HP (NYSE:HPQ), Cisco (Nasdaq:CSCO), Dell (Nasdaq:DELL), Brocade (Nasdaq:BRCD) have all given weak guidance heading into January, according to Ticonderoga Securities, and they see less upside for the sector near term.
Ticonderoga said, "HP Upside Momentum Wanes, Brocade Provides Weak Outlook. Last night, HP reported better than expected October quarter results, but the revenue upside deteriorated compared with previous quarters, a common theme of late in the tech world. Also, Brocade reported a better than expected October quarter but a weaker than anticipated January quarter outlook. Over the past two weeks, Cisco, Dell and Brocade have provided weaker than expected January revenue outlooks, while NetApp (Nasdaq:NTAP) was in line and the upside at HP slowed.
"Upside Momentum at HP Slows. HP reported 4QFY10 revenue of $33.28 billion (up 8% Q/Q vs. up 12% average) that beat the Street estimate by -$524 million or approximately one half of the average upside delivered over the past year. Looking back at HP's revenue results during CY10, the company beat the Street sales estimate by -$1.2 billion in the January quarter, beat by -$1 billion in the April quarter and beat by -$700 million in the July quarter. Looking into 1QFY11, HP's revenue outlook calls for $32.8-$33.0 billion versus the consensus estimate of $32.7 billion.
"What Did BRCD, CSCO, DELL, HP and NTAP Tell Us? The slowing upside momentum at HP and NetApp, combined with disappointing outlooks from Cisco, Dell and Brocade tell us that the upside in the tech supply chain will become more difficult over the next few quarters. The January quarter sales outlooks for these five companies in aggregate totaled $60.47 billion, below the Street estimate of $61.94 billion by 2.4%, or $1.47 billion, highlighting deteriorating demand as we exit the year."
HP closed Tuesday at $44.19, gaining $0.94, or 2.17 percent. Cisco was at $19.20, falling $0.36, or 1.84 percent. Dell ended the session at $13.82, losing $0.14, or 1 percent. Brocade closed down at $5.13, dropping $0.57, or 10 percent. NetApp was at $50.85, falling by $1.37, or 2.62 percent.
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