Jacques and ALL: Article...PC sales look pretty strong...
nytsyn.com
CompUSA Jumps 13% on Sales Growth
By WES CONARD
c.1997 Bloomberg News
ALLAS - CompUSA Inc. shares rose 13 percent on Wednesday after the company said sales in stores open at least a year, rose a better-than-expected 9.7 percent in the fiscal fourth-quarter on strong sales to businesses.
CompUSA's shares rose 2 11/16 to 23 15/16, in trading of 3.15 million, more than three times the company's three-month daily average of 910,900.
The computer retailer, which operates 129 stores, said its total sales rose 23 percent to $1.15 billion in the quarter ending June 28, from $935 million in the comparable 13-week period in the previous year.
Most analysts were expecting a 5 percent to 6 percent increase in CompUSA's same-store sales, which is another example of Wall Street routinely underestimating the company, analysts said. ``You are getting a lot of cross-currents on how good the PC market is now,'' said Dennis Telzrow, an analyst with Principal Securities. ``This is another demonstration of their strong growth and the success of their diversification steps.''
Dallas-based CompUSA is expected to earn 20 cents a share in the fiscal fourth quarter, based on the average estimate of 13 analysts polled by IBES International Inc. CompUSA said it plans to announce fiscal fourth-quarter earnings Aug. 13.
For the rest of 1997, the company expects demand for Microsoft Corp.'s Window's NT operating system to continue to fuel corporate sales, while consumer sales will depend on how successful new products are.
``On the consumer side we have the Pentium chip coming out and some new digital video disk products coming out, and we'll have to see how they do,'' said James Skinner, the company's chief financial officer.
CompUSA's earnings have been buoyed by a growing number of services that the company offers, including computer training, installation and repair. The services are sold at a much higher profit margin than computers and software and have helped shelter the company's earnings from weakening computer sales in the past year, analysts said.
The company has also been very aggressive in marketing to corporate, government and educational customers, which has helped it maintain profitability as the retail side of the business has slowed, analysts said.
``They won't tell you how much of their sales are corporate and how much is consumer,'' said David Toung, an analyst with Argus Research. ``I would suspect the corporate sales are getting to be a larger part, particularly on the service side.''
While the sales were considerably higher than expected, Toung said he wanted to look at the company's profit margins and expenses for the quarter before he considered changing his earnings estimates.
The year-earlier quarter was a 14-week period when the company had sales of $999 million. Since the current quarter is 13 weeks long, sales in the earlier quarter were adjusted to reflect a comparable 13-week period.
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