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March 2, 1999


By CBR Staff Writer

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.

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