Dell (DELL)

[HenryTo]

Not sure if anyone has been keeping track of Dell (a Motley Fool Inside Value Pick) recently but it just made another 52-week low yesterday on the heels of a downgrade:

http://stockcharts.com/gallery/?dell

Price targets all across many investment discussion boards are being blown to pieces as the stock continues its slide.

The latest downdraft is being attributed to:

1) Rumors of slowing notebook sales in Asia - as reported by Digitimes (which interestingly, hasn't been too reliable a source in the past;

2) However, this "rumor" is somewhat being confirmed by the latest dismal earnings report that came out of INTC. And since Dell only uses Intel microprocessors. the next earnings report from Dell shouldn't be so good either;

3) On Thursday morning, both the Gartner Group and IDC released their 1Q estimates for 2006 PC sales, and it wasn't too pretty for Dell. Quoting Morningstar: "... both firms reported a slide in Dell's overall global market share. IDC's "Worldwide Quarterly PC Tracker" gauged Dell's global market share at 18.1% in the first calendar quarter of 2006, down from 19% a year ago. This slide occurred in a surprisingly strong first quarter for the PC market; global PC shipments grew over 13% year over year, well ahead of expectations."

Still watching at the moment... Any comments or inputs from our fellow individual stock investors?

[rffrydr]

Still watching? trying for a bottom today.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Behind that ticker is a revolution. Dell made the PC go boom and that's what the bubble was all about. If not Dell then which? IBM? Maybe BOOM.

[nodoodahs]

[rffrydr]

Dell, the eponymous ticker...

Well, I'll say more as more is said but generally my objections to Dell begin where your (excellent, as usual) analysis leaves off. Why can't can't Dell be like Coke (and we, like Warren Buffet in the 80's)?

For my part, this couldn't be a worse comparison because for me CULTURE comes first. For Dell this is both the culture of Wall Street and wellspring of all future growth, beguiling Asia.

Dell will fail in asia for exactly the reasons Coke succeeded: culture. Coke is the great brand names of brand names, as we've discussed and this extends to Asia. Like Marlboro and Sunkist, these cultural products may not be a part of everyday consumption but they are "consumable." Foreign markets like to be SEEN consuming them for all the things they represent--thus they are good. These include american values, apart from its politics, of free-thinking, quality across quantity, neat, sweet and, above all, cool. Now, quick, think computers.

The PC in asia is the ultimate commodity. Really the basis of its growth and use was more like a tv set. You had to have a computer to watch your pirated dvd/cd. There's that word, "pirate." This stuff is a necessity and as such it is necessarily cheap. You'll see the cheapest piece-of-crap PC sitting in every office because it is only a tool--one that doesn't make money, and can be such an inhibition to making money. As such there is no concept of "premium" over what a tv is and does. Nor does the fact that their own peasant farmers subsidize their income assembling these modern-day wonders in their own homes help with the "wow" factor americans are so willing to gobble up when it comes to these things.

Dell has a "relationship" with business. It comes into school districts and small institutions and gives them the IBM treatment at a fraction of the cost. China doesn't want the IBM treatment. China's Lenovo bought IBM's PC business.

Then there's the Wall Street Culture. Dell is yesterday's bubble. End of story. It's too close in time. It may be relatively cheap but it's prospects for big returns are nil. So, it'll trade like WalMart and the PC will come down to the tv--while the tv climbs up to the PC. Samsung--but that's another story.

Y'know, we're a lazy bunch, Henry. This, of course is excepting Nodoodahs. If we did half the work you do on just one of your commentaries it wouldn't be "easy money" then, would it?
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Stock down another 2% today to another new three-year low.

Still watching, and watching, and watching...

[Goodfella]

Bought a dell 8 months ago, it wouldnt boot up properly. 2 times i sent it back to them,motherboard replaced twice, wasnt fixed. then a freelance dell guy came to my house to fix it, replaced the memory. still wasnt fixed. five months ago got a brand new laptop out of them - few weeks later they profit warned reasoning laptop repairs hitting them

[rffrydr]

All the girls love my Sony notebook with the vegas style sreensaver beat. And Frys does more for less with rolling their own in store. We're going high and low, away from the "middle" away from Dell. "Reinvent"? That model IS Dell. They'll be around, around in a very big way, like WalMart. And they're stock will trade like WalMarts. Everyone knows and everyone forgets.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Three questions/concerns:

1) Has Dell finally squeezed every ounce of use from their direct sales business model? Also, after laptops become a commodity, what is going to be Dell's profit driver? Can Dell continue to reinvent itself?

2) Are other competitors finally catching up in terms efficiently pricing, assembling, and shipping their products?

3) Are Dell going to start offering better customer service? How about recent reliability issues? Otherwise, my next laptop definitely won't be a Dell.

Seems like Dell won't be a good buy until the Motley Fool's subscribers capitulate or after Morningstar has revised down their "fair value estimate." Again, we will re-evaluate when we get there.

[rffrydr]

Lenovo--and the Ipod: "less is more."
_________________
Today is the Tomorrow you worried about Yesterday!