John, here's some information re. the PC industry & some key DELL events this quarter. Note the updated mean consensus estimate for DELL of 54› below vs. our 59› to 60› estimate. If DELL does hit the consensus estimate this represents 59% growth over last year. However, if DELL hits our estimate this represents approximately 75% growth over last year.
BTW, I cashed out all my call option holdings on August 28 and am looking for a new entry point for the 3rd quarter earnings run. I still hold lots of stock itself but that's no fun unless I'm selling covered calls, which I may if the price goes above $115 [pre-split]. I figure, looking at all the open interest on the september calls and puts that the best price for the market makers is $115 [$57.50 post split] or just under.If DELL goes above $115 prior to September options expiration you can bet that it will come back to $115 by September 18 - options expiration day.
I don't know how next week will play out but I'm guessing the overall market will move up on Tuesday morning given Greenspan's comments on Friday evening. However, after reading Barron's on Saturday and the reading the article 'Cracks in the Nifties', particularly the section on DELL, I'm not sure that DELL will participate in this rally on Tuesday morning. I believe the comment " if I were a DELL shareholder, I'd be very unhappy that the assets it earns are being looted" was particularly damaging. In my opinion book value and trailing earnings are only relevant with low or flat growth companies. Gorillas like DELL with 50% plus annual earnings growth should be viewed with the future in mind - with the same kind of attitude as Internet stocks.
As always your comments are welcome.
Silicon Valley: 10 Things to Watch in Tech: PC Makers
By Eric Moskowitz
Staff Reporter
9/4/98 12:46 PM ET
The tide is turning yet again in the PC industry. Just as chip prices inch back up, a flood of low-cost PCs is narrowing margins as companies like Compaq (CPQ:NYSE) clear excess inventory. Given the cutthroat competition in the PC market, many big-name manufacturers are focusing on other markets such as business services and servers.
Just how this shakes out could leave investors scrambling. One earnings warning this month could set stocks in the sector tumbling anew. Good news, such as strong consumer back-to-school and Christmas sales, could lift stock prices. To help investors navigate these shoals, TSC offers 10 important events -- key earnings dates, analyst meetings and court dates -- that could yield insight into the fortunes of PC makers.
Sept. 14 to 18: NationsBanc Montgomery Investors Conference, San Francisco
For the 28th year, NationsBanc Montgomery's Thom Weisel welcomes tech companies into his annual gathering of fund managers, who will hear the PC makers go over their numbers and offer any updates. The conference often yields encouraging words and gloomy forecasts that move stocks.
Sept. 21: August PC Sales Figures from PC Data
On the third Tuesday of each month, research firm PC Data delivers its reading of the industry's pulse. For August, count on more evidence that the sub-$1,000 market is alive and well. Key point: average PC prices. After falling to $1,128 in June from $1,152 in May, PC Data reported PC prices stabilized at $1,146 in July. Industry mavens will closely watch the price chart to prepare for the Christmas season.
Sept. 25: August PC Figures from ZD Store Board
Unlike PC Data, which focuses on retailers, ZD's research unit analyzes the sellthroughs of retail and computer dealer channels for its figures. A sizable increase in back-to-school numbers could spell good news for the PC sector. Dave Tremblay, a senior PC analyst at ZD Market Intelligence, is among those who see PC prices continuing their descent in the second half as the peak PC-sales season -- back-to-school to Christmas -- starts up.
Sept. 25: Dell's Analyst Meeting, Austin, Texas
Dell (DELL:Nasdaq) CEO Michael Dell and financial chief Tom Meredith are inviting selected Wall Street analysts to Austin. The meeting will provide updates on Dell's performance and strategic business priorities and an indication whether the PC maker can continue its impressive earnings performance into 1999.
Oct. 12 to Oct. 16: Apple and Compaq Earnings
Analysts expect a huge boost from the iMac, the shiny new Apple (AAPL:Nasdaq) computer, to allow the tech pioneer to deliver blowout earnings numbers for the third consecutive quarter. The early consensus estimate for Apple's fourth quarter calls for earnings of 48 cents per share, reversing last year's 18-cent loss. The earnings report is likely to come after the market closes Oct. 14. Also reporting that week is Compaq, which has finally cleared out much of its inventory channel. Analysts see the company earning 6 cents per share vs. 36 cents a year ago. But if inventories are indeed completely out of the way, expect Compaq to beat estimates.
Oct. 19: IBM Third-Quarter Earnings
This week, IBM (IBM:NYSE) is reportedly putting its Global Network business up for sale to back out of a highly competitive market that isn't central to its core business. Steven Milunovich, the influential PC analyst at Merrill Lynch, suggested in a recent report that Big Blue should do away with its consumer PC business because the terrain has become too treacherous. IBM's earnings should offer a glimpse into whether these would be good moves for the company's bottom line.
Oct. 22: Gateway Third-Quarter Earnings
Gateway's (GTW:NYSE) second quarter in 1998 was not a good one, but the company has poured money into promoting its new YourWare campaign, which started in June. Analysts expect a profit of 47 cents per share, compared with the year-ago loss of 8 cents per share.
Nov. 16 to 17: Hewlett-Packard and Dell Earnings
For the past two years, Hewlett-Packard (HWP:NYSE) has consistently missed Wall Street's numbers. And for two quarters running, it has warned it would not meet earnings expectations. The early consensus estimate for the Palo Alto, Calif.-based company is for 75 cents per share, flat with the year-ago fourth quarter -- not exactly the kind of earnings growth Wall Street rewards. Meanwhile, Dell, which has consistently surprised with strong earnings, is looking to post another good quarter thanks in large part to its direct-to-order machine. Analysts estimate 54 cents per share vs. 34 cents in its October quarter a year ago. But keep one good investing eye on Dell's gross margins and Asia-Pacific revenues this quarter.
Nov. 16 to 20: Comdex, Las Vegas
Thousands of companies launch products at this airplane-hangar-sized trade show, and people come from all over to find out which of them will become the next Palm Pilot. For PC makers, the show provides a good platform from which to trumpet new products. |
