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

To: rupert1 who wrote (52581)	3/10/1999 4:51:00 PM
From: Elwood P. Dowd	Respond to of 97611

victor... maybe it was CSFB. I'm not certain, either. El

To: rupert1 who wrote (52581)	3/10/1999 5:53:00 PM
From: Steven N	Read Replies (1) \| Respond to of 97611

CREDIT SUISSE FIRST BOSTON CORPORATION Equity Research Americas Investment Summary Our recent visit to Compaq on our Texas Tour has caused us to lower estimates because sales in January were below plan in the U.S. and in Europe. Currency issues in Brazil also hurt both revenue and gross margin. Further, Compaq may have been effected by some weakening of the channel. 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. We'd have to say that industry sales in January may have been 3-4% below expectations. The problem does not seem to be ASPs or margin pressure, as ASPs appear to be firming and gross margins appear fine. February has shown signs of strengthening despite Compaq telling us the first half was a bit weak. We think Dell was above plan in February, Gateway was on track and Compaq began to see second half strength. We've reduced our Q199 EPS forecast to $0.31 from $0.36 as a result of lowering our revenue forecast and gross margin assumptions. Consensus is $0.35. For the year, we're lowering our forecast to $1.70 from $1.75 (consensus is $1.80). We're lowering our Q1 revenue forecast to $9.8B from $10.0B. January and the first half of February were weaker-than- expected. This comes despite our model already showing a traditional sequentially down quarter. The company indicated that demand was fine in services and at the high end but overall business in North America and Europe had been tracking below expectations for the first six weeks of the quarter. More recently it had picked up and its possible that a very strong March could offset the initial weakness. Asia Pacific and Japan have been exhibiting robust growth. Additionally, the recent 38% devaluation of the Brazilian Real will likely impact the top line and gross margin. The company did not hedge its inventory and receivables and its assets are depreciated at historic cost (and $ conversion). As a result, we've also lowered our Q1 gross margin forecast to 27.2% from 27.6%. Pretty sure it was CS