Overall, IBM's numbers were good but not great. However, as noted, it shows just how well its model can perform in tough economic climates. Imagine what these numbers might have been if corporate IT spending was in a full mode of recovery.

HP and Dell should take a lesson.

Bottom Line

Clearly there continues to be fundamental challenges at both HP and Dell, and none are quick fixes. Both companies must focus on finding new ways to grow their high-margin segments, which include networking and storage.

I just don't think they are putting enough resources in these areas. As a consequence, they are losing share to Cisco ( CSCO) and EMC ( EMC).

Better still, they need to try to become IBM and figure out how to reshape their businesses to strategically leverage their portfolio of offerings to include services and software. Outside of servers, they need to leave hardware alone -- this is exactly where IBM was a decade ago.

It turned out IBM made the right decision. HP and Dell must do the same.

At the time of publication, the author had a position in AAPL.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.

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