Frank and thread, I have just read Nile's comments about Dell. I will repeat the pertinent parts and add my comments next to each of his comments.
1. Nile believes that competitive pressure towards the end of the quarter will lead to total revenues of of $5.2BB, down from previously estimated $5.5 BB. Nile offers no sources for the decreasing revenues.
2. Nile believes that ASPs ticked down to "at least $2350" vs. his previous expectation of $2375. He offers no substantiation for this figure. He goes on to predict that ASPs will come under increasing pressure in the coming quarters.
3. Nile then offers the following curious comment: "We believe that better expense control and margins enables the company to reach consensus EPS of $0.31." But when you examine the attached models you discover that they do not relate to the current discussion! They were generated 11/13/98 and show an expected decrease in gross margins from 22.5% to 22.2% and fully diluted eps of $.30 per share vs.his current estimate of $.31. What are we to make of this?
4. He then goes on to estimate that y/y revenue growth will slow to 39% in January '99. But if that were true, then total revenues would be $17.009 BB for FY '99. But by my reckoning we have already booked $13.069BB so far (not counting Q4), and even if we take his lowered estimates of $5.2BB, that would yield $18.269BB for the year, or a 43.4% y/y increase.
5. To muddy the waters even further, his current summary expectations as of 12/12/99 shows total revenues at $18,537 -- an increase of 50.4% y/y, and eps of $.30 for the quarter.
There are other discrepancies in his comments as well, but rather than nitpick I would simply say that he does not provide a model (in spite of what the text claims -- you must check the date), nor does he justify his "beliefs" with data, nor does the ominous phrase "management guidance" appear anywhere.
So back to the question I first asked: where does he get his numbers from?
TTFN,
CTC |
