Neil - here's my take on that
Institutional investors will generally not hold a stock which disappoints even one time. Dell might be an exception, because it is such a marvelous company. But, despite strong numbers, they still disappointed twice and that set the institutions into sell mode.
Institutions have sold a net 44 million shares in the last three months. And that selling pressure has, I believe, smothered volatility - institutions continue to sell into any strength and, of course, other buyers appear on any weakness.
What will cause Dell to break out of the doldrums? IMO, two consecutive quarters of strong earnings out-performance (beat the consensus estimate by, say, 25%).
When will this happen? Well, after years of not commenting on analysts' estimates, Dell appears to have decided to play the game. Starting with this quarter, they appear to be guiding analysts to lower the bar, which, at least, gives Dell the opportunity to outperform estimates.
Despite this, because of hitting "account acquisition" mode (lower margins), startup costs in the consumer space and late fix for Europe management, IMO the start of earnings blowouts will not be this quarter. However, those moves should yield benefits in Q3. And likely the third quarter will be very good, and despite Y2K prognoses, IMO the 4th quarter, which ends in January and will be reported mid-Feb 2000 will also be very good.
Institutions should then return and we should see some more Dell-like performance in the stock price.
But when it comes to the future, who really knows, eh?
CL |
