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

To: tsyl who wrote (98665)	2/13/1999 10:04:00 AM
From: Dorine Essey	Respond to of 176387

Don't know if this was posted before: Dorine NEW YORK, Feb 12 (Reuters) - Fears<that fast-growing computer maker Dell Computer Corp. DELL.O could fail to beat earnings forecasts when it reports fourth-quarter results next week sent Dell stock tumbling nearly 12 percent lower Friday. The actions sparked a renewed sell-off among technology stocks, which have been battered much of the week on concerns that the high-growth sector has become over-valued. Dell's fall from grace came after several Wall Street brokerages produced reports that warned of a potential revenue shortfall for Dell's quarter ended in January amid signs of intensifying competition in its personal computer business. Shares of Dell, the No. 1 direct seller of personal computers and for years a darling of Wall Street investors, closed at $89.87, down $12 on the day in extremely heavy trading of 66 million shares on the Nasdaq stock market. The technology-laden Nasdaq composite index finished down 83.7 points, off nearly 3.5 percent, one day after it logged its highest one-day point gain ever. BancBoston Robertson Stephens and Salomon Smith Barney issued reports on Dell that fretted over gains in corporate sales by rivals Compaq Computer Corp. CPQ.N, Hewlett-Packard Co. HWP.N and International Business Machines Corp. IBM.N. Prior to the opening of trading Friday, Robertson Stephens said it expected Dell to report fourth quarter revenues of $5.2 billion, shy of its earlier estimate of $5.5 billion. "We believe Dell's finish to the quarter was soft," wrote analyst Daniel Niles. The brokerage cited competition in U.S. corporate desktop and large server computer markets as potentially to blame for the expected shortfall. Still, Niles said he expected Dell to meet the consensus earnings estimate of 31 cents per share when it reports fourth quarter results on Tuesday after the stock market closes. The possibility that fast-growing Dell could fail to deliver a positive earnings surprise triggered a sell-off among fast-money momentum investors that have favored the stock for its spectacular growth and track record of consistent results. Salomon Smith Barney said it saw Dell's biggest rivals -- Compaq Computer Corp. CPQ.N, Hewlett-Packard Co. HWP.N and IBM IBM.N making progress toward mimicking the so-called "Dell model" of direct customer sales relationships in large corporate accounts. Dell's sales model allows customers to cut the cost of a computer by custom-ordering the latest machines and directly having it shipped to them instead of having to choose from a menu of pre-built machines sold via indirect distributors. Salomon said it was "comfortable" with its 31 cents share earnings estimate, but that it did not expect to be positively surprised above that level. The brokerage said that, given recent competition, it may have been too optimistic that Dell's computer selling prices would remain firmer. Nevertheless, it said strong profit margins would offset any revenue shortfall. Other brokerages contended, however, that Dell was doing just fine. In contrast to the naysayers, Credit Suisse First Boston said Dell was "on track to meet or beat" its fourth quarter earnings estimate of 31 cents per share and it also said revenues appear to be ahead of its $5.4 billion estimate. Even with heightened corporate competition, Dell is still growing at a much faster clip than its rivals, Warburg Dillon Read LLC analyst Charles Wolf said. The company has continued to grow at roughly three times the rate of Compaq, the No. 1 overall supplier of PCs, according to industry estimates. "It's difficult to believe that the competition has heated up to the point that Dell will report a weaker quarter," Wolf said in a telephone interview. A Dell spokesman declined to comment on its results ahead of the earnings report. REUTERS Rtr 18:50 02-12-99 Copyright 1999, Reuters News Service