Here is the article, this Fortuna does this to us all the time. Funny about the timing of this after yesterday's recommendation of Dogpaq:
RESEARCH ALERT - Merrill cautions on Dell Q4
NEW YORK, Jan 4 (Reuters) - Dell Computer Corp.
faces difficulty managing profit margins amid high component
costs during its current quarter ending later this month,
posing risk to its capacity to meet expectations, a Merrill
Lynch analyst said on Tuesday.
-- Merrill's Steve Fortuna said in a research note that he
believed that the computer maker was well-positioned for
long-term growth but that recent share price gains should not
be construed as meaning "Q4 (fourth quarter) is without risk."
-- Shares of Dell dropped 2-11/16 to 48-3/16 in active
trading near the opening on the Nasdaq stock market, later
improving to 49. The stock had climbed significantly ahead of
the holidays from levels just above 40 on December 13.
-- "Dell shares have risen over the past couple of weeks
for no apparent reason, in our view," the analyst said.
-- In the note, entitled "Q4 still lacks clarity," Fortuna
also cited some positives for Dell, noting that the company was
benefiting from a modest decline in computer memory prices,
more displays, and better Intel chip supplies. Also, Year 2000
concerns appeared to have little impact on Dell, he said.
-- "We believe the quarter rests entirely on how well the
company can fine tune its customer segment pricing so as to
rebuild gross margins without materially impacting the
top-line," Fortuna wrote.
-- He said Dell management had one of two options. One is
to be less aggressive on PC pricing in order to shore up
profitability and risk missing a possible fiscal first quarter
buying boom as Microsoft releases its Windows 2000 system.
-- The second option would be to follow the company's
normal pricing policy, but this would likely prevent the
company from meeting Wall Street's current fourth quarter
consensus earnings estimate for Dell, he said.
-- If the company were to miss meeting fourth quarter
expectations, it most likely would be due to lower gross
margins rather than failure to meet revenue growth estimates.
Fortuna has estimated per share earnings of 20 cents for Dell's
fourth quarter ending later in January, which is a penny below
the 21 cent consensus estimate of analysts surveyed by First
Call.
((-- Eric Auchard, New York newsdesk, 212-859-1840)) |
