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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: uel_Dave who wrote (8462)	10/18/1999 6:20:00 PM
From: uel_Dave	Read Replies (2) of 54805

Dell 3Q to feel pinch Increase in memory chip prices after Taiwan quake to tarnish earnings October 18, 1999: 6:10 p.m. ET source: cnnfn.com NEW YORK (CNNfn) - Dell Computer Corp. warned Monday that an increase in computer memory chip prices are likely to affect its third-quarter financial results. Dell (DELL) officials recently told analysts that its business should remain strong in the wake of last month's earthquake in Taiwan, which knocked the region's chip foundries out of commission for about two weeks. In a statement released after markets closed Monday, however, the company said random-access memory chip prices had increased as much as 25 percent amid a shortage of components. In a brief statement, Dell said the price increase "would be felt on third-quarter operating margins." The company did not provide specific forecasts for operating profit or revenue. Analysts polled by First Call had expected Dell to earn 20 cents a share in the third quarter. Dell shares fell 1-1/2 to close at 41-5/16 prior to the warning. Its shares plunged to 37-7/8 in after-hours trade. "We are managing the memory situation carefully and are working to offset the cost increases with efficiencies in other parts of our business," said Thomas J. Meredith, Dell's chief financial officer. "We are also taking actions to reduce overall memory consumption, including advertising system configurations with lower amounts of base memory." Recently, BancBoston Robertson Stephens analyst Dan Niles downgraded his rating on Dell's stock to "long-term attractive" from "buy," anticipating slower-than-expected growth because of the Taiwan earthquake. Dell is the latest technology firm to feel the effects of the Taiwan earthquake. Compaq Computer Corp. (CPQ), Hewlett-Packard Co. (HWP) and Advanced Micro Devices Inc. (AMD) have all reported problems in the aftermath of the earthquake. Although Dell is only a Prince, what impact will this have on the Gorillas such as Qualcomm tomorrow re: Dell's warning. Thanks, David

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