DELL points and news...
their numbers are known, and BOY OH BOY have they been talked up,(and this GS blurb below) so I dont feel there is much upside.
Thursday August 15, 12:34 pm Eastern Time
Reuters Market News
Outlook Dims for Computer Makers, Goldman Says
NEW YORK (Reuters) - Goldman Sachs cut its financial outlooks on four of the major U.S. computer hardware makers, saying it was no longer realistic to hope that these companies would rebound faster than the struggling industry. ADVERTISEMENT
Among her actions, Goldman analyst Laura Conigliaro said she was reducing her investment ratings on storage equipment maker EMC Corp. (NYSE:EMC - News) and business computer maker Sun Microsystems Inc. (NasdaqNM:SUNW - News)
Marking the end of an era for computer names that were once synonymous with fabulous stock gains, Conigliaro said she was suspending price targets on eight fallen angels in her universe of computer, storage and printer stocks. These include recently merged computer maker Hewlett-Packard Co. (NYSE:HPQ - News), which took over Compaq, as well as EMC and Sun.
Meanwhile, Lehman Brothers analyst Dan Niles on Thursday said he was more positive on the hardware sector, saying technology spending in the U.S. is finally stabilizing. But Lehman is still more bearish than Goldman.
Niles raised Hewlett-Packard to an equalweight rating, essentially a neutral, from an underweight rating. He increased his view on the hardware sector to equalweight from underweight but still maintains underweight ratings on two companies.
Conigliaro, who has often led the way among Wall Street analysts in making downward revisions of consensus forecasts for the computer hardware sector, said she was also cutting her three-year growth targets on a range of companies she follows.
The Goldman analyst took the actions ahead of the quarterly earnings report from leading personal computer maker Dell Computer Corp. (NasdaqNM:DELL - News), which is due out after the close of trading on Thursday. Conigliaro does not track Dell Computer.
"Our decision to wait out the slowdown for a number of our companies under the presumption that they would rebound faster than others has long since ceased to be realistic," Conigliaro wrote of an industry she noted was now entering the third year of its worst-ever slump.
Putting a positive spin on the depressed stock valuations of the sector, Conigliaro said, "At this point, most enterprise systems and storage valuations are within pre-bubble ranges."
The exceptions remain Sun and EMC, she said, which command share-price-to-earnings ratios slightly above the valuations they enjoyed before the explosion in technology spending during the late 1990s that is considered in hindsight to have triggered an unsustainable "bubble" in valuations.
Still, even Sun and EMC look good on a share-price-to-sales comparison, the analyst noted.
Conigliaro cut her 2003 calendar year revenue estimate on Hewlett-Packard Co. to $74.2 billion from $76.7 billion, and cut her earnings estimate to $1.30 from $1.36. Niles also cut his estimate on HP's earnings, putting fiscal 2003 revenue at $72.7 billion from $74.7 billion, and earnings at $1.05 per share from $1.15 per share.
Conigliaro cut her 2003 revenue estimate on diversified hardware, software and services giant International Business Machines Corp. (NYSE:IBM - News) to $83.8 billion from $84.4 billion, which was already below the consensus Wall Street view of $85.2 billion. She maintained her view that IBM would report 2003 earnings of $4.50 per share.
She reduced her 2003 revenue estimate on Sun to $14.5 billion from $15 billion and lowered her 2003 earnings outlook to 21 cents per share from 23 cents per share. Still, she remains a penny ahead of the Wall Street consensus of 20 cents per share for the once-high-flying Internet computer maker.
She trimmed EMC's 2003 revenue outlook to $6.5 billion from $6.8 billion but she left her earnings estimates unchanged at 17 cents per share for the year.
In addition, Conigliaro performed house-cleaning, paring revenue and earnings estimates for several lesser-known makers of storage equipment, including Brocade Communications Systems Inc. (NasdaqNM:BRCD - News), Network Appliance Inc. (NasdaqNM:NTAP - News), QLogic Corp. (NasdaqNM:QLGC - News), Emulex Corp. (NYSE:ELX - News) and Storage Technology Corp. (NYSE:STK - News)
With the exception of Brocade, she ended price targets for these companies, as well as for network test equipment maker Tektronix Inc. (NYSE:TEK - News)
Shares in the sector were mixed. Shares of Sun Microsystems were off 24 cents, or 5.4 percent, at $4.20. EMC was flat at $7.19. Hewlett-Packard was up 26 cents, or 1.8 percent, to $14.89 while stock in IBM gained 1.8 percent, or $1.35, to $76.27. Dell was flat at $27.15. The American Stock Exchange Computer Hardware Index (AMEX:^HWI - News) was off marginally.
Shares in Brocade were up $1.02, or 6.8 percent, at $16.07 in Nasdaq trade. The company on Wednesday reported a 52 percent rise in quarterly profit and reaffirmed its outlook for higher revenue and earnings in the current quarter, saying companies are still buying its products.
(Additional reporting by Caroline Humer) |
