Wow. What a week. The best take I found this week on the market's astonishing finessing of l'affaireCompaq (CPQ) Monday was from TSC's Justin Lahart:
Wall Street did not merely digest Compaq's earnings warning Monday; it ripped the thing apart, gulped it down, burped and asked for more. Which makes one wonder what the Street is going to do for a postprandial encore.
Compaq finally found its floor around 24, on phenomenal volume last Monday of more than 111 million shares, about eight times normal. And the damage was pretty much contained within the PC-makers group.
Meanwhile, broader tech issues wandered up a little, though today many were down a little. On my screen, of the 25 stocks to watch in 1999
list, 20 are red -- down -- today, and only five are in the green from yesterday's close. (Watch for my promised quarterly update on that list here next week, by the way.)
On to more news about tech stocks and investing.
It hasn't been much reported, but the
did something smart Monday. At the
Demo Mobile '99
conference in San Diego, Palm President Robin Abrams announced that Palm's opening up the Palm market by licensing the right to make Palm-compatibles to other companies.
There are already a few pseudo-clones out there now, such as IBM's WorkPad, but they're all built by 3Com for the private-label market. The first true clones under Palm's new OEM licenses should be out in six to nine months, Abrams said.
This is a critical step in ensuring the survival of the PalmPilot platform. Just as
would have prospered mightily if it had begun serious licensing of the Mac platform years earlier than it did, Palm just couldn't wait any longer. Today Palm faces competition not only from the myriad of WindowsCE machines, but also from low-end producers, such as
Diversifying the hardware base within the universe of Palm compatibility is a smart, if undoubtedly painful move. And judging by the number of
readers who write me to praise their Palms, this is good news for a lot of us on the user side, as well as for 3Com investors.
We have yet another entry in the biennial Seymour Trophy competition for the most unfortunate corporate name change in the technology business. This has always been a tough league with hot and heavy competition; tech companies are wont to change names frequently -- sometimes as a result of a merger and other times as a positioning exercise, or what an ad-agency friend of mine calls "refreshing the franchise."
In the current round, we have in the finals such idiotic changes as
after it merged with
. (Mercifully, a company that already owned that moniker sued the company last December -- can you imagine
a name like that? -- and USWeb changed to
. Not exactly music to the ears, but not moronic, either.)
, about which I wrote
here just before its IPO in November 1998. Last week that perfectly fine and even appealing name was dumped when the company changed its name to
Nope, this isn't a delayed April Fools' joke: They really did.
I suspect FatBrain may have retired the trophy.
The news is looking better, if so far only incrementally and tentatively so, on the Y2K front. When I warned about the end-of-quarter problem
here a couple of weeks ago, as Japan, Canada and the state of New York, plus some businesses, changed to their new fiscal year on April 1 -- thus entering a year in which date calculations for the period Jan. 1- March 31, 2000, become critical -- there was worry among Y2K experts that we'd see some serious problems revealed.
Similarly, as we approached the 99th day of the year 1999 last Friday, experts worried that we'd see some cracks, because for years, programmers have used the phony date "9999" as a kind of scratchpad address in memory or to indicate a null value. With so much date arithmetic based on day-counting, those worries were prudent.
But unnecessary, as it turned out. There are still worries about Sept. 9, 1999, for the same reason. Stay tuned.
Elsewhere, tests in the electrical-generating and distribution businesses, while hardly comprehensive or conclusive, are encouraging. Plant operators have been rolling dates in the software forward to 2000 -- and in some cases, continuing to operate with the year 2000 dates in place as a more rigorous test. So far, no major problems.
In Rutherford County, N.C., for example,
is still confidently running two facilities at its Cliffside coal-fired plant as if it is early 2000 now, though overall, Duke believes it is only about 77% Y2K compliant. The
Tennessee Valley Authority
is doing the same thing with two non-nuclear plants in Tennessee.
Investor-owned utilities that do suffer failures early next year will face devastating litigation costs. That's worth keeping in mind for utilities investors throughout the remainder of 1999.
Telcos and tel-tech have been much in the news, and a lot of investors have made money there and in the cable business this year, especially as we look toward explosive consumer and business demand for fast access to the Web. Data traffic in general has experienced spectacular growth, and cable companies continue hoping to deliver voice over their existing lines into our homes. But what's been most interesting in the past couple of weeks have been the tiny deals going down.
The big players are on nearly hidden acquisition forays, looking for tiny companies they can buy before they get too expensive and can then weave into their integrated-services webs. A good example is
(NCNX:OTC BB), which emerged earlier this month from the ashes of
The big telco players' sudden interest in this small "wireless cable" provider in the Midwest has moved its price, post-Heartland's exit from bankruptcy, from 20 a week ago to more than 35 today.
"Wireless cable" -- yep, I know it's oxymoronic -- solves the "last-mile" problem beautifully for would-be broadband giants, and
, which I am long, is already a big holder. Fair warning: With a thin float of less than 9 million shares available for trading, Nucentrix is still a bit of a walk on the wild side.
My bet: MCI WorldCom will acquire the rest of Nucentrix for a nice premium.
Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, Seymour was long MCI WorldCom, although positions can change at any time. Seymour does not write about companies that are consulting clients of Seymour Group, or have been in recent years. While Seymour cannot provide investment advice or recommendations, he invites your feedback at