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

To: OLDTRADER who wrote (169568)	5/8/2002 12:06:08 PM
From: stockman_scott	Respond to of 176387

RESEARCH ALERT-Merrill Lynch says Dell shares too low Wednesday May 8, 12:02 pm Eastern Time NEW YORK, May 8 (Reuters) - Merrill Lynch on Wednesday said that shares in No. 1 computer maker Dell Computer Corp. (NasdaqNM:DELL - news) had fallen too low due to weak market conditions and what it called unfounded negative news reports. In the past week, The New York Times and Barron's both reported that Dell's gamble on its own stock price made through "put" options has come back to haunt the company as it obligated the company to pay more than market price for its own shares last year. The reports also said those costs could be high going forward if Dell's remaining put options are exercised. According to a regulatory filing, Dell paid an average of $44 per share to buy back about 68 million shares. That's far above its price of $24.52 on Wednesday after Dell shares gained 10 percent, or $2.17, in Nasdaq trade. Meanwhile, the American Stock Exchange Hardware Index (AMEX:^HWI - news), gained 6 percent on a day when Cisco Systems (NasdaqNM:CSCO - news) ignited enthusiasm about the potential of a rebound in technology spending. Merrill Lynch analyst Steve Fortuna said that at the end of January, Dell had 51 million put options outstanding that could be exercised at a similar price. The cost of exercising all of them would be $1 billion more at the current share price, Fortuna wrote. But even if Dell did have to spend that amount or more if the stock price dropped, Fortuna said that Dell's use of options has been favorable for the company when adding in the benefits from previous years, when Dell' stock price was rising. "In light of recent accounting issues in the news, we believe that the negative glare from these reports has weighed unjustifiably on Dell's shares," Fortuna said. Fortuna reiterated his "strong buy" rating on the company, saying that Dell should benefit significantly when companies start buying personal computers again and as use of computer servers based on chips from Intel Corp. (NasdaqNM:INTC - news) increases.