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

To: rupert1 who wrote (55380)	4/1/1999 3:56:00 PM
From: Night Writer	Respond to of 97611

victor, It looks like The Mirror had the idea first and the Sun tried to steal the show by announcing a couple of days earlier. In that case, the Sun should also become a Compaq customer. <g> I agree with you on the economic analysis. I made the losing no matter what you do statements with tongue in cheek. I actually view the report as being positive. NW

To: rupert1 who wrote (55380)	4/1/1999 8:50:00 PM
From: Harry Landsiedel	Read Replies (1) \| Respond to of 97611

victor. Re: " I think the inflation worries will begin in earnest when the international economies really start heating up." You may be right about the "worries". But the worries are based on the stubborn illusion that growth creates inflation. Wiser economists see that productivity is having a dampening effect on price increases. Following is an excerpt from a recent report on manufacturing that makes that point. It was written by Wayne Angell a former Fed governor. HL "And computers are playing a key role. The one area of the manufacturing economy that was very strong in 1998 was the computer industry. Output of computers and office equipment rose by 52.0% in 1998, which was the strongest yearly increase in production for this sector on record. Production growth of semiconducters and related equipment was also robust lastyear, at 27.9%, though down from its 49.6% average annual increase over the prior four years. In total, production of computers, communicationsequipment, and semiconducters increased by 26.8% in 1998, which accounted for the entire increase in manufactured output last year. So far, we have not seen any evidence of a slowing in the output of this high-tech sector in early 1999 as the production of computers rose at an annualized rate of 42.6% in January. Note that since output growth of the computer industry was so strong throughout 1998, the apparent acceleration in manufacturing activity in the last few months likely reflects a strengthening in the growth of the smokestack economy rather than the high-tech economy. Order growth for the high-tech sector remained robust throughout much of 1998. The nominal value of orders for computers and office equipment rose by 20.5% in 1998, which was the largest annual increase since 1992. Order growth in 1998 was much faster in real terms, since the producer price index for computers fell by 25.9% during the year. Despite this sector's ability to satisfy demand, 1998 actually witnessed a rise of 3.3% in the dollar value of unfilled computer orders. Given recent stock market concerns over the ability of the computer sector to sustain rapid growth in 1999, the production and order data could provide an important reality check (as it did in 1998). Orders data for computer and office equipment are published on March 4, while output data for February will be available on March 16. Our economic outlook for the U.S. economy remains favorable for high-tech capital goods manufacturers. We have consistently argued that the combination of tight labor markets and strong overall economic growth would stimulate significant investment in computers and other high-tech productivity-enhancing capital equipment. With the unemployment rate at a 29-year low of 4.3%, there has been no let up in the tightness of labor markets, and we therefore expect continued high levels of spending on such capital goods. Moreover, as overseas companies attempt to compete with their high-tech, high-productivity U.S. counterparts, we believe the result is likely to be continued strong order growth for U.S. high-tech companies. We are not afraid of strong economic growth in 1999, and we do not believe that the markets should be either. It is our view that strong growth has been, and will continue to be, a result of sound economic fundamentals, including high rates of capital spending and labor productivity growth. Stable gold prices, at around $287 an ounce, suggest that there are no inflation pressures building in the real economy. This view is supported by the NAPM price index, which has posted nine consecutive sub-40 readings for the first time on record.