Need help, all!!!!! Well, Mike, it is time again for the thread (Gabriel, Kelley, et al) to start to get at the revenue, earnings, EPS number for the quarter...I can use your help with my back-of-the-envelope musings...
Last year, from Q4 '97- Q1 '98.....revenues grew 4.8%
$ 3,737,000 (Q4 '97)- $ 3,920,000 (Q1 '98)
In the CC, Meredith guided analyst to look for mid-single revenue growth...
so applying this same 5% figure, that would get us...
$ 5,173,000 (Q4 '98)- $ 5,431,000 (Q1 '99)...38.5% y-o-y growth
applying 8.2% margin= 445m earnings, or 46% y-o-y growth,
16.2 EPS at 2.738B shares (12M buyback during quarter)....
BUT...
This would appear well-conservative, given the following factors..
(1) I am assuming that net margin will be flat (8.2%), whereas their is a possibility that margin could tick up (8.3%) due to internet and other cost savings, etc...
(2) Kumar, just the other day, said if Dell continues its current "win" projectory, that Dell could register 5.7B in revs this quarter....Let's say Kumar "overestimates" by 75m...and Dell comes in at 5.625B (43.4% y-o-y growth)...then at 8.2% net margin= 461m earnings (51.1% growth y-o-y), and .17 EPS (.168 actual) at 2.738B shares.......all numbers higher than my "conservative" estimate......I contend that Kumar has been pretty accurate when so close to earnings releases (although others on the thread would disagree)...
(3) Dell could buyback more than 12m shares in the quarter....historically 12m would be on the low-side...
(4) This quarter, storage and Gigabuys revenues & earnings should have a slight, but still meaningful impact. How much (additional) will these areas contribute to revenue, earnings?
(5) IBM deal. There is speculation (and evidence) that Dell could see some immediate margin improvement with this new deal.....in fact, that a significant royalty payment might be either significantly lessened or eliminated....
(6) Meredith mentioned that there was approximately 300m in contracts that did not close in Q4, that should be closing in Q1. Meredith implied that these were revs. (contracts) that were (originally) expected to close in Q4, hence last quarter's revenue shortfall....Meredith also flat-out stated that Dell had best-ever contract "backlog" going into the this quarter...
So where to go from here?
We can look to the recent IDC/Dataquest numbers for some guidance, although, even there, it requires some real thinkin'...
It appears to me that Dell's unit sales, according to Dataquest & IDC
were up (sequentially, from Q4 '98-Q1 '99) somewhere between 4-8%...
I believe that last quarter's ASP's were flat....assuming that is still the case (and that is a HUGE assumption)....wouldn't that mean that revenues (then) are up 4-8% sequentially? But wait, maybe we should add a bit in for storage and Gigabuys...let's say 6-10%....
So..
5.483B (39.7% y-o-y) - 5.69B (45% y-o-y)...
Hmmmm, that's not real helpful...too big a spread for me...could still drive a truck through that estimate....
Another factor:
We've had a long-standing debate on the thread on whether or not IDC (and Dataquest) seasonally adjust their data for Dell.....Some threadsters have contacted IDC, and IDC has stated that they do.
However, if I recall correctly, on other occasions, they have (also) stated that they do not and/or we have found out that they do not (or don't do a great job)...The reason for this rambling:
If Dell is able to replace their abysmal (for Dell) January, with April data, Dell's numbers will surely look much better...and there is a better chance that Dell will hit the 10% sequential revenue growth figure (5.69B) than 6% (5.48B)...
Of course, we have no way of knowing how strong April PC sales are, but it stands to figure that they are, at a minimum, at least a little better than January...
Finally, although MD & TM were bullish at the CC, they also told analysts NOT to raise their future earning estimates....perhaps this is a standard technique for them....or a new conservative bent...or maybe April is not going gangbusters?....or maybe it is meaningless for this discussion...However, given the revenue miss of last quarter ("only y-o-y growth of 38%.....and TM's comments that this was a "hiccup"....if we are to believe Dell's management here, then we should assume that revenue growth will be somewhere in the 40's this quarter...)
OK, I've thrown this all (in the dumper) at you....what are your thoughts (or anyone else?)
Note: Given some all of this conflicting (?) data, I look to split the difference:
5.6B in revs. (42.8% y-o-y growth), 459m earnings (50.4% y-o-y growth), and 17 cents EPS (16.7 cents actual...5% above consensus)
That would be a solid recovery quarter for Dell (and the stock), but not a blowout (given Dell's high performances in the past)....Stock should continue, however, to appreciate nicely)... |
