Okay, let's take it from the top:
Jubal says Dell was down not because of problems at the company but high valuation.
I think he misstates the problem. It was clear a few weeks ago that Dell had become a Momo "investor's" plaything. These guys don't value companies. They play the greater fool game. I warned people many time on the thread about that, but it is so much fun when you see your stock streaking skyward. And it's not so much fun getting a margin call. And it's less fun when you are not diversified and have all your eggs in one basket.
Valuation is still quite hefty for Dell. I think that it is just the momentum guys who have gone seeking greener (or is it redder) pastures.
Nobody can foretell the future. Not even pussycats. Beware of those predciting prices. They are charlatans.
Then he says that revenues of $5.17 is "well short" of the expected $5.5 billion. Is that difference considered very large? Yes, but it doesn't portend anything particularly negative for the future. I fact, we are hearing from management that the pipeline looks quite good.
Then he says that the 8% growth is much lower than the 22% that other PC makers saw but isnt that an unreasonable comparison since DELL was not in (and did not want to be in) the sub-$1000 pcs? The reason that other box makers get such a big Q4 jump is because of their emphasis in retail (consumer) sales. Dell's emphasis is corporate sales, which, while seasonal, is not nearly as seasonal as the retailers. So those kinds of comparisons are specious. Dell saw y/y Q4 growth of 38%. No other computer manufacturer can claim those kinds of numbers. Focusing on sequential sales is a big mistake.
And does DELL really have to cut prices to stop from losing out to competitors?
Yes. The business is competitive, and the cost of the machine is very important. But Dell has a big cost advantage that is derived from two factors: first its BTO model precludes costs associated with high levels of inventory (like being stuck with obsolete inventory, inventory handling costs, and inability to take advantage of declining component prices); second, reliance on the web for sales and selling direct eliminates huge costs associated with sales and distribution.
Finally, Jubak isn't much of a thinker. His "analysis" is generally superficial. I am being kind to him.
Hope this helps,
TTFN,
CTC |
