Jim, I'm expecting the Intel earnings report this afternoon to be a non-event for we bulls. Intel should easily make consensus estimates and make their typically cautious comments going forward.
CPQ's Q1 only showed 3% revenue erosion [despite a 50% earnings shortfall]. And, if Dan Niles is close to being accurate on his PC volume and revenue forecast for 1999, this translates to 1% to 3% sequential volume growth.
And, with HP and DELL both stating that Q1 is okay I suspect that Q1 earnings will start looking much better than expected.
DELL's analyst meeting really cinched it for me last week when Meredith spoke. This paragragh taken from a news summary says it all;
<Chief Financial Officer Tom Meredith later declared, "We
are pleased with our position over all geographies, all product
segments and all customer segments... The officials were responding to investor fears that have been triggered in recent months by warnings of weak sales early in the year by rivals including Compaq Computer Corp. (NYSE:CPQ),the world's No. 1 PC maker.
"What you have from us is a commitment...(that) we will
continue to grow at a multiple of the market and we will also
provide you with quarterly growth," Meredith said directly
Dell's competitors normally post strong holiday-fueled
fourth quarter results followed by sharp sequential declines in
the first quarter. By contrast, Dells' revenues grow
consistently each quarter without such ups and downs.
Meredith told analysts they should leave the meeting
feeling comfortable about Dell's position in the market selling
PCs to large corporate customers, both in its current quarter
ending in April and for future quarters.
To insulate itself against the downward pressure on PC
prices being felt industry-wide, Dell officials described how
the company was focusing on boosting the percentage of revenues
its receives from items other than PCs themselves.
These include follow-on sales of peripheral products like
printers, customer financing arrangements and computer services
to help customers install and maintain PCs.
Dell officials said 38 percent of revenues come from
non-hardware items, up from 31 percent a couple of years ago.">
Notice the commitment to make the numbers this and every quarter. That is a very strong statement suggesting a good Q1 at the least. Notice also the increase in peripheral sales [to offset ASP erosion] as a growing percentage of total revenue.
Regards, Gabriel |
