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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (40808)	12/14/2000 11:42:24 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

Is Dell next with bad news? By Bloomberg News December 13, 2000, 3:10 p.m. PT NEW YORK--Walter Winnitzki called Dell Computer executives Tuesday to inform them he was cutting his profit estimate for this quarter because he expected Dell to warn of lower sales and earnings. The Round Rock, Texas-based computer maker didn't try to talk him out of it, the Chase Hambrecht & Quist analyst said. Dell in November said sales growth next year would be slower than forecast. Compaq Computer's announcement yesterday of slowing personal computer sales this quarter prompted Winnitzki to predict another disappointment from Dell. The world has changed since Dell gave its earlier forecast, said Winnitzki, who has followed Dell since it went public in 1988. "They didn't see the magnitude and depth of the weakness earlier. The Christmas selling season is a bust." A Dell investor-relations executive told Winnitzki the company was "watching the industry as much as everyone else" and couldn't comment further, the analyst said. Dell spokesman Venasio Figueroa said the company had no comment. Winnitzki lowered his forecast for Dell's sales growth this quarter over last to 2 percent from 6 percent and cut his earnings-per-share forecasts by 13 percent to 23 cents. The average profit estimate among the 23 analysts surveyed by First Call/Thomson Financial is 26 cents. The PC slowdown extends beyond this year, Winnitzki said. He cut his profit forecast for the next fiscal year, which ends in January 2002, to $1.02, and lowered his revenue growth forecasts and operating margin estimates as well. Winnitzki said Dell will probably cut its sales and earnings forecasts further, though he declined to say by how much or when he expected the announcement. The quarter ends at the end of January. "The fact that we've seen direct competitors preannounce (means) Dell's comments may come sooner rather than later,'' said Winnitzki. He said he called company executives to tell them he would be issuing the report. ''As a courtesy, I like to give the company a heads-up,'' said the analyst. Winnitzki isn't the only one on Wall Street who suspects Dell will lower its outlook. Andrew Neff of Bear Stearns, in a note to clients published late yesterday, said Dell wouldn't be immune to a slowdown in consumer demand. "The larger question here is: When are the pronouncements from Hewlett-Packard and Dell?'' wrote Neff, the third-ranked PC analyst in Institutional Investor magazine's survey of money managers. He didn't return a call for comment. Hewlett-Packard said Dec. 6 it would meet its 2001 revenue-growth targets and that sales this quarter will increase "at the lower end" of the projected rate. Other PC makers haven't been so optimistic. Gateway and Apple Computer already have cut forecasts for this quarter. Dell told investors on Nov. 9 that sales growth would slow to about 20 percent next year, citing slowing sales of desktop PCs to businesses. It was the third time this year Dell cut its sales target. Dell shares plunged 19 percent the next day. Compaq said Tuesday that its sales and profit will miss its forecasts in the fourth quarter and in 2001. Shares of Houston-based Compaq dropped $2.67 to $18.10. They've dropped 33 percent this year. "We're seeing softness spread to sales to small- and medium-sized businesses," said Winnitzki. "We made the decision to issue this report earlier, but when Compaq came out, it added confidence that we were making the right decision." Some investors agreed that Winnitzki and Neff were correct in suggesting Dell was likely to cut its forecasts before it reports fiscal fourth-quarter earnings in February. "They both do thorough industry research, and I respect them," said Steve Salopek, who helps manage the One Group Technology Fund. The fund holds Dell and Compaq shares. Salopek declined to say if he was buying or selling PC shares. He said, though, he didn't expect shares to recover anytime soon. Said the fund manager, "I'd still wait at this point." Copyright 2000, Bloomberg L.P. All Rights Reserved.