COMPUTER MAKERS CUT REVENUE FORECASTS
(compiled from Dow Jones Newswires)
Computer maker Gateway says it expects fourth quarter revenue of about US$2.55
billion this year, about equal to last year's US$2.45 billion, but US$500 million
below previous estimates.
Gateway says it expects sales not to meet previous estimates, although the
company anticipates that consumer sales will continue ramping up during the
fourth quarter. "The economic slowdown, coupled with ongoing shifts in PC seasonality,
clearly had a significant impact on our sales over the holiday weekend," Gateway
Gateway still expects operating income growth of 25% this year. As reported
earlier, Merrill Lynch & Co. (MER) analyst Steven Fortuna cut fourth quarter
revenue estimates for Gateway to US$3.04 billion from US$3.14 billion. The analyst
said in a research note that Gateway was expected to announce that while volume
showed improvement, it would not be as strong as originally hoped.
Dell officials said they expect revenue for their 2002 fiscal year, which begins
in February, to climb by about 20% from the current year. The forecast marks
continued downward revenue-growth trend from Dell, which once wowed Wall Street
with its high growth rate. In January, Dell warned that revenue for the current
fiscal year would grow in the low-30% range, down from historic levels near
50%. The company reduced the figure even further in a warning, saying that full-year
revenue would increase by only about 27% from last year. Some observers said
the company's new 20% figure for the 2002 fiscal year appears to be an attempt
by Dell executives to avoid having to issue any more negative revisions.
Revenue for the third quarter came in at $8.26 billion. Previous expectations
had been for Dell to record about $8.5 billion in third-quarter sales. The $8.26
billion figure marked a 22% improvement from sales of US$6.78 billion in the
IBM posted earnings of US$21.78 billion in the third quarter of this year,
below market expectations of US$22.5 billion. Jay Stevens, an analyst at Buckingham
Research Group said that every major category at IBM was down from what he had
expected. He noted that IBM tried to make it clear that had the company not
faced supply shortages, it would have better revenue growth. During a conference
call to discuss earnings with analysts IBM said it was hampered by supply shortages
for wafers and ceramic substrates. Analysts have said that IBM's revenue will
be flat going forward.
Taiwan's largest personal computer maker, Sunday lowered its 2000 net profit
forecast to between NT$7.9 billion ($1=NT$32.076) and NT$8.1 billion from the
original estimate of NT$12 billion, as demand and shipments decline amid a slowdown
in the global computer industry.
Acer also cut its full-year sales target to between NT$105 billion and NT$110
billion from the original NT$150 billion, the company said in a news release.
Acer said it has felt pressure from a decrease in PC demand. It also said it
will see its revenue decline by around NT$20 billion, resulting from a cut in
contract orders from a multinational customer this year. Many computer companies
in the US have all warned that their third-quarter sales wouldn't meet forecasts,
signalling a slowdown in the computer industry. Many US companies blamed the
fall of the euro, which has raised prices of non-European-made computers in
Bucking the general trend, Compaq returned its troubled commercial PC business
to profitability after four money-losing quarters. The division - which accounted
for 33% of the company's second-quarter revenue - posted an operating profit
of $62 million on a 3% increase in revenue to $3.3 billion. There were other
areas of strength (the server and storage division) and a couple of weak spots
as well (the consumer side, where a North American price war drove down operating
income despite a sharp increase in revenues, and global services, where both
revenues and income fell). Compaq's report is sure to add fuel to the debate
over the vitality of the PC market. According to Dataquest, US PC sales increased
just 12% during the second quarter, sharply slower than the 29% jump of a year
ago. IDC put second-quarter growth even lower, at 7%.
Despite earnings warnings from personal computer makers Apple Computer Inc.
(AAPL) and Gateway Inc. (GTW), Hewlett-Packard Co. (HWP) is still confident
it will reach its fiscal 2001 revenue growth target of between 15% and 17%,
said Carly Fiorina, president, chairman and chief executive. During H-P's Security
Analyst Meeting, which was broadcast via the Internet, Fiorina said that 2001
will be the biggest year in terms of new product introductions in its laser
printing business. The company is also accelerating growth in its enterprise
business, which she said should grow from 9% year over year to above "Hp's average,"
said Fiorina. She added that enterprise growth will be above the market growth
As for retail PC sales in 2001, the executive said PCs are still selling but
at a slower rate than in 2000. Therefore Fiorina said H-P is looking for single
digit growth for US PCs in 2001. In the company's software business, Fiorina
said the Palo Alto technology concern is making important investments and acquisitions
in the software space. Fiorina forecasted that software growth will track higher
than the rest of the market in 2001. This year, HP divested software assets
and restructure others, she noted.