Update: Bear Stearns, Gerard Klauer Latest to Lower Dell Outlook

Updated from 8:19 a.m. ET

Bear Stearns this morning cut its earnings estimates on computer maker Dell(DELL Quote - Cramer on DELL - Stock Picks) to reflect lower sales and margins.

The firm trimmed Dell's 2001 earnings-per-share outlook to 87 cents from 92 cents and its 2002 EPS view to 90 cents from $1.05.

Bear Stearns said it expects other PC-related companies to guide down estimates during earnings season.

The Federal Reserve's emergency rate cut last Wednesday was fortuitously timed for beleaguered Dell, coming directly on the heels of a harsh note from Lehman Brothers analyst Dan Niles. Niles expects the information technology budgets at Fortune 500 companies to come in 3 to 5 percentage points below the 10% growth that researcher International Data Corp. had forecast. That doesn't bode well for Dell, since the overwhelming majority of its sales come from the corporate PC market, where demand remains slack despite aggressive price-cutting.

Niles last week reduced Dell's fiscal 2002 revenue-growth estimate to 17% from 20%, which is where the company guided analysts down in November. Dell had said that earnings would see "slightly faster" growth than revenue in 2002. Niles took his estimate for 2002 earnings to $1 a share from $1.l0. That puts his estimate for earnings growth at 10%, about half Dell's guidance.

TheStreet.com last week anticipated that other analysts would move to lower their outlook for Dell.

Sagging computer sales have dragged down the computer-making sector, as well as chip stocks, since these companies make the brains that power computers. When fewer computers are sold, fewer chips are needed.

Gerard Klauer Mattison cut its fiscal 2002 earnings estimates for Dell to $1.08 from $1.11, citing limited near-term growth as a result of moderate desktop demand. According to First Call/Thomson Financial, 24 analysts produced a consensus estimate of $1.10 a share for 2002.

The research firm, which maintained its outperform rating and its $35 price target on Dell, also expects fourth-quarter 2001 earnings of 26 cents a share, compared with 16 cents a share last year, on revenue of $8.7 billion, up from $6.8 billion a year ago.

"Although Dell remains the only PC vendor that has yet to preannounce this quarter, we would not be surprised if the company's sales of its desktops and low-end Wintel servers fall short of expectations," Gerard Klauer Mattison said.

The firm said consumer PC demand would likely worsen in the near term and indicated that server and storage companies are the "safest harbors." Gerard Klauer maintained a neutral rating on Apple(AAPL Quote - Cramer on AAPL - Stock Picks) and Compaq(CPQ Quote - Cramer on CPQ - Stock Picks), while keeping its outperform designation for Gateway(GTW Quote - Cramer on GTW - Stock Picks).