

To: Elwood P. Dowd who wrote (50472)	2/28/1999 1:23:00 PM
From: Richie	Respond to of 97611

El............ I book marked that sight, I like the commentary..... especially the part where he ties the key economic indicators... into the outlook of the market. RichieH

To: Elwood P. Dowd who wrote (50472)	2/28/1999 1:28:00 PM
From: Richie	Respond to of 97611

El........... Looks like some negative with the positive in this one, It may have been posted already, sorry if it was previously posted. RichieH Investors Shed PC Stocks On Fears Of Supply Glut By Eric Auchard NEW YORK (Reuters) - Investors dumped personal computer stocks Friday amid fears a build-up of PC inventory could stifle first quarter growth -- and repeat a cycle the industry had vowed just one year ago would never happen again. Friday's sell-off was sparked after Compaq Computer Corp. (NYSE:CPQ - news), the world's largest maker of personal computers, said industry sales of commercial PCs had been soft for the first six weeks of the first quarter in North America and Europe. Wall Street analysts saw Compaq's weakness as further evidence of a build-up of left-over PC inventory from the heavy production cycle that occurred for most major PC makers in the final quarter of 1998. Two brokerages advised investors to avoid buying new shares of Compaq. Analysts at other firms slashed their earnings estimates for Compaq's first quarter results. ''In this environment, it's shoot-first and ask questions later,'' said one analyst of the queasy overall market sentiment that fueled wild-selling of computer stocks, with nearly 75 million shares trading hands. Compaq stock closed down $5.62 at $35.37, Gateway Inc. lost $7.44 to $72.69, Hewlett-Packard Co. (NYSE:HWP - news) gave back $4.75 to $66.44 and IBM fell $3.87 to $169.75. All prices refer to composite U.S. stock exchange trading. Dell Computer Corp. (Nasdaq:DELL - news) lost only $1.62 to close at $80.12 in Nasdaq trading, but the stock has been sent reeling since it reported a slackening in its normally torrid growth rate two weeks ago. Inevitably, Intel Corp. (Nasdaq:INTC - news), maker of the microprocessors that form the core of most PCs, was swept along in the downdraft because it is seen on Wall Street as a proxy for the sale of PCs. Its stock fell $7.81 to $119.94 in heavy Nasdaq trading action of 42 million shares. ''It's a zero-sum game,'' said Ashok Kumar, a PC analyst at brokerage Pipper Jaffray of Minneapolis. ''If one company ends up being the party pooper it affects the whole landscape,'' he said of Compaq sales weakness and the rising likelihood of a price war to slash backlogs of older products,'' he said. The industry must make way for newer computers first released today that are based on Intel Corp.'s just released, next-generation microprocessor, the Pentium III. Ironically, most of the industry was absorbed Friday with their announcements of new Pentium III PC models. To analysts, it sounded like a replay of last year. In the first quarter of 1998, investors learned the profits PC makers reported in the fourth quarter had been bolstered by excessive PC shipments at the end of 1997, which then sat unsold on distributors shelves, creating months of backlog. That build-up led to a log-jam across the PC industry in the first-half of 1999 and a round of bruising price cuts to clear inventory. Earnings results at most major PC makers were crippled, and their stocks suffered as well. ''It's almost like deja vu,'' Kumar said. ''In the December quarter, Compaq stuffed the channel to make the numbers'' he said, referring to Wall Street's earnings expectations for the company's fourth quarter. But Compaq spokesman Jim Finlaw denied that weak sales of commercial PCs during the first six weeks of 1999 had spurred an industry oversupply glut. ''Inventory is doing well,'' he said. ''We saw slow demand in North and Europe,'' Finlaw said of January sales. This was partially offset by what he said was strong demand in the Asia-Pacific region, including China and Japan, and ''okay'' demand in Latin America. The spokesman was relating comments Compaq Chief Financial Officer Earl Mason first made Thursday in response to a question from a group of investors visiting the company's Houston headquarters. Mike Kwatinetz, a CS First Boston analyst who was among the group visiting Compaq Thursday had said in a research note published Friday that weak demand among Compaq's network of PC distributors may be a factor in the recent soft PC sales. He wrote: ''Since Compaq appears to have had a shortfall in January, the question arises: ''How is the industry doing?'' In retrospect, Dell and HP's slight revenue shortfalls may have been more of an industry issue than we previously believed.'' ''This is a tech wreck,'' a senior equity trader at Dresdner Kleinwort Benson said of Friday's debacle. ''What analysts were saying about Dell, with slower growth prospects, seems to also be affecting these other computer stocks, like Compaq.''

To: Elwood P. Dowd who wrote (50472)	2/28/1999 1:37:00 PM
From: Kenya AA	Read Replies (1) \| Respond to of 97611

E: Although it's good to hear "kind words" about CPQ, in this particular paragraph, it seems to me that this guy is talking apples and oranges ... Here's what happened: Merrill Lynch reported that in their opinion they are going to earn 30 cents next Q instead of 35 cents and that sales will be $9.8 B instead of $10.0 B because prices are dropping for PC's. Helloooo…. Prices have been dropping since 1981 when IBM brought out the PC with dual floppies. OK there he's talking about lower revs due to a drop in ASPs, but in the next sentences, he's talking about a slowdown in PC purchasing. Seriously, there were some significant downgrades on CPQ from other Wall Street firms but this was the "jump-on-the-band-wagon" scenario. We think that this slight slowdown, if it indeed materializes at all, won't affect Compaq's management in their quest to reach $50 billion in sales by 2000. I see lower ASPs and lower demand as two different problems - you can make up for lower ASPs with volume as long as the demand is there. My understanding is that the first six weeks "problems" were demand related. Am I being too picky??? K

To: Elwood P. Dowd who wrote (50472)	2/28/1999 1:50:00 PM
From: Howard Feinstein	Read Replies (1) \| Respond to of 97611

They removed the life support system from me this morning and I am just starting to breathe on my own since Friday! El, I'm not sure I can take a year of CPQ trading in a 30-35 range and virtually going nowhere! It's amazing how this once "high flyer" has been reduced to dead money! I'd love to have some idea where this stock will be trading by year end. I don't have a clue!!! At what price does this HONEY become a buy? Do I sound distraught? You bet your ass!! I would have rather chanced the dice tables at Caesars Palace! Howie P.S.- Can't wait to see the CPQ action on monday!