Wall Street worried about Dell earnings
By Bloomberg News
Special to CNET NEWS.COM
February 15, 1999, 6:15 p.m. PT
NEW YORK--Stocks may fall tomorrow amid concern that Dell Computer will report
disappointing sales, a potential decline that could be worsened by rising interest rates.
"We could have a nasty week," said Barry Hyman, senior market analyst at
Ehrenkrantz King Nussbaum here. "Dell is important to the tech sector. Any shortfall
or slowdown in growth is going to hurt this sector."
Standard & Poor's 500 Index futures for March settlement was mixed, rising 0.20 to
1238.50, or 0.004 percent above "fair value," which takes into account dividends,
cost of money and number of days until expiration.
Dell shares dropped 12 percent Friday on concern that the No. 1 direct-seller of
personal computers will report weaker-than-expected fourth-quarter sales tomorrow.
Dan Niles, an analyst with BancBoston Robertson Stephens, warned that sales will
be $5.2 billion, short of his earlier forecast for $5.5 billion.
Analyst Ashok Kumar at Piper Jaffray in Minneapolis has warned for several months
that Dell's growth is slowing.
Hyman expects Dell to decline and said the selling will probably spill into rival
technology stocks including Cisco Systems, Gateway, Hewlett-Packard, or IBM.
HP is also scheduled to report earnings tomorrow. Analysts forecast the world's
second-largest computer maker's profit to decline to 83 cents a share for the quarter
ended January 31, down from 86 cents in the 1997 quarter.
Computer-related shares are the most overvalued, said Art Micheletti, chief
investment strategist at Bailard, Biehl & Kaiser of Foster City, California, which
oversees $1.2 billion of investments. "So when you get a decline, that's where you get
hurt the most."
Stocks may fall further after a rise in the benchmark 30-year Treasury yield to 5.42 percent on Friday, the highest
level since August. Higher interest rates make it tougher for companies to borrow money for expansion and limit
consumer access to funds.
Copyright 1999, Bloomberg L.P. All Rights Reserved.
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