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To: JRI who wrote (116674)	4/12/1999 1:19:00 PM
From: Mohan Marette	Respond to of 176387

IT markets seen strong despite Compaq hiccup By Neil Winton, Science and Technology Correspondent Well if you think that some'n,check this out.Oh my god they are getting it finally.<g> ====================================== LONDON, April 12 (Reuters) - Compaq Computer Corp spooked stock markets on Monday with its profit warning late last week, but analysts said the world information technology industry would remain robust and set new records in 2000. Some analysts said Compaq's problems were believed to be short-term and largely caused by growing pains from last year's acquisition of Digital Equipment Corp. Late on Friday, Compaq, the world's biggest personal computer manufacturer, warned that heightened competition and disappointing sales of its most profitable computers would hit profits in the first quarter. Technology stocks around the world were rocked on Monday by the news, but analysts said the damage was probably limited by the fact that a warning in late February from Compaq, based in Houston, Texas, had already alerted stock markets to its problems. Investors have been nervous about prospects for information technology markets generally, despite powerful sales gains in 1998. They will be watching for forthcoming U.S. technology earnings, including Intel Corp (Nasdaq:INTC - news) which reports on Tuesday, Microsoft Corp and Dell Computer Corp (Nasdaq:DELL - news) to see if Compaq's statement augurs industry-wide woes. The worry is that big multinational companies, racing to prepare for possible millennium computer bug problems, will have brought forward purchases in an unsustainable bubble. This theory suggests that at around the end of 1999's first quarter sales will hit a wall leaving the likes of Compaq reeling. Software giant Microsoft Corp (Nasdaq:MSFT - news) has expressed this fear, and late last week said again it was still worried that 1998's rapid sales increase might suddenly freeze early in 1999. Philip Fersht, analyst at high-technology consultancy IDC, thinks not. Fersht also believes that Compaq's problems are likely to be growing pains from its takeover last year of Digital Equipment Corp, which he reckons will pay huge dividends. ''We see healthy growth in IT (information technology) as a whole, particularly in software. World-wide this will continue and in 2000 we will see IT expenditure top one trillion dollars globally for the first time,'' Fersht said. IDC defines IT in five categories - services, packaged software, basic communications, single use systems -- like PCs, notebooks, laptops and desktops -- and multi-user systems including servers. Marie-Christine Pygott, analyst at the Context consultancy, also reckons that sales of personal computers in Europe, although slower than the torrid pace set in 1998, were remaining strong. She retains her western Europe sales forecast of a 17 to 20 percent increase in 1999. IDC's Fersht said it was unsurprising that Compaq was experiencing some problems because of the major restructuring now taking place after the DEC takeover. ''You would have to expect it would take a year or two for the new look Compaq to get up to strength and speed. But the acquisition of DEC will make it a very strong player in the long term,'' Fersht said. Fersht was also sanguine about price pressures facing Compaq and other hardware manufactures like International Business Machines Corp (NYSE:IBM - news) and Hewlett-Packard Co (NYSE:HWP - news). ''PCs, desktops, servers - they are all getting cheaper. IBM, H-P and Compaq are squeezing out smaller companies and revenues will be down because margins are down. But once smaller companies are squeezed out, the big ones can start enjoying larger profit margins again,'' Fersht said.