UPDATE 1-Goldman Sachs removes Dell from Americas buy list

viernes 4 de abril de 2008 14:25 CEST

(Changes source; adds analyst's comments, background and share movement)

April 4 (Reuters) - Dell Inc's DELL.O moves to reverse share losses and margin deterioration will likely take longer than expected to improve the firm's financial results, said Goldman Sachs, which removed the world's second-largest personal computer maker from its Americas buy list.

"With visible progress in Dell's turnaround unlikely until later this year (at the earliest) and the macro environment making its transformation more difficult to execute, we think there are better opportunities in hardware - specifically Hewlett-Packard Co (HPQ.N: Cotización)," analyst David Bailey said.

On Thursday, Dell said it plans to cut more jobs than the 8,800 it had targeted as it seeks to reduce expenses by at least $3 billion annually by 2011.

The $3 billion in cost savings at Dell is likely to be partly offset by the company's spending needs, which in turn is expected to reduce the ultimate bottom-line benefit of Dell's cost-cutting initiatives, Bailey said.

"If Dell were to realize the entire $3 billion, it would add a little over $1 to full-year earnings-per-share, but we expect that the benefit will be much smaller given Dell's current competitive positioning," Bailey said.

The analyst, who rates the stock "neutral," cut his price target to $23 from $25, citing increased risks associated with the firm's turnaround.

However, Dell may be an attractive investment as its turnaround begins to gain more traction, Bailey added.

Shares of the Round Rock, Texas-based company were trading down 12 cents at $20 in trading before the bell, after closing at $20.12 Thursday on Nasdaq. (Reporting by Tenzin Pema in Bangalore; Editing by Amitha Rajan)