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

To: rupert1 who wrote (56484)	4/9/1999 11:49:00 PM
From: Captain Jack	Read Replies (1) \| Respond to of 97611

Victor-- this is it.. if you look at what the news services are saying it isn't this pretty.. and "Yes, that's what I'll think when I'm delivering...."-- if that is what is going through your mind you will be dreaming not thinking so watch the roads... NEW YORK, April 9 (Reuters) - Compaq Computer Corp. (NYSE:CPQ - news), the world's No. 1 personal computer maker, on Friday confirmed investor fears by warning that it expected its first-quarter profits to be less than half of what Wall Street had forecast. In a terse statement released late Friday, the Houston-based company estimated revenues for the quarter ended March 31 at $9.4 billion, resulting in earnings per share of about 15 cents. The forecast fell far below the consensus estimate of 31 cents a share among Wall Street analysts, according to a recent First Call Inc. survey of brokerage estimates. By comparison, Compaq eked out a profit of just 1 cent in the year-ago first quarter as it worked off a glut of inventory. The announcement, which came after the close of regular session stock market trading Friday, triggered an after-hours sell-off in Compaq shares. It also knocked down the share prices of rival PC makers and key suppliers of computer chips and software. Analysts said the shortfall -- which Compaq officials first telegraphed as a possibility in late February -- is likely to reverberate through technology stocks Monday as investors take measure of the impact on the industry. ''The quarter's shortfall reflects lower-than-anticipated market demand and increased competitive pricing in the commercial PC sector,'' Chief Financial Officer Earl Mason said in the statement. Mason's remark echoed comments he had made to a group of investors in late February when he signaled that commercial sales of Compaq PCs, especially to small and medium-sized businesses, were weak in the first six weeks of this year. ''While market conditions will continue to be competitive, we fully intend to expand our business and grow market share profitably in 1999,'' added Eckhard Pfeiffer, president and chief executive, also in the statement. ''The company will continue its aggressive drive of reduction of cost and operating expenses in the face of a very competitive market,'' he said. Beyond the immediate crisis, Compaq has been struggling to digest last year's $8.4 billion acquisition of Digital Equipme~ A Compaq spokesman declined to comment further. The company said the forecast was preliminary and that final results for the first quarter would be reported on April 21. The first-quarter shortfall repeats what is in danger of becoming an annual pattern for Compaq. While fourth-quarter results are fueled by strong end-of-year shipments to corporate and retail accounts, first-quarter results often shiver through a seasonal slowdown as distributors dump inventory unsold in the previous quarter. This year, further complications cropped up after Compaq introduced late last year its new line of Prosignia commercial PCs targeted at small and mid-sized businesses. In a break with Compaq's historic reliance on computer wholesalers and distributors, the company allowed customers to contact Compaq directly via the phone and Internet to purchase the new machines, in effect undercutting its distributors. While analysts see the new sales strategy as necessary for Compaq to compete with faster-growing direct PC distributors like Dell Computer Corp. (Nasdaq:DELL - news) and Gateway Inc. (NYSE:GTW - news), many believe the immediate impact has been to antagonize Compaq distributors, causing sales to suffer. The earnings warning is expected to renew debate on Wall Street over whether the nosedive in Compaq results reflect a general weakening of demand among PC makers generally or whether Compaq alone is to blame for its weak sales. ''This is going to be a tough tough thing for tech stocks but keep in mind that in some ways Compaq and Oracle for quite a while have been in a world of their own,'' said Hugh Johnson, chief investment officer of First Albany Corp. ''You've seen solid underperformance from Compaq on many days when IBM, Dell, Cisco and Microsoft have been strong.... The initial reaction will be negative for the tech group but I think the market will quickly sort out the group,'' he noted. Some institutional investors wasted no time dumping stocks of leading technology companies late on Friday. Compaq stock plunged nearly $5 in after hours trading late Friday to $26, reversing a gain during the regular trading session on the New York Stock Exchange, where it closed at $30.94, up $1.31 on the day, ahead of the disappointing news. Intel Corp. (Nasdaq:INTC - news), the principal supplier of computer chips that form the brains of Compaq PCs, fell more than $4 to $126.25 from a close of $130.81. Software maker Microsoft Corp. (Nasdaq:MSFT - news) slipped to $92.75 from $94.25. Closing prices were for regular session trading on the Nasdaq stock market. Dell dropped to $40.125 against its close of $43.54 in Nasdaq activity, and Gateway fell to $72.50 from its close of $74.69 in composite U.S. stock market trading. International Business Machines Corp. (NYSE:IBM - news) and Hewlett-Packard Co. (NYSE:HWP - news) -- Compaq's biggest rivals and major PC makers themselves -- did not trade in the after-hours session. Compaq stock remains well off the highs it set in late January above $50 when investor optimism peaked following better than expected fourth quarter results.

To: rupert1 who wrote (56484)	4/9/1999 11:54:00 PM
From: Joseph F. Hubel	Read Replies (1) \| Respond to of 97611

Victor, You deliver the milk this morning and on Monday we'll all get creamed. Kenya, Please run that equation again so we can feel more knowledgeable.(G) not. Right now feeling pretty stupid and betrayed. JFH

To: rupert1 who wrote (56484)	4/9/1999 11:55:00 PM
From: Loki	Respond to of 97611

victor...maybe I'll have to start delivering milk to supplement my income due to CPQ losses. My broker called me to to tell me the wonderful news as I was preparing my oldest son's Birthday Celebration. I slipped away on occasions to look at the thread. I haven't had time to digest it fully. Initial thoughts... 1. How could they miss by so much .36 - .31 to .15 2. They gave the units away to convince the channel to take them and maintain revenue and cash flow 3. Why did they beat Q4 and not sandbag for Q1. 4. They will announce .16 or .17 on the 21st. 5. CPQ's size will influence tech market 6. Intel could straighten course somewhat 7. Why did Mason (again) say he was comfortable with estimates When delivering the milk do you drive a lorry or "clip clop" your coach across the cobblestone? Loki I missed the virus incident. Anything I should know? I hope it's fixed.