IBM sees no boost to 1999 results from Dell pact
By Eric Auchard
NEW YORK, March 4 (Reuters) - International Business
Machines Corp. said the impact of the company's $16
billion component supply deal with Dell Computer Corp.
will accrue over the long run and is not expected to lift
near-term financial results.
In a conference call with Wall Street analysts following
Thursday's announcement of the pact, IBM officials guided
brokers to make no changes in their current earnings estimates
for the computer maker's 1999 year, a spokesman confirmed.
The impact of the deal to supply data storage, computer
chips, network attachments and computer displays is unlikely to
be seen until 2000 and will accelerate over the seven years of
the pact, said SoundView Technology Group analyst Gary Helmig.
But Helmig, who participated in the call with IBM
executives at midday Thursday, said IBM executives hinted that
the Dell agreement could be the harbinger of similar supply
partnership deals with other top computer makers.
He quoted James Vanderslice, a senior IBM executive who
oversees the company's technology supply business, as saying,
"'This could be the precursor to some other deals,'" adding
that analysts should "'Stay tuned.'"
Helmig speculated that IBM could expand existing supply
relationships with any number of top computer makers, including
Compaq Computer Corp. and Gateway Inc. IBM
already supplies Dell, Compaq, Gateway and virtually all of the
world's top 10 computer systems makers with key components.
"This is a good deal, certainly, for both companies,"
Helmig said. "It's just not going to be a big stimulus for IBM
immediately," he said.
"They (IBM officials) didn't think that IBM estimates
should be raised for 1999 as a result of this deal," Helmig
said. "I get more excited about the Year 2000," he said.
A recent First Call survey of analysts estimates projected
that the world's largest computer maker will earn between $7.29
and $7.75 per share this year, with a mean estimate of $7.53
per share. By contrast, IBM earned $6.57 per share in 1998.
IBM stock, which traded up more than $10 earlier in the
day, had fallen back to $170.75 in late-afternoon composite
U.S. stock exchange trading, a gain of $4 on the day.
Dell, which had traded nearly $4 higher earlier, was up
only 50 cents in late day traded at $81.44. |
