Hey Boss -
Some reassuring words on the PC side from the eternal optimist Andy Neff
Which Way Did We Go. Investors are always focused on change at the
margin, so here's a biggie: We have not cut an earnings estimate so far in this earnings season. (and, in fact, we've increased estimates for Apple). Moreover, the second surprise for us so far this quarter is that - with the exception of some pronounced weakness in Asia - sales results have been in line or better than expected for Apple Computer, Seagate, Sun Microsystems and Digital Equipment. In addition, this trend is even apparent in several cases where companies that had pre-announced disappointing results - only to come in with better sales than expected, such as Intel and Compaq. Finally, with a few notable exceptions, such as Compaq, these results came in with gross margins above expectations, owing to favorable mix shifts and component cost trends.
What does this mean? First, it may imply that underlying demand remains healthy, particularly in the U.S. and Europe. Second, it appears that corporate users are more focused on productivity than merely low price and are shifting towards more fully configured systems. Third, and most importantly, it may mean that expectations are low enough to enable the results to lead to upside surprises and multiple expansion from current levels.
Have a good Sunday - I am going home.
td |
