The Zacks Analyst Blog Highlights: Dell, Autodesk, Adobe Systems, Parametric Technology and Avid Technology

News provided by

May 19, 2011, 09:30 ET

CHICAGO, May 19, 2011 /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 Inc. (Nasdaq: DELL), Autodesk Inc. (Nasdaq: ADSK), Adobe Systems Inc. (Nasdaq: ADBE), Parametric Technology Corp. (Nasdaq: PMTC) and Avid Technology Inc. (Nasdaq: AVID).

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

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Wednesday's Analyst Blog:

Dell Exceeds Expectations

Dell Inc. (Nasdaq: DELL) delivered first quarter fiscal 2012 EPS of 55 cents, handily beating the Zacks Consensus Estimate of 43 cents.

Revenues

Revenues for the first quarter were $15.0 billion, up 1.0% from $14.9 billion reported in the year-ago quarter. Revenue growth was driven by an improvement in the company's Enterprise Solutions and Services.

Moreover, the company also witnessed decent growth in several key areas this quarter like the Small and Medium Business, the Asia-Pacific and Japan, and the company's Server business was particularly strong. The overall revenue remained below the company's expectation, as Dell witnessed slower growth from its Consumer business and some weak sales in the Public sector.

Revenue by Segments

Large Enterprise posted revenue of $4.5 billion, up 5.0% year over year.The improvement in revenue was led by the ongoing hardware refresh. Client revenue was up 7.0% and server growth was up 6.0%. Overall, Client hardware revenues fell 2.0% to $8.0 billion, driven by weakness in Public and Consumer.

Public revenues in the quarter were $3.8 billion, down 2.0% from the year-ago quarter. The company continues to witness budget cuts, which dampened spending on the client refresh. However, budget cuts had the opposite effect on server consolidation, virtualization and efficient IT services, which can drive structural cost reduction for customers given the financial challenges they're facing.

Small and Medium Business revenues were $3.8 billion, up 7.0% from the year-ago quarter. Revenue was at the highest levels in the last 2 years, driven by strong demand across all product lines. Server and Storage revenues were up 19.0% and 7.0% respectively, while hardware revenue from the segment grew 1.0%.

Consumer Business revenues decreased 7.0% to $3.0 billion. The company is experiencing above average seasonality due to good demand for Dell's Sandy Bridge based offerings, which are now widely available, good consumer spending and a refreshed portfolio of XPS products.

Total sales from the BRIC countries (Brazil, Russia, India and China), which accounted for 27.0% of Dell's quarterly revenue, increased strongly by approximately 18.0%.

Guidance

Dell expects mid-single digit revenue growth in its second quarter and expects fiscal 2012 revenue growth of 5% - 9% and an increase in non-GAAP operating income growth to 12%-18%.

Our Take

Dell reported decent first quarter numbers, with earnings per share (EPS) and revenues moving up from the year-ago quarter. New products, a stronger services business, opportunities in the Electronic Medical Record sector, along with the introduction of Dell Streak were the achievements for the previous year.

Earnings Preview: AutoDesk

Autodesk Inc. (Nasdaq: ADSK) is scheduled to announce its first quarter 2012 results on May 19, 2011. We do not see any major variation in analysts' estimates in the run-up to the earnings report.

Prior Quarter Recap

Autodesk reported fourth quarter 2011 earnings of 27 cents per share, in line with the Zacks Consensus Estimate. Earnings per share (EPS), including stock-based compensation but excluding one-time charges, increased 22.7% year over year, primarily driven by strong revenue growth.

Revenues increased 16.0% year over year to $528.0 million in the fourth quarter. This was above the Zacks Consensus Estimate of $515.0 million, as well as management's guided range of $500.0 million to $520.0 million. The company witnessed a rebound in demand for its software solutions in fiscal 2011.

The year-over-year growth was driven by higher license and other segment revenues.

For further details please refer to: Autodesk Matches Earnings Estimate

Current Quarter Expectations

For the first quarter of 2012, Autodesk expects revenues in the range of $510.0 million to $525.0 million. As per the Zacks Consensus, Autodesk is estimated to earn revenues of $522.0 million.

GAAP EPS is expected in the range of 21 cents to 24 cents. Non-GAAP EPS is expected in the 34 cents to 37 cents range for the quarter. The Zacks Consensus Estimate is currently pegged at 31 cents per share for the first quarter of 2012, below the guided range.

For fiscal 2012, Autodesk expects revenue to increase 10.0% year over year. Non-GAAP operating margin is expected to increase 200 basis points on a year-over-year basis. However, the company did not provide any EPS guidance for the full year. The current Zacks Consensus Estimate is pegged at $1.40 per share for fiscal 2012.

The outlook provided by the company includes the impact of two acquisitions (Scaleform Corp and Blue Ridge Numerics), which were closed during the first quarter of 2012. However, the Blue Ridge Numerics acquisition is not expected to impact first quarter results, so the guidance remains unchanged following the announcement.

Estimate Revision Trend

For the current quarter, out of the seven analysts covering the stock, only one analyst raised estimates while none moved in the opposite direction over the last thirty days.

For fiscal 2012, three analysts raised their estimates in the last thirty days, one of which was made in the last seven days. Hence, the EPS estimate inched up from $1.39 to $1.40.

The analysts believe that the company is well positioned to benefit from an improving macro environment and fundamental improvements in the business, which is evident from a recovery in new license sales that would occur in conjunction with global recovery.

The analysts also believe Autodesk is gaining market share and its presence in the emerging markets will drive top-line and bottom-line growth going forward.

Conclusion

Autodesk posted a positive average earnings surprise of 43.75% in the trailing four quarters, implying that the company either beat or was in line with the Zacks Consensus Estimate over the same period. The company is also expected to post another positive surprise in the next quarter.

In our view, the company's improvements and innovations in 3D design technology and product portfolio provides Autodesk a competitive edge. These innovations enable Autodesk to stay ahead of competitors like Adobe Systems Inc. (Nasdaq: ADBE), Parametric Technology Corp. (Nasdaq: PMTC) and Avid Technology Inc. (Nasdaq: AVID).

Over the long term, we remain optimistic on the stock and have an Outperform recommendation, given positives such as Autodesk's operating margin leverage and strong revenues, stability in its end markets, the increased demand for 3D products, expanding market share, a diversified product pipeline, cost control and strategic acquisitions. However, foreign exchange fluctuations remain a headwind.

Currently, Autodesk has a Zacks #2 Rank, which translates into a short-term (1-3 months) Buy rating.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

SOURCE Zacks Investment Research, Inc.