The Zacks Analyst Blog Highlights: Dell, Hewlett-Packard, Microsoft, Intel and IBM

The Zacks Analyst Blog Highlights: Dell, Hewlett-Packard, Microsoft, Intel and
                                     IBM

PR Newswire

CHICAGO, Nov. 19, 2012

CHICAGO, Nov. 19, 2012 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Dell (Nasdaq:DELL),
Hewlett-Packard (NYSE:HPQ), Microsoft (Nasdaq:MSFT), Intel (Nasdaq:INTC) and
IBM (NYSE:IBM).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

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Here are highlights from Friday's Analyst Blog:

Just As Telling As the Fiscal Cliff

The 'Fiscal Cliff' debate is all the rage at present as negotiations between
Congress and the White House get underway. But the two sides remain poles
apart, notwithstanding their conciliatory postures and a resolution, even a
temporary one, may not emerge for quite some time. Importantly, the odds of
going over the 'cliff' are non-trivial, which means that we shouldn't expect
this issue to go away anytime soon.

'Fiscal Cliff' aside, we get the October Industrial Production report a little
later, with expectations of a moderation in the growth pace from last month's
level. Given the soft international backdrop, any level of positive growth in
the industry sector is welcome. But one has to be wary of the sustainability,
if not the prospect for improvement, of this trend given how much
international demand has been behind sector's momentum.

The monthly ISM survey, which is basically a sentiment indicator, appears to
have started improving after showing persistent weakness in the summer months,
assuming Thursday's weakness in the Philly Fed and Empire State readings were
Sandy-related. But the monthly Durable Goods orders, which reflect actual
ground reality, has been far less inspiring.

Recent data on China's factory sector show signs of life, but the picture in
Europe, Japan and elsewhere remains downbeat. This goes on to show that while
the Fiscal Cliff uncertainty is a big deal in the near term, it is hardly the
only issue on the horizon.

Dell's (Nasdaq:DELL) travails, as reflected in its quarterly earnings report
after the close on Thursday, is due mostly to the secular shift in demand for
desktops and laptops due to the popularity of tablets. Hewlett-Packard
(NYSE:HPQ) is essentially in the same boat as well. That said, it would not be
correct to put the entire blame on this phenomenon and not acknowledge the
subdued corporate capital spending picture that has repeatedly come out from
the earnings reports of such bellwethers as Microsoft (Nasdaq:MSFT), Intel
(Nasdaq:INTC) and IBM (NYSE:IBM).

The Tech sector's third quarter earnings performance clearly tells this story.
Total third quarter earnings in the Tech sector are down 7.9% from the same
period last year, while revenues in the sector are down 9.1%. Only 60% of the
sector's companies have beat earnings expectations, which is weaker than the
aggregate average for the S&P 500 as a whole (the 'beat ratio' for the index
is 62.6%, as of this morning). Given the Tech sector's status as the largest
earnings contributor to the S&P 500 and its profile as the perennial growth
driver, this state of affairs raises doubts the current quarter and beyond.

There isn't much to write home about the earnings picture beyond the Tech
sector, either. As of this morning, we have third quarter earnings reports
from 476 companies in the S&P 500, or 95.2% of the index's total membership.
Total earnings for these 476 companies are down 4.7% from the same period last
year, with 62.6% of the companies beating earnings expectations.

The growth rate looks even weaker when Finance is excluded from the aggregate
numbers. Excluding Finance, total third quarter earnings are down 9.8%. 
Estimates for the fourth quarter have come down by more than half since the
start of the third quarter reporting season, but full-year expectations for
2013 still remain elevated and likely need to come down.

What this means is that while the Fiscal Cliff debate is dominating everything
else at present, it is by no means the only issue that we need to be concerned
about.

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