Stefan:<<Jeffrey D there is no advantage for me to convince you that PC sales
have slowed so I will stop at that.>>
Perhaps you should try to convince these guys first. Jeff
Top Financial News
Sun, 07 Mar 1999, 3:34pm EST
U.S. Computer Shares Likely to Rally After Rebounding From February Plunge
Computer Shares Seen Gaining: U.S. Stocks Outlook (Repeat)
(Repeats story from March 5.)
New York, March 7 (Bloomberg) -- Computer stocks, down as
much as 30 percent from their highs of earlier this year, began
to attract buyers last week.
The Standard & Poor's 500 Computer Systems Index, which
includes International Business Machines Corp., Dell Computer
Corp. and Compaq Computer Corp., posted its first weekly gain
since January, and investors see more gains ahead.
''The fears that were brought on by seasonal weak PC sales
were overblown,' said Uri Landesman, a money manager with J.P.
Morgan Investment Co. which oversees $316 billion. ''The second
quarter will be a blockbuster.''
The stocks lost momentum in February as investors grew
leery of paying high prices for an industry with weakening
sales. Dell reported its slowest sales growth in two years and
Compaq, the world's biggest personal computer maker, said
January sales lagged expectations.
Dell picked up 10 percent in the last three days of the
week, after tumbling 28 percent in the four weeks ended Tuesday.
Compaq rose 6.8 percent, after losing 35 percent of its value
since late January.
Dell now trades at 75 times trailing earnings, down from 95
times on Feb. 5.
Semiconductor and software makers also regained some
ground, after being dragged down by concern that the slowing
demand for personal computers could blunt sales of associated
products. The Philadelphia Semiconductor Index, which lost 17
percent since the end of January, rose 8.6 percent in the last
three days of the week. Microsoft Corp., the world's largest
computer software maker, which started out the week down 14
percent from the end of January, added 4.2 percent.
''It's time to do a little bottom-fishing,'' said David
Mead, chief investment officer at Harris Bank in Chicago, which
oversees $25 billion.
Mead bought shares of Compaq, Intel Corp. and International
Business Machines Corp. in recent days.
Gains on the Week
For the week, the Nasdaq Composite Index, laden with
technology shares, rose 2.2 percent. The Standard & Poor's 500
Index climbed 3 percent, and the Dow Jones Industrial Average
gained 4.6 percent, topping 9700 for the first time. The Russell
2000 Index of small stocks rose 1.5 percent.
Not all computer-related shares stand to gain, investors
say.
''We're entering a period where things are changing
quickly, and it's becoming more important to pick the right
companies,'' said Joseph E. Stocke, a senior portfolio manager
at Meridian Investment Co., which oversees $2 billion.
''Technology continues to be a good area, but stock selection is
the key.''
Stocke has been selling America Online Inc. and Computer
Associates International Inc., while adding to holdings in
Seagate Technology Inc. and Apple Computer Inc. AOL, he noted,
has risen almost sixfold in the past year, while Computer
Associates shares have languished since the company dropped its
$9.8 billion hostile offer for Computer Sciences Corp.
Landesman is betting on companies he expects to benefit
from spending to ensure computer systems are ready for the year
2000, such as EMC Corp., the No. 1 maker of computer storage
systems for corporate networks. He also likes companies that
provide the infrastructure for the Internet, including Sun
Microsystems Inc. and Cisco Systems Inc.
''Internet spending will continue to be robust,'' said
Landesman. ''Countries and companies have no choice but to spend
on'' telecommunications.
Not all money managers are convinced it's time to buy.
''There is still uncertainty about what earnings will look
like,'' said Michael Ranis, senior vice president at Bank
Hapoalim in New York, which oversees $400 million.
Ranis has trimmed holdings of computer-related shares and
is waiting to see prolonged gains in the likes of Microsoft,
Cisco, Intel, Dell and IBM.
''I don't mind missing the first few percent,'' said Ranis.
''But I want to see all five move 5 to 10 percent from their
recent lows. Then there is still enough room for them to rise
and make some money.''>.
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