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Firms raise estimates on Dell

On a four-quarter roll, Dell's earnings make analysts bump up their ratings. LSI is also raised, but Lucent and Ortel aren't so lucky.

Dell upped on strong earnings
Dell Computer (DELL) was upped by at least three financial firms after reporting strong fourth-quarter results that beat Wall Street's estimates for the fourth consecutive quarter.

The company's stock was up as high as 75 from yesterday's close of 72-1/8.

Stamford, Connecticut-based Soundview Financial analyst Mark Specker raised his fiscal year 1998 estimate to $3.97 from $3.28.

"We moved our growth rate for next year up a couple of percentage points because their sales momentum is a bit better than we thought it would be," said Specker.

Specker explained that the company has been unable to guide analysts to an accurate estimate, which in turn causes massive upward revision following the company's earnings report.

Dell's sales and general administrative (SGA) line declined substantially in the quarter. "They surprised Wall Street and about 10 cents was due to cutbacks in SGA. The key point is that year over year, the company has shown growth of 47 percent and that is extremely fast. There are very few companies that have grown their top line that fast," added Specker.

The firm maintained its ratings of short-term rating "hold" and long-term "buy."

Cowen & Company raised Dell's fiscal year 1998 estimate to $4.25 from $3.50, and its fiscal year 1999 estimate to $5.25 from $4.15.

CS First Boston upgraded Dell to a "buy" from a "hold."

Lucent downed to "neutral"
Lucent Technologies (LU) was downgraded by Smith Barney analyst Anthony Langham to "neutral" from "outperform." The firm also lowers its price target to $62 a share from $67 a share.

The company's stock dropped as low as 52-1/2 from yesterday's close of 58-3/4.

LSI upped to "buy"
Designer of advanced custom semiconductors LSI Logic (LSI) was upgraded by Soundview Financial analyst Erach Desai to "buy" from "hold." The firm maintains its long-term rating of "hold."

The company's stock was trading around yesterday's close of 34-1/8.

"I think the fundamental reason to get interested in the short term was a large order received from a large microprocessor vendor," said Desai. "I think in the short term the bookings momentum will act as a catalyst, and we can look forward to better revenue performance later this year." Earlier this week, LSI Logic and Motorola's information systems group announced a licensing agreement in which Motorola's V.34 software modems will be embedded into LSI Logic's leading custom semiconductors.

Ortel downed after strong earnings
Communications equipment manufacturer Ortel (ORTL) was downgraded by Morgan Stanley analyst Neil Danzger to "neutral" from "strong buy."

The company's stock fell as low as 11-5/8 from yesterday's close of 20-5/8.

Danzger attributed the downgrade to the company missing analyst expectations. Ortel fell a penny short of Morgan Stanley's estimate and two pennies short of Wall Street's consensus estimate. Near to medium weakness will limit the opportunity for upside surprises in the next two quarters, he added in a report.

Yesterday, the company reported a 48 percent jump in net income for the quarter, and a 71 percent increase in revenue for its third quarter, but also reported that it expects a slowdown.

"We have reduced expectations for our core broadband business based on a recent slowing of domestic orders that will have an effect on the current fourth quarter, and, as it looks now, into the first quarter of fiscal 1998," said Ortel president and CEO Wim H.J. Selders, in a statement.