Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: D.J.Smyth who wrote (163219)	12/15/2000 12:01:29 PM
From: John Koligman	Read Replies (1) \| Respond to of 176387

In addition to the rampant discounting on the Dell website, this might be another 'clue' as to Dell's online sales... John Shipping giants cut forecasts as economy slows By Bloomberg News December 15, 2000, 7:20 a.m. PT ATLANTA--United Parcel Service and Federal Express, the largest package-shipping companies, have cut profit forecasts because U.S. shipments are lagging as the economy slows and consumers are spending less than expected this holiday season. "Both FedEx and UPS appear to have hit a wall in December," said Gregory Burns, a Lazard Freres analyst. "We expected some moderation for both, but it appears the holiday season is really flat right now." UPS said shipments in the first two weeks of the holiday season were unchanged from a year ago and that fourth-quarter profit would be lower than analyst forecasts. FedEx said it expects U.S. growth rates for its FedEx Express and FedEx Ground services this month to be unchanged to slightly lower. The company expects profit for its fiscal year ending in May to fall short of analyst estimates. Shipping companies such as UPS and FedEx often feel the effects of an economic slowdown just after other industries, as corporate customers begin making smaller shipments more often to avoid building inventory as business cools. UPS said its shipments between businesses began slowing in October and November, followed by the unchanged holiday shipments. UPS shares dropped $3.94, or about 6 percent, to $58.69. FedEx fell $4.31, or about 9 percent, to $41.97. UPS shares have fallen 15 percent this year, while FedEx's stock has risen 2.5 percent. Profit forecasts UPS said fourth-quarter profit will be 7 percent to 10 percent higher than the 56 cents a share it earned in the year-earlier period. The average in a First Call/Thomson Financial survey of analysts was 14 percent growth to 64 cents a share. FedEx said earnings for its fiscal year ending in May now are expected to be $2.50 to $2.60 a share. The First Call average was $2.68. FedEx also estimated earnings for its quarter ended Nov. 30 were 67 cents a share, higher than the average First Call forecast of 64 cents. The Memphis, Tenn.-based company blamed the lower or unchanged December growth rates on the U.S. economic slowdown and severe winter weather. UPS delivers more than half the goods bought on the Internet. BizRate.com said U.S. shoppers spent $1.22 billion at Internet retailers last week, though the 46 percent rise so far this season was a little more than half what it expected as consumers buy fewer computers and less clothing. Overall, U.S. retail sales fell 0.4 percent in November, the first drop in seven months. Most of the two companies' shipments are between businesses. A decline in personal-computer sales to consumers and small businesses, which has caused some computer makers to cut fourth-quarter and 2001 earnings estimates, also is hurting UPS and FedEx. "Many of our customers are technology customers," said William Margaritis, a FedEx spokesman. "They are experiencing the same sort of effect the general economy is (and) they're part of this slowing growth." FedEx noted slowing shipments out of Asia, a source of computer parts, and also said Asian exports historically peak before the Christmas shopping season in the United States. The company declined to give specific numbers. Lower volumes UPS said even though the busiest days of the holiday season are ahead, U.S. shipments for the two weeks ended Dec. 8 were unchanged. U.S. volume increases slowed to 4 percent in October and November, from 5.5 percent in this year's first nine months. "At this point, we do believe the primary factor at work here is the slowing of the American economy," said UPS spokesman Norman Black. The lowered UPS estimate "suggests the economy is a little softer than what we thought it would be," said Douglas Rockel, an ING Barings analyst with a "hold" rating on the company. He also rates FedEx a "hold." Burns, the Lazard Freres analyst, Thursday cut his ratings on FedEx to "hold" from "outperform." He maintained a "buy" rating on UPS, while cutting the 12-month target for the share price to $70 from $75. UPS said it expects to meet its goal for 2000 of 10 percent sales growth and income growth in the middle of the 10 percent-to-20 percent range. The company also said that "barring further economic slowing," it expects to meet similar targets in 2001. UPS expects to ship more than 19 million packages on its busiest day, Dec. 19. FedEx said it still expects to ship 6.5 million packages Dec. 18.

