Lately we've had more letters asking for stock tips than for tips on how to make computers behave. No wonder! We wrote our last column predicting computer company performance in November. Six of the seven companies we liked then are trading now near 52-week record levels.
Intel, which was at $377/8, is at $47 as we write this. Its 52-week rec-ord is $52.Apple, then at $36, is now at $553/4. Its 52-week high is $56.
AST Research was at $247/8. It's now at $47, near its high of $473/4.
American Micro Devices, then at a lowly $45/8, is at $71/2 and climbing. Its 52-week high was $113/8.
NCR, then at $551/8, is at $871/2, near its 52-week high of $927/8.
Compaq was at $515/8 and is at $691/2, practically its record high of $703/8.
Only poor Wang languishes. It hasn't gone up or down more than two bits since that column.
But we didn't purport to give stock tips then, and we still don't. All we can do is share with you our personal assessments of how the various computer companies are doing.
That's because we've always considered it part of our ongoing research to study not just a company's products and how well they're selling, but how solid the company is as well. We started doing that back in '82 to keep our readers from getting stuck.
It wasn't then, and still isn't, any fun buying products from a company that goes under, leaving you in the lurch for fixes and enhancements.
We spent last week studying the latest quarterly earnings reports as well as the companies' Wall Street performances. Seeing how much profit a company makes tells us how well they can finance new research and develop new products.
Here's what we learned this time round.
American Micro Devices still hasn't peaked. Its budget-priced math co-processor chips are just getting to market. The timing couldn't be better. With recession blues all around, buyers are looking for inexpensive ways, such as add-on chips, to pump new life into older computers.
We still expect Wang to climb out of the basement, but don't ask us when. The company is peddling products in all the right markets: imaging, Windows enhancement and multimedia. It could take the better part of this year, but sooner or later lightning's going to goose old Wang into a gallop.
Those other companies - Apple, AST, Intel, NCR and Compaq - are still solidly financed and blessed with product lines that are good as gold for the next couple years. But in this skittish market, we expect their stock to turn down before it moves up much more.
Now for some new observations. The jitters must be to blame for Wall Street's dumping of Autodesk. Traders didn't drop it because it lost money. It was among the few computer companies that came close to meeting projected revenues for the past fiscal quarter.
Why the mass rebuff? Analysts dumped on the company because it didn't show as much black ink as they'd projected.
Autodesk makes first-rate CAD (computer assisted drafting) programs. The firm shows first-class marketing smarts. We'd put a lot more down on Autodesk than on those Wall Street analysts.
We know of lots of computer companies still unpawed by the fickle finger of Wall Street. Everex, for example. They sell middle-of-the-line computers and accessory boards for bottom-of-the-barrel prices. Their manuals are readable, technical support's commendable, and execs have for years had all the right instincts on where to steer marketing efforts.
As this recession drags on, old-time cheap Charlies like Everex have a great chance of cashing in.
We're watching some softwaremakers, too, such as Informix. They're a major maker of databases for single-use, LAN'd and multiuser personal computers. Their software sets one of several industry standards in this enormous market.
Yet its shares are at nearly a low for the year.
The reason has naught to do with dismal sales or lagging profits, but just with a change in bookkeeping method. Its sales used to be entered shortly after receiving an order. Then the quasi-official American Institute of CPAs recommended that software companies switch to more conservative bookkeeping.
Informix decided to comply early. So this year a major share of revenue goes unreported until the product is shipped or payment is received, whichever comes first. On paper, it now appears they're making less money. Catch-up comes later.
Another software company, Interleaf, makes what must right now be the hottest computerized publishing system for books, magazines, in-house publishing and similar specialized publication. Now a slow but steadily growing market niche, at any moment its appeal could zoom nearly straight up.
We've watched Interleaf make nothing but the right market and product development decisions for the past several years. Yet Wall Street is trading its stock shabbily, just a couple dollars above the one-year low.
Computer Associates is one of the biggest software sellers in the world. Better, it's one of the most diversified. It sells accounting software for Macintosh and IBM PCs, for minis and for mainframes. Lately it expanded into computer security, a natural co-market for accounting software.
It too is trading on Wall Street near its year's low price. Interesting.