Mani - Re: "Unit computer shipment is expected to be down about 14 percent. Stop playing stupid."
I guess YOU are the STUPID one.
DLJ is predicting a 12 PER CENT PC UNIT SALES INCREASE in Q1:
"McCarthy said he had cut his industrywide forecast for growth in PC shipments for the first quarter to 12 percent from 18 percent, and for the second quarter to 15 percent from 18 percent. "
Paul
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dailynews.yahoo.com
Monday March 22 2:45 PM ET
Compaq's 1st Quarter Seen Hinging On Final Weeks
NEW YORK (Reuters) - Compaq Computer Corp. (NYSE:CPQ - news), the No. 1 maker of personal computers, will need a sales surge in the final days of March to meet Wall Street earnings forecasts, a brokerage analyst said Monday.
In addition, Donaldson, Lufkin & Jenrette analyst Kevin McCarthy said there was more evidence of weak demand throughout the PC industry, leading him to cut his estimate for 1999 shipments and warn that the likelihood of earnings disappointments this year had grown.
McCarthy said in a research note that pressure on computer hardware stocks had mounted in the past few trading days amid speculation that Compaq would ''pre-announce'' that its earnings in the three months ending March 31 would not meet Wall Street's current estimate of 32 cents a share.
Compaq spokesman Jim Finlaw declined to comment, saying the company was in its ''quiet period'' ahead of the end of quarter. The company plans to report first-quarter earnings in mid-April.
In late February, Compaq warned analysts that commercial PC sales had been weak in the first six weeks of the quarter, putting pressure on the PC maker to make up the difference with strong sales during the final six weeks of the quarter.
''At this point, a pre-announcement is too close to call,'' McCarthy said, using Wall Street's jargon for when a company issues a press release saying it will fail to meet Wall Street's quarterly expectations for revenues, earnings, or both.
''Street expectations of $9.7 billion in revenues could be missed by $200 million or so, and the company could still make the 30-cent earnings estimate, in our estimation,'' McCarthy said of his own estimate for Compaq's first-quarter results.
Analysts' consensus on Compaq's first-quarter earnings is 32 cents per share, according to First Call, which tracks brokerage estimates.
McCarthy said he had cut his industrywide forecast for growth in PC shipments for the first quarter to 12 percent from 18 percent, and for the second quarter to 15 percent from 18 percent.
''The jury is still out on whether soft demand experienced during the March quarter is simply a pronounced seasonal effect or the beginning of a more sustained slowdown,'' he said, adding that, ''We do believe that 1999 will be a slower
unit growth year than 1998.''
McCarthy concluded that computer industry stock price-to-earnings ratios -- a key measure of stock valuations -- ''will need to compress further to reflect... a greater chance of earnings disappointments associated with a slower unit-growth environment,'' he said.
In Compaq's case, PC shipment rates would have to increase by an estimated 50 percent in March compared with February, for Compaq to meet Wall Street expectations, he said.
Besides a March surge in overall PC shipments, Compaq also is dependent on closing several large deals for Digital servers by the end of next week, the analyst said.
Insulating Compaq against an earnings shortfall are reserves the company previously set aside to cover the costs of integrating Digital Equipment Corp., acquired last year, McCarthy said.
''CPQ has much flexibility on the earnings line given the DEC reserves,'' he said, referring to the Compaq by its ticker symbol and its Digital unit's old ticker symbol.
McCarthy said that while computer industry fundamentals appear to have deteriorated and Compaq's recovery ''has slowed somewhat,'' the stock ''already appears pretty beaten up.''
Should a pre-announcement occur, Compaq stock could fall to around $25, McCarthy estimated. In the event, Compaq
does not warn of an earnings shortfall, the stock could rebound as high as $38, he said.
By early afternoon Monday, Compaq stock traded 62.5 cents lower at $30.125 in composite U.S. stock exchange trading.
Meanwhile, Dell Computer Corp. fell $2.75 to $37.50 in Nasdaq trading after McCarthy cut his earnings and revenue estimates for Dell's first quarter ending in April based, citing slowing growth at the top direct PC supplier.
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