STOCKWATCH - Market awaits Dell results
STOCKWATCH - Market awaits Dell results
Stockwatch should really have come out mid-Friday, because by then Dell will have announced its fourth quarter results. As a result the market has not been a hive of activity, fears of a war between the US and Iraq continue to make the market err on the side of conservatism.
Thomson First Call carried out a survey of market analysts and found that most are looking for Dell to meets its target earnings of $593 million, which is 23 cents a share. But the market knows the news might not all be good and is preparing itself for Dell to lower its outlook for the first quarter of the 2004 fiscal year. Dell revenue is expected to be around US$9.5 billion. The majority of Dell's revenue comes from PC sales, but it is of course a powerful player in the storage market through its relationship with EMC. Walter Winnitzki, an analyst with First Albany Securities is one of those expecting Dell to lower its outlook and he blames "seasonal decline" in the PC and storage markets.
"Dell's success and growing mix in the consumer market tends to also mean greater seasonality in the demand patterns of this market sector. In storage we believe that it will be difficult for Dell to buck the industry trend for sequential decline in sales," Mr Winnitzki said. Storage and servers account for just 12 per cent of Dell's revenue.
The market will wait with bated breath.
Elsewhere in the market, storage software vendor Tibco is, allegedly, looking to lower the interest British media giants Reuters has in it. A report in the influential British business newspaper the Financial Times stated that Tibco is prepared to spend some of the US$640 million cash it has to lower Reuters' stake in Tibco to around 20 per cent from the 42 per cent that Reuters currently has. Vivak Ranedive, the chief executive of Tibco revealed his ambitions in an interview with the London newspaper. In the interview he said that Tibco would have more independence if Reuters lowered its interests.
The revelations did not seem to cause too many disturbing ripples for Tibco. Tibco's shares closed yesterday up six cents at $5.79 on the Nasdaq, whilst Reuters' shares dropped on the London Stock Exchange. Jordan Klein, an analyst with UBS Warburg raised his investment rating of Tibco from "neutral" to buy, but said his decision was based on Tibcos' "fundamentals remain strong combined with an attractive valuation."
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