Interesting points concerning DELL. We are due for the "post split jump" soon. Long time DELLheads know what I'm talking about. See you at 50.
Fez
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Saturday, March 13, 1999
INTERACTIVE INVESTOR
Analysts Watch: Mixed signals on PC stocks, Lycos deal
By Larry Barrett
ZDII
A couple of profit warnings and a handful of downgrades have pushed PC stocks down as much 30 percent in the past month. But some analysts argue that now is the time to buy these shares. And history is on their side.
Compaq Computer Corp. (NYSE: CPQ) really started the mess when it said January sales fell below expectations. That bit of news compelled some brokerage firms to cut the stock and lower its 1999 earnings estimates.
Then, Micron Electronics Inc. (Nasdaq: MUEI) said the same thing.
Not surprisingly, shares of Compaq, Dell Computer Corp. (Nasdaq: DELL), Gateway Inc. (Nasdaq: GTW) and Apple Computer Inc. (Nasdaq: AAPL) all took a requisite pounding.
Dell shares were trading at a pre-split price of $110 a share. By Friday afternoon, the stock was bouncing around $40 a share.
Dell didn't help its cause too much when it merely met analysts' estimates in its latest quarter, a cardinal sin by Wall Street standards. Never mind the fact that its earnings-per-share improved 55 percent from the year-ago quarter. And sales in the Asia-Pacific region jumped 30 percent.
"I reject the idea that things are slowing down," said Louis Mazzucchelli, an analyst at Gerard Klauer Mattison. "It's just the normal, seasonal behavior of this industry. Microsoft has the best view of anyone and they're seeing strong demand worldwide. This is nothing to worry about."
Just a few months ago, Apple was trading at a 52-week high of 47 5/16 and seemed to have all the momentum in the world. Now, the stock's around $33 a share.
"Apple's falling for all the wrong reasons," Mazzucchelli said. "They're being lumped into the group but they don't really belong with the group. Apple's new products are selling well and I think this downturn is unjustified."
To punish Apple now for the perceived weakness in the PC industry reeks of hypocrisy because Apple certainly wasn't making the huge gains other PC stocks were last summer.
Regardless, Cowen & Co. cut Dell from a "strong buy" to a "buy" Tuesday. Ten of the analysts covering Dell rate it a "strong buy" while 13 call it a "buy" and another 11 rate it a "hold."
The Dell bulls points out that it's recording more than $15 million in sales a day online. That improved efficiency and resurgent Japanese economy make betting against PC manufacturers a very risky proposition.
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