Dell ( DELL) and Hewlett-Packard ( HWP) were both taken to task by analysts in the wake of last night's earnings release. Despite the negativity in the PC sector, Merrill Lynch analyst Steven Fortuna was happy with Dell's quarter and reduced his estimates as visibility remains fogged in. He cut his fiscal 2002 (calendar 2001) sales forecast to $37.1 billion from $37.5 billion and reduced his 2002 earnings per share figure for a second time, lowering it to 82 cents from 85 cents. "We were very impressed with Dell's quarter as the company turned in strong growth in units (up 43%) and revenue (up 28%) in a no-demand environment," Fortuna wrote. "We believe that this strong performance showcases the continuing strength of Dell's direct model as the company has been able to use price as a weapon to profitably drive market share gains. Credit Suisse First Boston analyst Kevin McCarthy also wrote a love letter to the stock, saying Dell was the "best horse on a sloppy track." McCarthy did not adjust his estimates or rankings on the stock, choosing to comment on the positive results of the fourth quarter. "Dell gained market share in every product category and in every region," he wrote. "We continue to believe Dell is the safest stock to own in the computer hardware group." Lehman Brothers reduced its 2002 earnings per share estimate on Dell to 78 cents from 84 cents, while dropping its forecasted growth rate to 8% from 13%. The current Wall Street consensus calls for Dell to earn 90 cents a share. "Unfortunately," the company's memo began, "We believe consensus is likely to be... higher on both. Also margins are expected to stay flat for the next one to two quarters." Prudential Securities analyst Kimberly Alexy cut her 2002 earnings per share estimate to 82 cents from 87 cents. "We continue to like the stock long-term but expect limited catalysts until growth visibility improves." Meanwhile, Hewlett-Packard's earnings release was either a complete failure or a total anomaly. Lehman Brothers was fairly positive on H-P, while Credit Suisse First Boston clearly was not. Lehman dropped its 2001 earnings per share estimate to $1.60 from $1.70 and put its 2002 earnings per share estimate at $1.90, 8 cents lower than the current Wall Street consensus. "H-P experienced a tough quarter. Looking ahead, H-P may face additional pressures. Shares will likely weaken in the short term. However, in our view, H-P remains strong in imaging and printing. We maintain our strong buy rating." CSFB didn't see it that way at all. Analyst Kevin McCarthy, who had nice things to say about competitor Dell, blasted the company for dropping the ball. "H-P posted poor performance in nearly every operating group. While citing a slowing U.S. economy, the company took the blame for poor execution in several product areas," the analyst wrote. "We believe the stock will underperform in the next several quarters." McCarthy lowered its 2001 earnings per share to $1.55 from $1.65. Additionally, Prudential Securities cut its 2001 earnings per share to $1.60 from $1.70 and its 2002 earnings per share to $1.90 from $1.93, while Goldman Sachs analyst Laura Conigliaro lowered her 2001 earnings per share estimate to $1.62 from $1.65.
Oh, and CSFB lowered its 2001 and 2002 forecasts on JDS Uniphase ( JDSU) after a stern warning from Nortel ( NT) rocked the tech sector. CSFB cut its 2001 earnings per share estimate to 68 cents from 73 cents, and its 2001 sales estimate to $3.6 billion from $3.9 billion. Going forward, CSFB cut its 2002 earnings per share forecast to 80 cents from 88 cents and its 2002 revenue call to $5.4 billion from $6 billion. "We believe it is prudent to have more conservative estimates at this time given the deterioration in visibility in optical spending, particularly in North America," the company wrote in a memo to investors this morning. "We believe the lowered visibility encountered by Nortel is not an isolated event and anticipate that Lucent ( LU) and Alcatel ( ALA) may also be experiencing weakness." Upgrades