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Dell shares drop
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October 19, 1999: 10:51 a.m. ET
Stock under pressure after earnings warning from No. 2 PC maker
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NEW YORK (CNNfn) - Shares of Dell Computer Corp. fell sharply Tuesday morning after the PC maker warned that an increase in memory chip prices will put its fiscal third-quarter earnings under pressure.
Shortly before 11 a.m. ET, Dell (DELL) shares fell 3-3/8 to 37-15/16.
In a brief statement issued after the markets closed Monday, Dell said the impact of an unexpected increase in computer memory chip prices -- as high as 25 percent -- "would be felt on third-quarter operating margins."
Click here to listen to a replay of Dell's Monday conference call
The company declined to provide specific earnings or revenue forecasts. Analysts polled by First Call expected Dell to earn 20 cents a share in the quarter, which ends Oct. 31.
Credit Suisse First Boston, however, trimmed its third-quarter earnings estimates to 17 cents a share from 20 cents, and its fourth-quarter forecast to 21 cents a share from 22 cents.
Bear Stearns cut its rating on Dell's stock to "attractive" from "buy."
Computer memory prices have been on the rise in the wake of last month's Taiwan earthquake, which knocked the region's chip foundries out of commission for about two weeks.
Dell's woes, and the lingering effects of the Taiwan earthquake, dragged down the rest of the PC sector Tuesday morning. Compaq Computer Corp. (CPQ) slipped 9/16 to 19-7/8; Gateway Inc. (GTW) fell 3-1/2 to 48; and Dow component Hewlett-Packard Co. (HWP) lost 3-3/4 to 74-1/2.
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