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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (39577)	4/18/1999 1:44:00 PM
From: GROUND ZERO™	Read Replies (1) \| Respond to of 94695

Sure, we can go higher, but then again, we could go lower or sideways..... well, I guess that covers all the bases.....<g> GZ

To: William H Huebl who wrote (39577)	4/18/1999 4:53:00 PM
From: Kip518	Read Replies (1) \| Respond to of 94695

Interesting News -- CPQ boots out CEO & CFO!! thestreet.com

To: William H Huebl who wrote (39577)	4/18/1999 5:08:00 PM
From: Kip518	Read Replies (2) \| Respond to of 94695

Re: CPQ -- "isn't not nice to fool those mother analysts" from Friday's wsj Computer Sky Isn't Falling, but Compaq Gets Squished By JASON FRY and TIMOTHY HANRAHAN THE WALL STREET JOURNAL INTERACTIVE EDITION The press release was from Compaq Computer Corp., and the news was that the PC giant would report revenue of $9.4 billion and profit of 15 cents a share -- a far cry from the 31 cents a share analysts had expected. The announcement came late on a Friday -- the deadest time of the publication cycle for the business press. (You've heard of coincidences? This isn't one of them.) "The quarter's shortfall reflects lower-than-anticipated market demand and increased competitive pricing in the commercial PC sector," Compaq Chief Financial Officer Earl Mason said in a statement. Compaq CEO Eckhard Pfeiffer, meanwhile, said that "we fully intend to expand our business and grow our market share profitably in 1999" -- but used the rest of his statement to mention that very competitive PC market two more times. But Compaq's apparent effort to bury the news as best it could didn't work. Analysts registered their anger immediately and vocally: "When you miss by 15 cents ... how could they not have known a week ago?" asked ABN Amro analyst David Wu, adding that Monday would bring "a public lynching." And indeed it did. Compaq's shares plunged 22% Monday, and analysts piled on with an objection to Compaq's story that went beyond its timing: Simply put, they didn't believe it. After all, they pointed out, the rest of the PC makers weren't exactly battening down the hatches. Only a day before Compaq issued its warning, Dell Computer Corp. impresario Michael Dell held an upbeat meeting with investors in which he said that industry demand looked healthy. On Tuesday, meanwhile, Hewlett-Packard Co. CEO Lewis Platt called his company's PC sales "healthy, growing and profitable." "We talked to Dell, IBM and H-P and they're all feeling pretty good about their PC businesses right now," said Merrill Lynch's Steven Milunovich. "If there's an industry problem, we would have heard from Intel by now,"remarked a still-irritated Mr. Wu. "Compaq made up 13% of Intel's business last year. The fact that Intel hasn't preannounced a shortfall says 87% of the world is doing OK." While analysts generally agreed that the PC industry was beset by ruthless pricing pressures, they placed most of the blame on Compaq itself, which they see as beset by a host of ills. A two-year-old plan to turn Compaq into a networking and workstation powerhouse doesn't appear to working -- Compaq wrote off a big networking acquisition in 1998 and has disbanded a separate workstation division. Its integration of Digital Equipment has been hurt by lagging product sales, which Compaq contends will pick up when new, higher-performance minicomputers hit the market later this year. Its status as a leading PC supplier to businesses has slipped -- ZD Market Intelligence reported that the quarter saw Dell take a 21.2% share of those unit sales, compared with Compaq's 18%, and said Dell appeared to be "now opening up a sizable lead." Analysts took aim at Compaq's "customer choice" sales model: The company sells its product through retailers, but has also been developing a direct-sales operation along the lines of Dell's, making its machines available via phone and Internet orders. Mr. Pfeiffer defended that model, saying it lets customers decide how they want to purchase Compaq products and that it is "clearly superior" to a strictly direct model. But is it? Analysts contend that the model has angered computer resellers, increased costs and confused customers instead of empowering them. "Customer choice is all well and good but when it reaches customer confusion, that's another thing," argued Laurie McCabe of Summit Strategies Inc. Compaq's troubles formed the backdrop against which the week's earnings were viewed, as investors were clearly hoping for some company to step up with solid earnings that demonstrated beyond a shadow of a doubt that the problems were indeed with Compaq and not the industry as a whole. What they got was a muddle -- perhaps inevitable at the end of the first quarter, which is almost invariably the leanest for the computer industry. First came Intel Corp., which reported earnings that were good but not great -- and warned that future earnings could drop. Then came Apple Computer Inc., which posted strong but not spectacular earnings and whose sales to artists, educators and consumers don't make it a particularly good barometer for how PC sales to businesses are faring. Finally, there was Sun Microsystems Inc., which posted robust earnings -- and offered a warning about uncertainties in the market in the second half of the year. That worried investors, although analysts were more sanguine. Sun is traditionally cautious in its forecasts, they pointed out, and one of the risks cited by the company was that the cost of fixing the year-2000 problem will bite into earnings. That's a threat that a growing number of analysts are arguing won't materialize, and that a smaller number of analysts are complaining is being used as an excuse by every company that can possibly make the case. The upshot of the harried week: No smoking gun emerged to indicate that Compaq was correct to sound the alarm -- but no news came to light that convinced worried investors all was well. Mr. Pfeiffer, meanwhile, was left trying to rebuild bridges amid rumblings from institutional shareholders that surprises in Compaq's management wouldn't be a surprise. On Wednesday, he said he had held four analyst calls in the week in an effort to put things right and pledged to "fix the credibility gap." Judging from the hellish week that was in Houston, that will be a considerable effort.