OT for rudedog:
From ML's Morning Notes, pt. 4:
Dell (DELL; $41 ¾; B-1-1-9)
01E $0.94; 02E $1.20
Dell reported a mixed quarter with earnings per share of $0.22 including investment
gains, beating the Street by $0.01. Given that the company has now stopped breaking
out investment income, it is difficult to get at the true operating number. We believe it
was somewhere in the $0.20-$0.21 range, a tad below our $0.21 operating estimate.
Sales were $7.67 billion, up a disappointing 25%. As we had predicted, the number
came in below our previously revised estimate of $7.75 billion. Our new EPS estimates
for Q3 and Q4, including investment gains are $0.25 and $0.28, respectively. We were
at $0.26 & $0.29. For fiscal 2002, our EPS estimate goes to $1.20 from $1.15 purely as a
result of factoring in the additional investment income.
Due to the issues the company faces in both Europe as well as now in the government
sector (apparently Y2K-related), we have lowered our Q3 sequential sales growth
estimate to 10.5% from 12%. Recall that Q3 (October) is Dell’s big government quarter.
For Q4, we have raised our sequential sales growth estimate to 11% from just over 9%
to reflect the easier comparison.
Despite this temporary set back, we maintain our positive view in the Dell story and the
enormity of the opportunity set still in front of the company. We still think the stock is a
terrific value at these levels. We reiterate our Buy rating on Dell shares and set a price
objective of $60, based on 50x our fiscal 2002 EPS estimate of $1.20.
(S. Fortuna)
Lynn |
