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Street Talk: PC pain
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January 3, 2001: 9:51 a.m. ET
Analysts gloomy about Intel, Dell; optimistic about Akamai, Check Point
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NEW YORK (CNNfn) - Wall Street analysts gave mixed reviews to technology stocks Wednesday -- cutting price targets and earnings estimates for big personal computer industry names such as Intel and Dell Computer, but praising smaller software makers such as Akamai Technologies, Check Point Software and Comverse Technology.
Lehman Brothers cut its price target and earnings estimates for technology bellwethers Intel (INTC: Research, Estimates) and Dell Computer (DELL: Research, Estimates), saying personal computer (PC) demand is even worse than the industry expected.
"We believe PC demand in the last two weeks of December was terrible, leading to lower expectations for 2001," Lehman analyst Daniel Niles wrote in a research report.
Niles said PC-industry weakness in Europe and North America should get worse as Fortune 500 companies tighten their information technology budgets and weakness in Asian economies continues.
Niles said he expected 2001 PC sales growth will be 3 to 5 percent below the current 10 percent forecast.
"It seems as though more aggressive pricing is not spurring much of an increase in demand, resulting in a trade-off between profitability and revenue growth," Niles wrote.
Lehman cut its 2001 earnings-per-share estimate for Intel, the world's largest chipmaker, to $1.30 from $1.40. It cut its price target on Intel shares to $40 from $55.
Lehman cut its fiscal 2001 earnings estimate for computer maker Dell to $1 a share from $1.10.
Credit Suisse First Boston also reiterated its "hold" rating on another big computer maker, Apple Computer (AAPL: Research, Estimates).
Akamai, Check Point Software
CSFB analyst Todd Raker started coverage of Akamai Technologies (AKAM: Research, Estimates) with a "buy" rating.
In a report, he set a 12-month price target of $35 for shares of Akamai, which speeds delivery of content over the Internet.
"We believe Akamai's business model presents a high return on capital opportunity, with multiple services that leverage a relatively fixed server investment," Raker wrote.
Akamai shares closed Tuesday at $19.75.
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Raker also inititated coverage of Israeli Internet security firm Check Point Software Technologies (CHKP: Research, Estimates), giving it a "buy" rating.
"Our models suggest a $175 price for (Check Point) shares," Raker wrote in a research note.
Check Point's "dominant market position within network security and high value-added business model suggest superior long-term financial performance," Raker wrote.
Check Point shares closed Tuesday at $110.50.
Comverse Technology
CSFB also said the fall in shares of Israeli software company Comverse Technology (CMVT: Research, Estimates) represents a buying opportunity.
CSFB said selling in Comverse's shares was sparked by an earnings warning by Israel's NICE Systems (NICE: Research, Estimates) and rumors of inventory problems due to a sales slowdown. But CSFB said it had spoken to the company and said it believed there was "little validity in either of these concerns."
CSFB said the company has not seen any slowdown in orders for its products. CSFB also said it remains comfortable with its revenue estimates of $329.9 million and earnings of 40 cents a share for the current quarter.
Lehman Brothers reiterated its "buy" rating and $140 price target on Comverse shares.
Comverse shares closed Tuesday at $91.06. They have traded at a 52-week high of $123.88 and a 52-week low of $61.81.
Efficient Networks
Deutsche Banc Alex. Brown downgraded Efficient Networks (EFNT: Research, Estimates) to "buy" from "strong buy" a day after the broadband access company said it expected fiscal second-quarter revenue to be in the range of $100 million-$102 million, below earlier expectations, due to a lack of expected orders.
"The missed... quarter again raises the ongoing question of DSL market health," Deutsche Banc wrote in a research note. DSL, or digital subscriber lines, provide high-speed data transmission over conventional telephone lines.
Deutsche Banc also cut its 2001 earnings estimate for Efficient Networks to 10 cents a share from 80 cents.
UBS Warburg more drastically changed its 2001 results estimate for Efficient Networks, saying it now expects a 28-cent-per-share loss instead of the 75 cent-per-share earnings it previously expected. It also cut its 2002 earnings estimate to 72 cents a share from $2.04 and its 2003 estimate to $2.68 from $4.20.
Southwest Airlines
Merrill Lynch cut its intermediate-term rating on Southwest Airlines (LUV: Research, Estimates) to "accumulate" from "buy," saying it thought the airline's share-price performance would be more "modest" in 2001 than in 2000.
But, Merrill wrote in a research note, "The Southwest business model continues to thrive: low-cost, low fare, high growth and very profitable." For this reason, Merrill kept its long-term "buy" rating on the airline, calling it a "high-quality company."
Merrill also set a 12-month price target on Southwest shares of $39.
Beckman Coulter
ABN Amro raised its 12-month price target for shares of scientific instrument maker Beckman Coulter (BEC: Research, Estimates) to $50 from $40.
 ABN Amro said in a research report that it expects fourth-quarter diagnostic instrument sales across the industry will be stronger than a year ago. It said it believes Beckman Coulter will be able to capitalize on the growth trend and report better-than-expected fourth-quarter earnings.
It also said that it expects Beckman Coulter to post 2002 earnings of $2.54 a share.
Beckman Coulter's shares closed Tuesday at $41.81. They have traded at a 52-week high of $42.44 and a 52-week low of $22.75.
In brief
Goldman Sachs raised its 2000 earnings estimate for aerospace firm Boeing (BA: Research, Estimates) to $2.80 a share from $2.75.
Prudential Securities cut oil companies BP Amoco (BP: Research, Estimates) and Chevron (CHV: Research, Estimates) to "hold" from "accumulate."
Merrill Lynch cut its intermediate-term rating on brewer Adolph Coors (RKY: Research, Estimates) to "accumulate" from "buy," saying in a research note, "The fundamental outlook (for Coors) appears less favorable than in recent years, as input costs continue to rise and volumes appear to be slowing."
Credit Suisse First Boston cut Tumbleweed Communications (TMWD: Research, Estimates) to "hold" from "strong buy" after the provider of secure Internet e-mail services said it plans to cut jobs and its fourth-quarter 2000 losses would be more than double those in the fourth quarter of 1999.
-- compiled by Mark Gongloff from staff and wire reports 
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