Reason for sell-off?
PC maker stocks hit as analysts see Q1 shortfall
NEW YORK, Feb 26 (Reuters) - Shares of personal computer makers tumbled on Friday after two Wall Street brokerages cut their first quarter earnings estimates on Compaq Computer Corp. (NYSE:CPQ - news), the top personal computer maker.
Merrill Lynch analyst Steve Milunovich slashed his first quarter earnings estimate on Compaq to 30 cents a share from 35 cents, while Mike Kwatinetz, of brokerage CS First Boston, dropped his quarterly
projection to 31 cents a share from 36 cents. No further details were immediately available from either analyst.
Compaq stock fell $6 to $35 in composite U.S. stock exchange trading. Gateway Inc. (NYSE:GTW - news) dropped $6.44 to $73.69, while Hewlett-Packard Co. (NYSE:HWP - news) fell $2.94 to $68.25, both in composite trading.
Dell Computer Corp. (Nasdaq:DELL - news) lost $3.50 to $79.25, continuing its slide from Thursday, when it gave up $1.50 in active trading, after Merrill's analyst warned that long-term industry growth rates may be hurt by tumbling PC prices.
Kwatinetz said in a research note that he cut his earnings, revenue, and gross profit margin expectations after learning from Compaq that January sales were below the company's goals both in the United States and Europe. Weakening demand among its network of PC distributors may be a factor, he said.
He wrote that ''Since Compaq appears to have had a shortfall in January, the question arises: 'How is the industry doing?' In
retrospect, Dell and HP's slight revenue shortfalls may have been more of an industry issue than we previously believed.''
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