MB:
A little assistance on proper thread etiquette if you please. Is it better to do a catch-up read from where one left off, responding to queries on the run, or work backward from the last post? There are problems in both directions. (g)
A couple of comments on Dell for what they are worth.
MB reviewed the numbers and there's little to add on that score.
Dell's numbers were roughly as expected by the bears, but an arrow in the gut for the bulls. They took it hard. 25% off a darling stock in a week has left both financial and psychological damage that goes well beyond Dell's borders. IMHO, Dell has put the first dose of poison down the PC well. Put another way, I suspect that we will not get the normal insane dipper bounce, or at least not a strong bounce.
No one has noticed, (fortunately) but the price-to book is STILL in that magical 50 range. I love this situation.
The pros are selling to the public. Strong hands to weak hands. For bears, this is good news. Expect the "reiterated buys" but watch the trading.
Dell destroyed the magic last night. The words that did it were "single digit sequential revenue growth" WOW! Now of course this is exactly what we bears think, but for the the leaders of the "growth engine" to say it is a death sentence. I personally think even that will be tough to attain, but what I think doesn't matter,...they SAID it.
Dell has massive problems that have been discussed on this thread, but that have not been well understood by the public:
- In spite of their advertising, Dell is expensive. Many of us have been saying for many months that the best way to buy a PC is to price with Dell and then buy at the local cloner. The exact same box will cost hundreds of dollars less, and will be locally serviced. I've never understood how or why Dell has been so successful with what is essentially a "catalogue approach", especially with an item that usually does require some service from time to time, but they are great marketers, and it has worked so far. It doesn't work unless the price is right.
- Dell has no penetration, or even presence in the dynamic bottom end. As noted earlier, this is where the action is. Michael "intends to address it shortly". Too late.
- Dell's niche is now getting crowded which means one thing,....more pricing pressure.
- Dell sells primarily to business and government. They are on a buying holiday.
All of this said, in the near term, it will likely make much sense to re-saddle this horse for another ride. The dippers are "eating" a ton of stock now, and have not been able to acquire momentum. It may make sense to do this in the VERY near term.
Best, Earlie |
