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To: Vol who wrote (114021)	4/2/1999 9:39:00 PM
From: puborectalis	Respond to of 176387

Hard times for hardware stocks By Tiare Rath, CBS MarketWatch Last Update: 5:22 PM ET Apr 2, 1999 Silicon Stocks Earnings Surprises NEW YORK (CBS.MW) -- Jitters. Worries. Nervousness. More than just financial industry jargon, these words have defined 1999's first quarter for computer companies. As personal computer makers approach their reporting days, some analysts are saying some investors' agitation could be alleviated. How? Well, it likely won't happen through the actual quarterly results. Analysts have sliced their expectations for Compaq Computer (CPQ) in particular, pulling their earnings estimates down to 32 cents a share for the PC maker's first quarter from 46 cents a share. Dell Computer (DELL) also had its profit estimates cut this month. International Business Machines (IBM) had its own profit scare two weeks ago when analysts said its earnings and sales will probably be weaker than expected. The speculation sent the market into turmoil. See related story. While analysts said computer makers aren't set to report their most stellar quarters on record, what will decide their fate this earnings season will be what they say about the future. A little light? Earnings won't "be necessarily as bad as everyone was expecting," said BancBoston Robertson Stephens analyst Dan Niles. But, he said, "When they do report, I think most of the companies will come in light." Companies aren't buying as many computers as once expected, and there's been a surge in purchases of sub-$1,000 machines -- or sub-$600 machines -- which pulls in fewer dollars for computer makers. "Everybody's gotten dragged down; it just depends where you are in the food chain," said ABN Amro analyst David Wu. He predicted Compaq will make its reduced estimates, as will Dell and Gateway (GTW). Niles anticipated most companies' revenue will come in below expectations and that margins will be hurt. He also predicted Compaq missing its profit expectations by "several cents" without warning ahead of its report. But March looks like stronger a month for PC makers than a "disastrous February," Niles said. If companies indicate their momentum is strong, things will look up for the sector, he said. Still, Niles predicted stocks would be volatile through earnings season as companies report "a mixed bag" of results. The first quarter is also the weakest for PC makers, so numbers wouldn't have looked solid no matter what weakness the companies were facing, Wu said. Most years PC makers have a dynamite fourth quarter; things slow following the holiday rush and pick up after the first quarter, he said. "All these bellyaching types that moan about this and that will get more bullish as the year progress," Wu said. Also see: Economic impacts, SoapBox: First Call, Blue chip patterns and Software sector