This Day On The Street
Continue to site
ADVERTISEMENT
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 Vulnerable Stock

NEW YORK ( TheStreet) -- Dell Inc. (DELL) posted one of last week's biggest earnings disappointments, as earnings for its fiscal first quarter ended May 31 fell 79% and revenue fell 2%.

Most of the attention is on the company's PC division, where sales fell by 9% to $8.9 billion as laptop sales dropped by a lot. Operating profits in the segment fell 65% to $224 million,

On the positive side, sales in network gear and servers rose 14%, and services revenue rose by 2%.

Dell is cutting prices to try to gain market share and is spending more on research and development and in hiring. It is also building its corporate software business to try to boost profits in its PC division. But its strategy is being hampered by a broader slowdown in the PC market.

The latest quarterly results come at a time when Chief Executive Michael Dell is trying to take the company private. His plan is facing resistance from two of the company's biggest shareholders, Southeastern Asset Management and Carl Icahn, who believes that Michael Dell is undervaluing the company.

Dell is trying to boost its software business and move into mobile devices as the PC market weakens. The latest indication of that trend is the poor reception of Microsoft's (MSFT - Get Report) Windows 8 operating system.

Microsoft's offering was meant to bring buyers back into the PC market. But critics say that Windows 8 is better-suited for tablets and touchscreen devices.

According to research firm International Data Corporation, PC sales dropped 14% to 76.3 million units in the first quarter, the biggest decline since IDC began to track those numbers in 1994.

With sales in traditional PCs shrinking, earnings prospects for the largest PC makers will likely remain sluggish until new innovations gain traction.

Conversely, tablet sales are through the roof. According to research firm Gartner, tablet sales will more than double from 116 million last year to 265 million next year. By 2017, the number of units sold is expected to reach 468 million annually.
1 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
DELL $0.00 0.00%
MSFT $43.93 0.00%
AAPL $113.29 0.00%
FB $91.01 0.00%
GOOG $630.38 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs