By William Fellows
After sending PC stocks sliding late last week following its report that demand for PCs in the month of January was lower than expected – shares in Compaq Computer Corp plunged 16% overnight Thursday – Credit Suisse First Boston took to the phones yesterday to reassure the investment community that the report does not indicate a rollback of the industry rather that expectations themselves were too high. CSFB said Thursday that demand was 3% below where it should be. By Friday it was saying 1% to 2%. Yesterday CSFB delivered a more upbeat outlook for the March quarter as a whole, suggesting its expectation that 16.2% PC unit growth over the same period last year and 14.5% growth for the whole of 1999 could be too low. It said the top five PC vendors could only account for as much as 43.1% of all PCs shipped in the March quarter if they grow a further 4.4% over and above the industry growth rate as a whole. It doesn’t think they will meet this expectation. The five: IBM, Compaq, HP, Dell and Gateway accounted for 38.7% of unit ships in the December quarter and 38.1% in the September quarter. CSFB says this quarter IBM should ship 24% more PCs than it did in the same period last year (December quarter’s growth was 14% and September’s 24%); Compaq 24% (year-on-year growth was 18% for the December quarter and 6.5% for the September quarter); HP 15% (15% in December and 26% in September); Dell 48% (55% in December and 66% in September); and Gateway 36% (35% in December and 43% in September). Average growth expectation for all five is 28% this quarter (it was 23.6% in the last quarter and 25.6% in the September quarter). CSFB believes the internet is still the killer application driving PC sales.