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To: Captain Jack who wrote (73005)	12/2/1999 12:30:00 AM
From: Elwood P. Dowd	Read Replies (1) \| Respond to of 97611

Lifted the following at the Zoo...... ......<< Dell Shares Seesaw As Analyst Casts Doubt On 4th Q >> By: Monica Rivituso, December 1, 1999 4:08 PM SHARES OF DELL COMPUTER (DELL) reversed course dramatically this afternoon and sank almost 3% after Merrill Lynch analyst Steven Fortuna issued a blistering note, calling the company's fourth quarter into question. They crawled back in the final hour of trading, managing to eke out a .3% gain on the day. After speaking with Dell "at length" today, Fortuna walked away with several areas of concern. First, he says, dynamic random access memory (DRAM) prices remain high. And because Dell typically carries a very thin inventory due to its direct-sales model, rising DRAM costs hit it harder than other PC makers. After a September earthquake in Taiwan jacked up DRAM prices, Dell had to cut third-quarter estimates. Now Fortuna insists that if prices don't fall 15% to 20% by the end of the year, Dell might not meet Wall Street's fourth-quarter consensus earnings estimate of 21 cents a share. In addition, Fortuna says Dell indicated that it is seeing some Y2K-related slowdown in its large, corporate customers. "Although this was expected, in our view the potential for Y2K-related risk in other areas going forward cannot be entirely ruled out," the analyst warns. As if all that weren't bad enough, Fortuna says Dell is also facing a shortage of Intel's (INTC) latest Pentium III Coppermine chips, which run in the 500-550 MHz speed range. Machines that use the chips are experiencing lead times of 25 days, the analyst says, adding that this "may not be particularly encouraging for the quarter." Finally, an industrywide shortage of 15-inch flat-panel displays could affect shipments of a high-end Dell product "and perhaps have an effect on Dell's consumer market in Q4," Fortuna warns. It should be noted that Fortuna didn't start the day a Dell bull by any means. In fact, he ruffled some feathers back in August when he assumed coverage with an intermediate-term Neutral rating. In the PC maker's third-quarter report, CEO Michael Dell said he expected the fourth quarter to be a healthy one. He also noted at the time that a Y2K-spending slowdown didn't seem to be having as much of an impact. Sales to consumers and small businesses would offset any weakness in corporate sales, Dell added. Fortuna notes in his comments today that the PC maker's CEO will be speaking later today at a conference in Arizona. Whether reassuring words from the biggest Dell bull out there will pull the stock back into positive territory remains to be seen. Article: smartmoney.com