DIGITAL'S EARNINGS DROP\Company's announcement permeates PC industry, raises question\of trend.Byline: Lawrence M. Fisher The New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Times Blaming slow sales of its personal computers, Digital Equipment Corp. said Wednesday that this quarter's earnings would fall below analyst expectations. The news sent Digital's shares tumbling nearly 17 percent, dragging down other computer issues and, in turn, the broader market. The question for investors in Digital and other technology issues is whether the slowing sales of personal computers is a temporary or protracted pro·tract tr.v. pro·tract·ed, pro·tract·ing, pro·tracts 1. To draw out or lengthen in time; prolong: disputants who needlessly protracted the negotiations. 2. trend. In making the case that the slump is a passing phase, many analysts have cited the slow corporate adoption of Microsoft Corp.'s Windows 95 operating system operating system (OS) Software that controls the operation of a computer, directs the input and output of data, keeps track of files, and controls the processing of computer programs. . In this view, sales will pick up in the second half of the year, after large companies complete their evaluations of Windows 95 and begin to buy the more powerful PCs that the system requires. But Digital's warning for the third quarter, ending March 31, comes amid other recent signs of softness in the personal-computer market, including plunging prices for memory chips and less optimistic forecasts from Compaq Computer Corp. and IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) . Earlier this week, Dataquest, a market research firm, released a report that concluded the home market for PCs is rapidly maturing; Dataquest forecast just 8 percent growth in 1996, down from 22 percent in 1995 and 42 percent in 1994. Digital's shares dropped $11.25, or 16.7 percent, to close at $56, on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . Shares in Hewlett-Packard Co. dropped $3.625, or 3.6 percent, to $97.625; those of IBM fell $4.75, or 3.9 percent, to $117; Compaq fell $2, to $38.125; and Dell Computer Corp. fell $1.125 a share, to $32.50. Related stocks also took a hit, with declines at Intel Corp., Micron Technology Micron Technology ("Micron") NYSE: MU is a multinational company based in Boise, Idaho, USA, best known for producing many forms of semiconductor devices. This includes DRAM, SDRAM, flash memory, and CMOS image sensing chips. Inc. and Microsoft. The Dow Jones industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. fell as much as 52 points in the session, before rebounding to close at 5,655.42, down 14.09 points. John Jones, an analyst with Salomon Brothers in San Francisco, recommended caution about the entire information-science sector, citing a broad shift in economic factors that does not bode well. |
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