Market Underestimates Dell Consumer Electronics
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Credit Suisse First Boston maintained an &quot;outperform&quot; rating for Dell (nasdaq: DELL - news - people ) after the company expanded its line of consumer electronics (CE) products.
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(InfoWorld) - With U.S. markets closing for Thanksgiving, Google Inc.'s skyrocketing share price andÂ Dell Inc.'s earnings report are ending the fall trading season on a high note. Both developments, which pushed the Nasdaq Composite Index to rise 11.14 points and close at 2465.98 before the Thanksgiving break, highlight positive underlying trends but are shadowed by questions about long-term profits. Google (ticker symbol: GOOG), breaking the US$500 share-price mark Tuesday and staying above the magic number until Thanksgiving, has a market value greater than any media company and all IT companies except for Microsoft Corp. and Cisco Systems Inc. Google's lead in online search helps it grab a lion's share of online advertising revenue. Earlier this month, the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers LLP (PwC) reported that companies spent about $4.2 billion on online ads in the third quarter, as the market grew for the eighth consecutive quarter. But what happens when that growth inevitably slows? Google, expected to generate $2.8 billion in profit this year, is spending enough on R&D to defend its search turf and challenge Microsoft and other software developers in a new generation of Internet-based applications. It is hiring developers at a dizzying rate, and there's no doubt its young talent is generating a wealth of ideas. Most analysts polled by Thomson First Call expect shares to go higher still. Meanwhile, analysts applauded Dell's earnings report, issued Tuesday: Research firm Bear Stearns immediately boosted its rating from "peer perform" to "outperform" while Needham & Co. upped its rating from "hold" to "buy." Shares of Dell (DELL) jumped by $2.31, to close Wednesday at $27.13 Dell said third-quarter net income was $677 million and earnings per share were $0.30. This compares with a profit of $606 million last year, and earlier expectations of $0.24 per share, according to a survey by Thomson Financial. At first blush, the earnings look great. Dell's gross profit margin increased to 17 percent from 15.5 percent in its disastrous second quarter. Following Hewlett-Packard Co.'s tremendous report last week, when it said it quadrupled quarterly profit, this suggests that manufacturers may not have to rely on deep discounts going forward. Dell pointed to strong sales of servers based on Advanced Micro Devices Inc. chips, suggesting that the hardware market is invigorated by competition with Intel Corp. But Dell is under investigation by the U.S. Securities Exchange Commission for possible accounting misstatements. It still has not submitted a confirmed, official earnings report. The quarter's figures, as well as prior-quarter numbers, may be restated. Also, while Dell may be doing well in the server market, its notebook sales are not rising as fast as the market in general, and HP notebook sales growth is outpacing Dell's. Adding insult to injury, HP has overtaken Dell in PC sales. So while the hardware market is doing better than expected earlier this year, the spoils may not be evenly divided. Â
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U.S. stock futures were little changed  on Friday, pointing to a flat market open, as news of a  disappointing sales outlook from Dell Inc. DELL.O was offset  by reports that a merger between Verizon Communications VZ.N  and MCI MCIP.O could be finalized soon.
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Since January of this year, Dell Computer has been tailoring its sales model to fit changing market dynamics. Its very successful direct sales approach is simply not the best way to get through to certain markets. China is a shining example of this, and Dell announced today that it will distribute PCs through Gome, China's largest consumer electronics retailer.
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Dell Inc.  comfortably beat analysts' estimates for quarterly earnings on Tuesday as it sold more laptops and increased sales in China and Europe, sending its shares nearly 10 percent higher.
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While earlier efforts by Dell to sell Linux-based hardware may not have been a big success, the company is heeding the advice of IT users and trying it again.
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The electronics retailer's third-quarter is impressive, but not enough for some.
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Dell Inc. (DELL.O), the world's largest PC maker, could announce an expanded selection of its consumer electronics line in the next several weeks, a retail industry analyst said on Wednesday.
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Dell has taken an aggressive pricing strategy in its competition with Apple in the music player space. Jupiter Research analyst Joe Wilcox reported in his
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Dell, the world's largest personal computer maker, Thursday posted sales just shy of Wall Street expectations as profit excluding a tax-related charge topped analysts' forecasts.
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Dell is both profitable and well regarded, thanks to its habit of delivering serviceable but unexciting products at good prices and supporting them well enough to keep buyers coming back.
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Dell Inc. on Thursday continued its push beyond the PC into consumer electronics with the introduction of a mini-version of its digital music player that will compete with Apple Computer Inc.
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With the prospect of substantial financial corrections still looming over Dell Computer, analysts late yesterday were given a preliminary fourth-quarter fiscal year 2007 earnings report, on top of a recently issued third-quarter report that still remains preliminary. Those who were able to do the math for themselves came to a daunting conclusion: Dell's not growing.
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Dell is expected to expand its line of line of consumer electronics this week, possibly taking the wraps off of a challenger to Apple Computer&#39;s iPod Mini music player.
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Look for more consumer electronics products and services from the PC behemoth. Also: SuSE Linux for Dell servers.
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Dell Inc.  on Friday warned  that second-quarter earnings and revenue would fall short of  forecasts, blaming what it called "aggressive pricing" in a  slowing market.
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Its attempt to unseat Apple&#39;s iPod is falling way short, so a spiffy new player would help this holiday season. Will Dell have one?