Stocks: Computer Makers Power Up After Dell's Strong Earnings Report -- WSJ
August 31 2019 - 3:02AM
Dow Jones News
By Jessica Menton
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 31, 2019).
A strong earnings report from Dell Technologies Inc. is giving
shares of personal-computer makers a lift Friday, easing fears of a
slowdown in the technology sector amid heightened trade tensions
between the U.S. and China.
Shares of Dell, the No. 3 PC maker by shipments, rallied 10%
Friday after the PC maker delivered quarterly earnings that beat
analysts' estimates and a record $11.75 billion in revenue in its
PC division. That was the stock's best one-day percentage gain on
record based on data going back to August 2016, according to Dow
Jones Market Data.
Other PC makers advanced, with shares of HP Inc. climbing
1.1%.
Analysts have been monitoring how PC makers navigate tariff
issues. The simmering trade dispute between Washington and Beijing
and concerns over slowing global growth have caused some PC makers
and hardware sellers to tighten spending.
Shares of the world's top three PC makers -- China's Lenovo
Group Ltd., HP and Dell -- each shed at least 11% apiece in August
amid trade-induced volatility. The S&P 500 has slipped 1.8% in
that time span.
Although Dell is weathering some of the industry's challenges,
others haven't fared as well. HP reported flat revenue in the
latest quarter, as strong sales of desktop computers were offset by
a weaker performance in its printing business.
Meanwhile, networking-equipment giant Cisco Systems Inc.,
considered a proxy for high-tech hardware demand, forecast
weaker-than-expected growth this quarter on lower spending from
telecommunication companies and weakness in China. Cisco shares
have lost 16% this month.
"The report leads us to reaffirm our view that Dell is a nice
house in a tough neighborhood," Simon Leopold, analyst at Raymond
James, said in a research note Friday. The firm maintained its
"outperform" rating on the stock, raising its 12-month price target
to $62 from $61.
But there are signs of optimism for the industry. Global PC
shipments rose in the second quarter after two quarters of
declines. World-wide shipments totaled 63 million units for the
quarter ended in June, up 1.5% from a year earlier, according to
Gartner Inc.
Write to Jessica Menton at Jessica.Menton@wsj.com
(END) Dow Jones Newswires
August 31, 2019 02:47 ET (06:47 GMT)
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