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To: jbn3 who wrote (288)	3/7/1999 11:20:00 AM
From: jbn3	Read Replies (1) \| Respond to of 335

Industry Problems (excerpts): (27-FEB-99 to 6-MAR-99) from Business Week OnLine, By Peter Burrows, in San Mateo, Calif. (thanks to Rusty Johnson) Message 8064935 On Feb. 19, Packard Bell NEC announced a 15,000-person layoff, along with news that its Packard Bell home-PC unit had lost more than $1 billion over the past two years. On. Feb 23, Acer America Inc., after years of losses, said it would get out of unprofitable retail-store channel and sell only via the Internet. These moves followed Hitachi's Feb. 4 announcement that it would shut down its U.S. notebook subsidiary, Hitachi PC Corp. On Feb. 24, for instance, Gateway 2000 announced it would provide free Internet service to customers who buy a PC costing more than $1,000. Compaq, for one, is trying all kinds of schemes to find a profit formula that adds up. On the one hand, it's experimenting with the so-called free PC model: It will sell 10,000 Presario home PCs to startup Free-PC Inc., which will "give" them to customers who agree to have online ads appear on the units 24-hours a day. and from Motley Fool, 26-FEB-99 (thanks to Chuzzlewit) fnews.yahoo.com To the individual investor, the information that comes out of Compaq is just about as noisy as it can get. One quarter it says look at sales, another quarter it's sell-out from the channel. Next quarter it's going to be hits on AltaVista.com, and next quarter it'll be sell-in to the channel. From all the recent info I've seen, the re-sellers again have too much inventory. And that's not just today; last quarter they were discounting to clear out inventories. With Compaq protecting its price less and Web re-sellers increasing unit sales, the traditional channel players aren't happy. Compaq has even obliged them with a 90-day moratorium of sales to Web-based PC re-sellers starting in mid-February. In a nutshell, Compaq's cash flow is awful even before taking into account the cash outflow for prior restructuring costs. Cash flow for the year was down over $3 billion to $644 million. Through nine months, cash flow was down $2.1 billion to $700 million. From Yahoo News, 6-MAR-99 (thanks to Chuzzlewit, reprint) dailynews.yahoo.com ''A lot of this (Y2K work) has come out of capital budgets,'' said economist Cynthia Latta of Standard & Poor's Corp. ''Some companies have found Y2K costing more than they thought and they're running behind schedule.'' Equally unsettling for the economy, if capital budgets have been raided for the relatively nonproductive work of fixing computers instead of investing in new growth, a more long-term drag could be forming. ''It's hard to quantify,'' said Latta. ''We don't have a (U.S.) recession in our baseline, but we do have slow growth and possible recession early next year.'' The consulting firm Forrester Research surveyed 50 major companies late last year and found that they will ''buy more PCs over the next 12 months to rid themselves of aging equipment that could cause Y2K trouble.'' But then, with production lines churning at full tilt, ''PC buying will fade,'' Forrester predicts. The ''buying fade'' will happen late this year as the Y2K lockdown begins, says Forrester analyst Carl Howe, who did the much-cited survey.