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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: rudedog who wrote (159124)	8/3/2000 1:36:31 AM
From: Sam Bose	Respond to of 176387

Dell, PC Industry Could Be Shifting Into Neutral -- Like Automakers By Thomas Lepri Staff Reporter, TheStreet.com 8/2/00 9:18 PM ET The market already was fretting about Dell's (DELL:Nasdaq - news) upcoming quarterly results. Now it's clear Wall Street's worries won't end there. Dell lost 4.8% Wednesday after U.S. Bancorp Piper Jaffray analyst Ashok Kumar downgraded the stock to buy from strong buy on long-term concerns about the company's revenue growth. (His firm hasn't performed recent underwriting for Dell.) Dell closed Wednesday at 39 9/16, down 2. Fears about the company's fiscal second quarter, which ended July 31, are hardly new. Investors fled the PC makers en masse two weeks ago after International Data and Dataquest released figures showing unit-shipment growth in the PC market dipping sharply from the second quarter from 1999, when sales were juiced by price wars and a number of free-PC programs. Merrill Lynch analyst Steve Fortuna cut his quarterly revenue estimates for Dell last week. And on Tuesday, Dell lost more than 5% after traders got word that Bear Stearns analyst Andy Neff was telling his firm's staff that second-quarter revenue could be lower than he'd previously expected. (Neither Bear Stearns nor Merrill has done recent underwriting for Dell.) Neff wrote in an internal note that Dell's revenue could come in "closer to $7.7 billion" than his forecast of $7.83 billion, but he added that improved profit margins should help the company meet his bottom-line estimate. The 25 analysts polled by First Call/Thomson Financial expect the company to earn 21 cents a share. Dell declines to comment on earnings during its quiet period. But Wednesday was different. Kumar, who didn't return calls for comment, is one of a large number of analysts who believe that 2000 will represent the peak in the PC market's growth. And he invoked the long term in his note, writing: "We continue to believe that Dell does not have adequate earnings power in notebooks, server and nonsystem revenue to offset the secular weakness in consumer and commercial desktops." In that climate, "current revenue growth guidance of 30% is unsustainable." Kumar's call hasn't drawn anything like the outrage elicited by the sharply negative note from Salomon Smith Barney's Jonathan Joseph last month on the commodity semiconductor sector. But thus far, no one has echoed Kumar's fears about Dell's prospects beyond the second quarter. When SG Cowen's Richard Chu returned from a visit to Dell two weeks ago, he upgraded the stock to strong buy from buy even as he reduced his second-quarter revenue estimate to $7.8 billion from $7.85 billion. What he had seen in Round Rock, Texas, had convinced him that Dell's non-PC businesses would start generating significant momentum. Now, some 15 points later on the downside, Chu's sticking to his guns, though he's not harboring any false hopes for the very near term. (SG Cowen has not performed any recent underwriting for Dell.) "The message is, don't count on the top line this quarter," he says. "Dell may be targeting 30% for the year, but there's no way they'll make that in the second quarter, for a variety of reasons. Comparisons are tough. They're more focused on pricing and gross margins than the top line." Chu doesn't expect to see the desktop-computer segment grow much faster than midsingle digits on a percentage basis. He believes that strong sales of notebooks, enterprise hardware and services -- each of which Chu reckons could grow 40% to 50% year over year -- should boost profit margins enough to help Dell meet earnings estimates for the quarter. "But since desktops are half the business, they're not helping the top line," he says. Still, Chu is much more optimistic than Kumar. "I think 30% is a good number for this year," Chu says. "And also for fiscal 2002. Can they sustain it beyond that point? That's a big challenge. Anybody who wants to bet on that is working against the law of big numbers." That gambler also would be wagering on the company's ability to continue to revamp its business model away from the desktop PC -- a process Dell has set in motion, but whose completion is still a ways off. Pity those companies that can't pull it off, the thinking on Wall Street goes. "It's over," says Jeff Matthews, portfolio manager at Ram Partners. "The PC business is the auto business. Ford (F:NYSE - news) has a P/E of 5. And ultimately, the PC companies will have a P/E of 5. Intel (INTC:Nasdaq - news) will have a P/E of 10 because it has a monopoly on the engine business, but who cares?" (Matthews is short Intel, and has no position in Dell.) A stock's P/E describes the ratio of its price to its annual earnings per share. Using fiscal 2000 earnings, Dell's P/E sits around 64. Given the beating it has taken lately, Chu likes Dell now even more than he did two weeks ago, its longer-term challenges notwithstanding. "The stock discounts all of that in my mind," he says. "It's spent the bulk of the last two years going nowhere. If I had to bet on someone to execute, they're a good choice." Dell is scheduled to report fiscal second-quarter earnings on Aug. 10.

To: rudedog who wrote (159124)	8/3/2000 9:31:42 AM
From: D.J.Smyth	Read Replies (1) \| Respond to of 176387

rude Surely you agree that SOMETHING has driven this stock down 20% in a pretty short time. I am looking for what people may have seen, right or wrong, to lower confidence in DELL. Mindless boosterism is unlikely to move the stock price up... solid earnings and a good analysis of what that means for future DELL business might. certainly something. fear and the ability to move stock. just as one moves any other piece of inventory. my head, by the way, is not in the sand. i trust the information i have