Hi Frank, check this from Red Herring
Daniel Niles
BancBoston Robertson Stephens
415/693-3241
NASDAQ: DELL
UPGRADED TO BUY.
Based on the strength of Dell's second-quarter 2000 results, we are upgrading our rating of the stock from Long-Term Attractive to Buy. The company's second-quarter earnings per share of $0.19 exceeded the consensus estimate of $0.17 due to increased revenue growth (42 percent compared with last quarter's 41 percent), unit growth (55 percent compared with 52 percent), gross margins (22 percent versus 21.5 percent), and operating margins (11.3 percent versus 10.8 percent). Dell's second-quarter 2000 revenues for desktop PCs increased 26 percent from the same quarter of the previous year; its enterprise revenue from servers, workstations, and storage rose 85 percent; and its notebook PC revenue was up 49 percent despite shortages of LCDs. We think that Dell's increased sales of higher-margin products is an important factor in driving profitability improvements, and we expect the company to keep selling such products in the future. And compared with vendors of larger systems, Dell faces a lower risk of Y2K problems because only 16 percent of its total revenues are enterprise related, and opportunities in the consumer, small-office, and European markets will further help offset the risk. We are raising our fiscal 2000 earnings-per-share estimate from $0.70 to $0.77 and our fiscal 2001 estimate from $0.89 to $1.04. We expect the stock to soon regain its February high of $55.
redherring.com |
