The operating numbers were not as good as advertised.
Steve Jobs' presence at the analyst meeting can help to energize the financial community and offset some of the 'sell on the news' pressures.
They were probably a little behind the curve, but it's still early in the game. Compaq needed a partner for an ASP opportunity. They tried to address it on their own, but this is probably a more effective way to be doing it.
While the stock could remain under pressure near term, we maintain our 'buy' rating on IBM owing to a compelling second-half story.
Six of the seven last years, technology stocks have been weak around that time period. June, July has usually been around a bottom.
The odds are long that someone would buy Gateway.
It's good for Compaq at the margin, because it helps them fill out their product line, and it is good for IBM at the margin because it helps them to sell storage.
Compaq is No. 1 in the retail segment, they're No. 1 in the high end of the business. In the small-business segment, they don't have the same market share they have elsewhere. The key for Compaq is how well they'll execute.
They're trying to create value-added. We are seeing all computer companies focus on new ways of generating revenue.
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