This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dell's Sky Darkens

All of these factors contributed to a ripple effect through the stock market, as the Nasdaq gave back its four-week gain. Intel, Dell's sole supplier of chips, dropped 2% to $26.26. Applied Materials (AMAT - Get Report), the largest maker of chip manufacturing tools, shed 1.6% to $17.50. The other box makers, like Hewlett-Packard (HPQ - Get Report), Apple (AAPL - Get Report) and Gateway (GTW) each dropped, but only nominally.

"PC demand is likely softening," said analyst Chris Whitmore of Deutsche Bank in a Friday morning note. His firm has received noninvestment banking revenue from Intel in the past year.

This isn't the first time such an opinion was expressed. Industry researchers cautioned a month ago that the strong demand for PCs earlier this year wouldn't likely continue through the end of the year. Also, speculation about another inventory build in semiconductors was rekindled this week.

Elsewhere on Wall Street, some analysts were willing to overlook the revenue miss, taking a big-picture view.

Needham analyst Charlie Wolf noted that a 2% revenue miss was met by an incommensurate 8% drop in the stock. "The market's focus on quarterly results has become an obsession," he wrote to clients on Friday. Wolf has a financial interest in Dell securities.

"With its competitively superior direct distribution model, Dell continues to gain share in all of its markets and to grow revenues and earnings at mid-teen's rates, which is by far the fastest in the computer hardware industry."

The opposing views of Whitmore and Wolf are indicative of the bifurcation among analysts regarding the significance of Dell's second-quarter results.

These split opinions simply serve to highlight the ongoing crosscurrents for investors. From record oil prices and climbing interest rates to uncertainty regarding technology spending later this year, investors are stuck wondering where their money is headed.

More details will likely emerge Tuesday when Hewlett-Packard reports its financial results. Investors have run tech stocks higher in the past three months on hopes of better things to come, but Friday served as a wake-up call that nothing is guaranteed, even for the bluest of the blue chips.

Despite its renown for a hyper-efficient supply chain and direct-sales customer insight, Dell misplayed the second quarter due to mistakenly interpreting those customer insights. Its investors responded by completely erasing the stock's rally in the past three months in one day of trading.

These are tough times, indeed.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
AAPL $94.02 0.00%
AMAT $16.81 0.00%
HPQ $9.91 0.00%
INTC $29.04 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs