Dell Pressures Stocks

Elena
11 Nov, 2005
New York City

Asian-Pacific markets closed higher, led by South Korean Kospi, rising 1.8% to an all-time high on tech stocks. Thre Nikkei gained 0.5% on GDP data. European stocks traded higher at mid-day on falling oil, automakers and tech stocks. After the closing bell the global biggest personal computer maker Dell posted a quarterly profit decline of 28% and projected fourth-quarter earnings slightly below analysts expectations.

U.S. MARKET AVERAGES

Following Thursday’s rally, U.S. stock futures predict an opening near the unchanged mark. Falling crude oil prices brought relief to the market but disappointing quarterly report from technology bellwether Dell offset declines. The market is likely to remain without a strong market driver as no economic data or major earnings are scheduled for release today.

Shares of Dell ((DELL)) dropped after the world''s biggest personal computer maker said quarterly profit fell 28%. Dell also projected fourth-quarter earnings slightly below some analysts targets.

Department store operator Kohl's Corp. ((KSS)) said its quarterly earnings rose 15% on sales growth.

The gains on Thursday were in part prompted by action in the fixed income market, but bond trading is closed on Friday for the Veteran's Day holiday.

S&P 500 futures were up 0.4 point, but slightly below their fair value. Dow Jones industrial average futures were up 6 points, while Nasdaq 100 futures were up 4.5 points.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks gained across the region with the Nikkei rising 0.5% on better-than-anticipated GDP growth, 1.7% versus expectations of 1.1%. South Korea’s main stock market index hit an all-time high of 1.8%, supported by tech stocks like Samsung Electronics and Hynix Semiconductor. Hong Kong’s Hang Seng gained 0.9%, while China’s Shanghai Composite added 0.4%.

European markets posted solid gains at mid-day, reflecting U.S. markets rally overnight and weaker oil which boosted automakers and tech shares. The German DAX 30 climbed 1.3% on corporate earnings, the French CAC 40 added 0.1%, and London’s FTSE 100 gained 0.5%.

OIL, METALS, CURRENCIES

Crude oil dropped to $57 a barrel on rising supply and declining demand. Light sweet crude December delivery lost 71 cents to trade at $57.09 a barrel on the Nymex. Heating oil shed 2 cents to trade at $1.7208 a gallon. Gasoline declined 3 cents to $1.4794. Natural gas dropped 1 cent to $11.370 per 1,000 cubic feet. London Brent declined 83 cents to $54.85.

Gold prices slipped in European trading. In London the precious metal was fixed at $465.90, down from $466.60. In Zurich gold fell to $465.78 from $467.55. In Hong Kong gold lost $0.80 to close at $465.95. Silver traded unchanged at $7.46.

The U.S. dollar traded mixed against major currencies. The euro was quoted at $1.1700, down from $1.1731. The dollar bought 118.00 yen, down from 118.04. The British pound traded at $1.7403, down from $1.7458.

EARNINGS NEWS

Dell Inc. ((DELL)), personal-computer company, posted Q3 profit of 25 cents a share, down from 33 cents a share in the year-ago period. If not for one-time charges, the company would have gained 39 cents a share, meeting its own lowered estimates. The company anticipates a Q4 profit of 40 cents to 42 cents a share.

Pacific Sunwear of California Inc. ((PSUN)), apparel retailer, announced that its net earnings surged 20% on stronger year-over-year sales growth and an increase in its gross margin. The company reported Q3 earnings of 54 cents a share, up from 44 cents a share in the same period last year, matching the analyst estimate. Revenue increased 14%.

Target Corp. ((TGT)), discount retailer, posted Q3 earnings of 49 cents a share, down from 59 cents a share in the same period last year on revenue growth, beating analysts’ forecasts of 45 cents a share.. The company stated that it was confident that it will achieve its target for second-half earnings of $1.50 a share. The company added that it raised its current stock buyback program by $2 billion.

Big 5 Sporting Goods Corp. ((BGFV)), retailer, posted Q3 net earnings of 32 cents a share, down from 37 cents a share in the year-earlier period despite revenue growth and a 3.8%. same-store sales increase, falling short of analysts’ expectations of 37 cents a share.

Kohl''s Corp. ((KSS)), specialty department stores operator, reported that Q3 earnings climbed 15.3% to 45 cents a share, up vs. last year''s profit of 39 cents a share on a 13.7% net sales increase, coming in a penny ahead of analyst view. Comparable-store sales increased 3.5%.

CORPORATE NEWS

The German-American automaker DaimlerChrysler AG announced a decision to sell its remaining 12.4% stake in Japan's Mitsubishi Motors Co to the U.S. investment firm Goldman Sachs Group Inc. The purchase price wasn't disclosed but DaimlerChrysler said the sale would boost its revenue for 2005 by some $588 million. The deal will make Goldman Sachs with its 13.4% stake the biggest shareholder in Mitsubishi.



DreamWorks Animation ((DWA)), computer generated films producer, reversed to Q3 net loss of 1 cent a share, from a profit of 26 cents a share for the same period last year on strong revenue decline, missing analyst estimate of a profit of a penny a share. DreamWorks announced that it took charges amounting to 12 cents a share for Q3.

Pep Boys ((PBY)), provider of auto parts and services, posted Q3 net loss of 21 cents a share, down from a net profit of 11 cents a share in the year-ago period on revenue decline. The company announced that its same-store sales decline 2% during the period. Comparable merchandise sales went down by 0.6% and comparable service revenue decreased 8.2%.