Re: Dell earnings rise 27% -- stock gets hammered

On Thu, 29 Nov 2007 20:50:15 -0500, "Christopher Muto"
<muto@xxxxxxxxxxxxxxxx> wrote:

stock prices are a reflection of perceived future value. dell did little to
comfort analysts with the picture they painted of their future earnings.
also they are loosing share in the lucrative enterprise storage market which
is what prompted their acquisition of a storage company called equallogic.
in fact they acquired 5 companies this year in total and have no track
record of making mergers work. so who knows what is in store, and the stock
price reflects this feeling. selling more pcs (or laptops) that don't ear a
lot of money is relatively meaningless to their bottom line, particularly if
the cost grows at a faster rate than the gross revenue (9% revenue growth,
13% cost growth). also their profit margin is 5.3% vs 6.1% of last
quarter - compare either of those numbers to hp's 9.3 profit margin
announced less than a month ago and you can understand why people are
scared.

Thanks for the analysis -- I wasn't aware of all the changes you
mention, only the retail product mix and incentive changes and I have
seen a lot of missteps in some of those areas as far as product line
names and things like painted laptops. I am not impressed with how
Dell is executing at this time.
.