Salomon Cuts Estimates on Dell, Compaq, Gateway - TheStreet

The PC market hasn't found a clearing yet, or even a hint of a positive upswing in demand, according to a research note published this morning by

Salomon Smith Barney

titled "Still in the Woods." In the note, analyst Richard Gardner lowered his estimates on computer makers





(DELL) - Get Report




, noting that his projections are now below the consensus estimates for both Compaq and Gateway.

"Recent data points from

Ingram Micro



Tech Data

(TECD) - Get Report





Sun Microsystems

(SUNW) - Get Report


PC Data

point to continued PC demand weakness across all customer segments and most major geographic regions," the analyst wrote in his note.

Gardner lowered his current year earnings estimate on Compaq to 42 cents a share from 52 cents a share, and lowered his forecast for next year to 73 cents a share from 97 cents. Compaq's price target was cut to $18 from $24. The stock recently slipped 1.2% to $13.44, after touching a 52-week low of $13.32 earlier in the session.

The analyst cut Gateway's earnings estimate for this year to 26 cents a share from 42 cents a share, and he lowered his expectation for next year to 72 cents from 85 cents. Gateway's price target was cut to $16 from $20. Shares of Gateway recently lost 0.5% to $15.24.

Gardner dropped Dell's current year earnings forecast to 68 cents a share from 73 cents a share. Gardner didn't alter his earnings forecast of 89 cents a share for the next fiscal year, and he left his price target of $21 unchanged. He rates all three companies a hold.

Overnight, Dell Chief Executive Michael Dell was quoted in the Finland business journal


as saying that his company is "now more competitive than ever." Dell also said he would like to raise his company's market share to 40% from its current 13%.

The report said U.S. corporate sales of PCs have stabilized, but at lower-than-expected levels, and U.S. consumer sales have declined sharply. Gardner also said that "the most recent change in demand patterns has come from Europe," which "appears to be following the same progression as the

United States has in the last quarters." Additionally, some vendors, such as Hewlett-Packard, are now seeing weakness in the Asia-Pacific region, including China, Gardner wrote.