To: D.J.Smyth who wrote (163219)	12/15/2000 12:41:09 PM
From: John Koligman	Respond to of 176387

I suspect fewer people are arguing with Earlie these days. Regards, John To: Michael D.Burke who wrote (86911) From: Earlie Friday, December 15, 2000 8:29 AM ET Reply # of 86935 MB and Gang: I've been up to my ears in work of late and have not had a chance to join the thread. Fortunately, I am going to take some time off for the next while, so will be able to participate more actively over the holidays. Here are a few observations that might be helpful to some of our group. Back in August, following an intensive summer field research effort, I posted a piece (#83134) that forecast an extremely ugly autumn for the tech sector. In that post, I provided a number of observations that backed my dour view. Unfortunately for the vast majority of investors, that set of predictions proved accurate and we have experienced a severe contraction in tech stock valuations. While I am delighted that the forecasts I made at that time proved accurate, I am truly sorry to see the carnage that the market's contraction has inflicted on the majority of retail investors. Yes, one could argue that they got what they deserved for driving share prices into never-never land, but there is little solace to be taken as one watches much of the continent's already meager savings get wiped out. Today, many retail investors are convinced that we are at or are very close to a "bottom". The field evidence suggests that this is but wishful thinking. I can see absolutely nothing to suggest any respite from the marauding bear. Back in August, while the posted "worry list" was extensive, the key points revolved around an intensifying recession spreading across Asia, a "Fed" that refused to turn off the money printing presses, and above all else, a relentless expansion of tech sector inventories. Finished goods piled to the ceilings as well as the incredibly stupid triple ordering and hoarding of semi products by manufacturers (remember the supposed "shortage of semis" story that was promulgated by every N./Y. based analyst during the summer?) provided ample evidence that we were in for trouble this past fall, especially with corporate sales having fallen off the graph and the consumer finally cutting back on his manic borrowing. Unfortunately, inventories are now in much worse shape than they were last summer. This autumn's selling season has been lackluster and the all-important Christmas sales period has been disappointing. It is now inevitable that tech-related inventories will be at record levels as we move into the early winter sales doldrums. For quite some time, I have pounded away at the point that the PC market was saturated. In August, I noted that the cell/digital phone market was also approaching saturation. For any who might wish to question those observations, I can only say go visit some stores or distributors. And since PCs and cell phones soak up most of the semi products, to whom do all those still over-valued semi manufacturers sell their products? Near a "bottom"? Not by a long shot. Most funds, as well as the general investing public are now trapped as a result of massive over-ownership of tech stocks. Tech sector earnings have been artificially inflated as a result of "aggressive" (in some cases, fraudulent) accounting, as well as through the sale of dot com investments. Both of these unseemly practices are coming under pressure, just as actual earnings are being crushed. The tech sector must wade through several quarters worth of ugly "warnings", nasty financial results and considerable contraction and consolidation before a bottom will be found. In the end, profitability still defines stock prices. Real profits have been a rarity in many tech companies (as most have been forced to spend sums that far exceed their free cash flows on never-ending research and capital equipment investment, just to stay in the game). Saturation of addressed markets is just beginning to extract a toll, which in the end will be much worse than most investors can conceptualize. The tech sector bear is in its infancy. Incidentally, have a good look at the optical stocks. They are about to take it in the neck as the public comes to recognize that the build-out of optical networks was vastly over done. and that the growth in this sector is coming to an end. Also examine the "contract manufacturers". What happens to their growth as their contracts get cut back dramatically this winter? Most operate on minuscule margins. Their fixed costs are large. Most will find it difficult to reduce their operating costs to align with their plunging order books. Their PEs will be stripped near term. Best, Earlie