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Rosy scenario from Intel
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November 7, 1996: 8:47 p.m. ET
PC makers are encouraged that demand will be strong this season
From Correspondent Carmine Gallo
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NEW YORK (CNNfn) - There are very encouraging signs that demand will be strong for computers this holiday season. But while technology firms are looking forward to a green Christmas, they're also working to avoid a repeat of last year, when hopes were high and demand was weak.
Technology investors were infected with the optimism Thursday after bellwether Intel forecast strong sales in the fourth quarter. The company gained $3.25, and gave a boost to shares of other major computer makers in the process.
Industry wide, U.S. computer sales are forecast to rise about 20 percent this quarter, that's slightly above last season's growth rate.
Demand is expected to be strong this year for several reasons:
- The Christmas season is traditionally a time when consumers buy computers.
- Corporations are spending heavily to upgrade their systems.
- Most importantly, prices are dramatically lower.
Eugene Glazer, technology analyst for Dean Witter Reynolds, said with memory prices coming down sharply, powerful computers are much more attractive.(106K WAV) or
(106K AIFF)
Last year, the industry expected demand to exceed even the 19 percent growth rate it achieved, but high prices drove consumers away.
Even the hype over Windows 95 failed to generate the strong demand PC makers were expecting.
"Not a lot of people converted to Windows 95. It happened much more slowly than people expected, and it was really skewed into the business and corporate market as opposed to the home market. That reflected on the retail sales," said Louis Mazzucchelli, technology analyst for Gerard Klauer Mattison.
Weaker-than-expected sales last season left computer companies with a glut of inventories, and early this year, their stocks took a beating for it.
Analysts say computer companies are betting that lower prices will make up for a lack of new products. If sales fail to live up to forecasts, it could have a ripple effect, hurting retailers, computer makers and chip makers.
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Intel
Windows 95
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