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Dell soils itself

Monday, May 08, 2006 | 04:19 PM

in Psychology/Sentiment | Technology | Trading

The top performing stock of the 1990s continues to struggle. Dell Computer announced both earnings and revenue will be below prior forecasts.

Earnings for the quarter have been cut to 33 cents, down from previous forecast of 36 to 38 cents a share. Revenue for the quarter is now expected to be ~$14.2 billion, the low point of previous estimates of $14.2 billion to $14.6 billion.

We previously highlighted the ongoing decline of the formerly vaunted and rightly famous Dell customer service, which now aspires to be merely average or worse.

Apple passed Dell in market cap back in January 06, and they have jostled back and force for cap leadership since then. Once Dell reopens, I would expect to see Apple leap into the lead by a wide margin over Dell cap wise, for the foreseeable future (or until Apple lowers guidance).

Dell halted after the close, $26.43 last . . .

UPDATE: May 8, 2006 4:32pm

Dell Inc. shares re-opened down 4.7% at $25.20, and fell as low as 24.81 in after-hours trading...Ouch.

UPDATE 2: May 9, 2006 6:22am

This chart is a pretty convincing argument why investors should not fight a major trend:

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Comments

Why would APPL lower guidance? Don't get me wrong, I was sick when I couldn't go long apple years ago and think Apple is priced into . That said what about their business model or costs expose them to anything except general trends? Perhaps you have one or two examples of people abandoning OS Server for MS Small Business Server? Perhaps you wish to ignore the thousands in the other direction? Oh, iTunes is crumbling? QuickTime? Perhaps the scion of Apple being annointed Disney heir? No, Apple has walked a tightrope for decades.

BR replies: I have no reason to believe Apple will or wont. I was merely cracking wise.

"For the foreseeable future or until Apple lowers guidance" means I have no clue what's gonna happen with Apple. And I've been out of the stock since just under $40 (from $7.40) . . .

Posted by: Robert Cote | May 8, 2006 4:55:54 PM

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