Dell Getting Fit for Print
Dell (DELL) shares showed signs of life Thursday, a day after company executives touted progress in the printer market, a relatively recent but significant product push for the world's largest computer company.
Dell has garnered strong sales momentum, but it continues to operate without profit. Dell executives are content to keep growing the business at or near break-even, as they count on subsequent sales of ink and toner to boost profit.
But the selling of ink and toner -- the printer consumables market -- is no less competitive and carries with it its own risks and hazards.
Dell is trying to bring its operational efficiencies to bear on markets beyond the PC, where its supply chain and direct-sales approach provides it with cost advantages over its competitors. Dell has expanded into TVs, digital-music players and data storage, but its most significant new frontier is in printers.Dell entered the market just over two years ago, and it has quickly carved out a double-digit market share for itself, thanks to an aggressive pricing strategy that came at the expense of other long-time printer companies like Hewlett-Packard (HPQ), Xerox (XRX) and Seiko-Epson. (Another printing heavyweight, Lexmark (LXK), is a Dell competitor, but Dell is also its largest customer). Most players in the printing business bank on ink and toner to buoy performance, which would sag if it depended only on discounted sales of printers, so price sensitivity to these consumables is a major concern. Dell offers initial deals on consumables when a printer is purchased, and also offers a real-time monitoring program that will alert the user when supplies are getting low and then directs them to Dell's Web site. The program is designed to get customers hooked early on the convenience of Dell's replenishment service, but it carries risks.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV