Dell Shares Fall Amid PC Sector Sell-Off
Friday November 15, 5:13 pm ET
By Caroline Humer
NEW YORK (Reuters) - Shares in computer companies fell on Friday after Dell Computer Corp. (NasdaqNM:DELL - News) gave a disappointing outlook for the fourth quarter and a research firm raised concerns that holiday-related personal computer sales will be weak.
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Research firm Gartner Dataquest said worldwide personal computer shipments won't show a big jump as both consumers and businesses cut back on purchases, predicting only a 1.5 percent rise in sales from last year.
"We're awfully concerned about the economic situation. There's just a lot of uncertainty out there and people tend not to like that," said Gartner Dataquest analyst George Shiffler.
Gartner sees worldwide PC shipments of 35.1 million units in the fourth quarter and total 2002 shipments of 127.3 million, up 1.8 percent from 2002.
PC sales have been slow for about two years, hurt by a downturn in the economy that has corporations cutting their technology budgets. In addition, with little compelling new technology, consumers have held back on buying replacement PCs.
Dell said on Thursday during an earnings announcement that it expected fourth-quarter earnings of 23 cents per share on revenue of $9.7 billion. That was in line with analyst estimates but some investors said on Thursday they had been hoping for more.
Company executives declined during a conference call to say much about how sales related to the end-year holiday season were doing, saying that it was a little too early to tell. They also said it was still too early to call a rebound in demand.
The fourth quarter is typically the strongest for consumer sales, which have become increasingly important for PC makers as corporations have cut back on technology spending.
"(Dell was) hesitant to make a strong statement about consumer PC sales this holiday season," said John Park, an analyst for money management firm Independence Investments, which is a unit of John Hancock.
That affects other personal computer companies with large consumer businesses, including Hewlett-Packard Co. (NYSE:HPQ - News) and Gateway, he said.
Dell shares fell 3.6 percent, or $1.12, at $29.82 on Nasdaq while Hewlett-Packard closed unchanged at $16.90 on the New York Stock Exchange.
Shares in struggling personal computer maker Gateway were off 10 percent, as it was hit by concerns not only about the PC sector but about its own accounting. The company disclosed on Thursday evening it has been under investigation by the Securities and Exchange Commission for two years.
Gateway lost 63 cents, or 15 percent, to close at $3.56 on the New York Stock Exchange.
Companies that make the chips that go into computers were also lower after Merrill Lynch cut a handful of ratings on the stocks, including its rating for Intel Corp. (NasdaqNM:INTC - News), the world's largest microprocessor company, to "sell," citing valuation concerns. Intel fell 2 percent, or 41 cents, to $18.80. |
