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

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Sep 21, 2012, 09:30 ET

CHICAGO, Sept. 21, 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 Inc. (Nasdaq:DELL), Hewlett-Packard Co. (NYSE:HPQ), Microsoft Corp. (Nasdaq:MSFT), Intel Corp. (Nasdaq:INTC) and Lennar Corporation (NYSE:LEN).

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Here are highlights from Thursday's Analyst Blog:

Dell Joins the Windows-8 League

The announcement of Dell Inc.'s (Nasdaq:DELL) new range of PCs came as no surprise since archrival Hewlett-Packard Co. (NYSE:HPQ) unveiled a series of PC models earlier this month. The world's third largest PC-maker followed H-P's footprints and is all set to enhance consumer experience with three new PCs (an enterprise-class Ultrabook, a touch-optimized tablet and an All-in-One PC) in the coming month. However, pricing details have not yet been disclosed.

All the three models, targeting different user segments, will run on the yet-to-be-released Windows 8 operating system from Microsoft Corp. (Nasdaq:MSFT).

Dell's 14-inch Ultrabook, Latitude 6430u is much lighter and thinner than the XPS series of Ultrabooks. The laptop mainly targets the defense sector with its extreme resilience. It is perfectly suitable for use in harsh environments such as war. As promised by Intel Corp. (Nasdaq:INTC), battery life of this Ultrabook too allows the user remain productive throughout the day on a single charge.

Dell asserts that its Latitude 10 tablet is fit to serve the needs of enterprises across all industrial sectors. The model is loaded with added security features which allow utmost data protection and encryption. The tablet also flaunts features such as fingerprint reader and smart card reader to foster user authentication.

Last, but not the least, Dell's OptiPlex 9010 All-in-One comes with a flexible stand, multi-touch screen and an adjustable camera.

As offerings from H-P have already been announced and are expected to release by the coming month, the technology sector is going to see another round of competition to regain market share. According to industry experts, customers have withheld purchases ahead of the Win 8 launch and hence believe that the launch could charge up the gloomy PC market. However, it will be hard to predict any clear winner as all the key players appear to be playing their cards right.

The ongoing uncertainty in the PC market has led H-P and Dell to shift their focus toward the high-margin enterprise solutions market. Concurrent with the three new PCs, Dell introduced the PowerEdge C8000 series of servers to support high-performance computing and big data applications. The servers will facilitate space saving, reduce costs by saving energy and improve data center performance at a high temperature.

Despite its upcoming product momentum, we prefer to be on the sidelines on overall PC market health, declining fundamentals and a high debt burden.

Currently, Dell has a Zacks #4 Rank, implying a short-term Sell rating, while H-P has a Zacks #3 Rank, implying a short-term Hold rating.

Earnings Preview: Lennar Corp.

Lennar Corporation (NYSE:LEN), one of the leading homebuilding companies in the U.S., is set to unveil its third quarter fiscal 2012 results on September 24, 2012, before the market opens. The Zacks Consensus Estimate for third quarter is currently earnings of 27 cents on revenues of $1.03 billion.

Second Quarter 2012 Recap

Lennar Corporation's adjusted earnings of 21 cents per share in the second quarter of 2012 beat the year-ago quarter earnings by 14 cents on the back of solid new order growth. Earnings also beat the Zacks Consensus Estimate by 5 cents.

Total revenue in the quarter grew 22% year over year to $930.2 million on the back of pricing and volume gains. Revenue, however, lagged the Zacks Consensus Estimate of $946 million.

Agreement of Estimate Revisions

Of the 15 estimates for Lennar's third quarter 2012 earnings, only 1 moved in the upward direction over the last 7 and 30 days.

For the full year 2012, only 1 out of the 14 estimates moved up over the last 7 and 30 days.

The upward movements of the estimates were prompted by higher closings and orders in the months of June, July and August 2012.

Magnitude of Estimate Revisions

The Zacks Consensus Estimate for the third quarter of fiscal 2012 remained static at 27 cents over the last 7 days. However, over the last 30 days, the estimate for the third quarter declined by a penny from 28 cents.

The Zacks Consensus Estimate for fiscal 2012 rose by a penny to $2.82 per share in the last 7 days. However, the estimate has declined by 2 cents from $2.84 in the last 30 days.

Surprise History

Lennar Corporation surpassed the Zacks Consensus Estimate in the last two quarters. However, the company's results lagged the Zacks Consensus Estimate by a penny in the fourth quarter of fiscal 2011. The company's results were in line with the Zacks Consensus Estimate in the third quarter of fiscal 2011. The average earnings surprise was 27.8% in the trailing four quarters.

Our Recommendation

Lennar Corporation's stock carries a Zacks #1 Rank (a short-term 'Strong Buy' rating).

We believe that the company is performing better than its peers by increasing sales prices, reducing incentives, improving volumes and investing in well positioned high margin communities.

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