Prudential Cuts Compaq Estimates, Says Apple May Miss Top Line

(Updated from 9:04 a.m. ET)

Prudential Securities analyst Kimberly Alexy lowered her revenue and earnings estimates for Compaq (CPQ), and she said Apple (AAPL) could possibly miss its top-line forecast for the current quarter.

Additionally, the analyst said aggressive pricing continues to pressure Gateway's (GTW) margins. She indicated that the PC maker could break even for the second fiscal quarter, even though she expects the company to post a loss for the period.

In her research notes, Alexy wrote that Compaq has set "overly aggressive" revenue and earnings guidance for the second quarter, considering soft spending in the U.S. and indications of a deterioration in Asia and Europe. She also said the likelihood of excess inventory and no signs of a pickup in demand will hurt the company's third-quarter revenue growth and earnings figures. The analyst now expects Compaq to break even for the second quarter, down from her previous earnings estimate of 4 cents a share. Wall Street is expecting income of 4 cents.

Alexy also said she "would not rule out the possibility for a top line miss" for Apple and kept her hold rating on the stock. She said desktop sales "continue to be rather lackluster" and now expects total revenue of $1.5 billion for the fiscal third quarter, down from a prior projection of $1.54 billion.

The analyst also maintained her hold rating on Gateway, which she said may miss the consensus estimate calling for a loss of a penny a share in the second quarter. Alexy said the company could post a bottom line within the range of break-even, but she lowered her own expectation to a loss of 3 cents a share.

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