RealMoney Radio: Dell Doldrums

Cramer says the PC maker's price cuts aren't gaining the company a thing.
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"One thing that you'll find everywhere is a personal computer ... and if you look further, you'll find that most PCs are made by

Dell

(DELL) - Get Report

," Jim Cramer told his

"RealMoney" radio show listeners Tuesday.

Intuitively, it seems like Dell is the stock to be in, but the book report on the stock says something very different, said Cramer.

The company is to report earnings next week, but it just warned that it will fall short of expectations. "Companies that exceed expectations go higher, the ones that meet expectations do nothing, and those that fail to meet expectations get hammered," he said.

Why? Because the companies themselves create their earnings expectations, and if they can't meet what they promised, we can't trust the company, he said.

According to Cramer, Dell is the premier personal computer company, but it has had to cut prices amid a largely saturated market. These continued price cuts "are not buying them anything," he said, meaning that the company isn't seeing more sales. Moreover, he said the cuts are eating into Dell's profit margins.

He said that Dell's legacy of using

Intel

(INTC) - Get Report

chips is also weighing on the PC maker, because Intel's product is not as good or as inexpensive as chips made by

Advanced Micro Devices

(AMD) - Get Report

.

Plus,

Hewlett-Packard

(HPQ) - Get Report

is seeing growth because it is offering better, faster processors, Cramer added, so the company can compete with Dell in terms of price and quality.

He said that an overall trend in tech is also hurting Dell. While notebooks are still selling, a lot of people like to use handhelds, making devices like Treos the new notebooks.

There was a time when Cramer would have said that investors need to be in a computer or tech company, and he admitted that he owns some of these stocks for his charitable trust

Action Alerts PLUS.

He said that these stocks are not performing well for his portfolio because this segment of tech is not paying off. Companies like Dell are involved in brutal price-cutting, and it's not leading to more share, sales or profits, he said.

If you feel you must own a tech name, he said to take a look at AMD, which is "taking a huge amount of business from Intel. "Intel is not worth owning," he said.

To see the most recent edition of The RealMoney Radio Recap in its entirety, please click here. This recap is published every day around 3 p.m. ET.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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