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HenryTo
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 Posted: Sat Apr 22, 2006 8:48 am Post subject: Dell (DELL) |
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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?  |
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HenryTo
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| Posted: Wed Feb 22, 2012 12:23 pm Post subject: |
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Morningstar on Dell's 4Q earnings.
| Quote: | | Dell's fiscal 2012 fourth quarter was marked by sagging margins and a cautious outlook for fiscal 2013. The results were in line with our expectations, and we do not anticipate adjusting our fair value estimate. However, the latest results do raise questions about the source of Dell's recent operational improvements. Total revenue for the quarter was $16 billion, up 2.2% year over year. The services segment was the key driver of growth, with revenue up 12%. The bulk of the services increase was tied to strength with commercial customers in Europe and Asia. In contrast, the breakup with EMC continued to weigh on storage revenue (down 13% year over year), though Dell-owned storage revenue was up 33% during the same period. Dell also cited its efforts to trim unattractive business from the software and peripheral segment as a challenge to top-line growth. Despite these margin-accretive activities, gross margins still reverted to year-ago levels of 21.1%, down more than 150 basis points from the average delivered during the first three quarters of fiscal 2012. Dell pointed to the shortage of hard disk drives as the key issue during the quarter. However, its margin performance suggests that much of the firm's recent operational improvements were due to temporary tailwinds on PC components versus a sustainable transition to higher-margin enterprise solutions. Hard drive shortages appear to have created an unfavorable mix shift by limiting the high-end PCs that could be sold. However, we view PCs as increasingly commoditylike solutions across the portfolio. This suggests that favorable inputs and other margin-accretive forces for PCs are fleeting. Dell has made great strides in transitioning more of its business to enterprise solutions, but the challenges of the fourth quarter highlight just how reliant on PCs the firm remains. |
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HenryTo
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| Posted: Wed Nov 16, 2011 8:46 pm Post subject: |
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Morningstar on Dell's 3Q results:
| Quote: | | Dell's DELL third-quarter results and revised full-year outlook demonstrate that the firm continues to emphasize profitability over revenue growth. Given Dell's broader transition to emphasize non-PC technologies, these results are in line with our expectations. Nonetheless, further margin expansion may be limited in the near term as Dell faces stiff economic headwinds and supply chain challenges. Revenue was flat during the quarter, but Dell delivered an operating margin of 7.4%. This represents a level consistent with the trailing four quarters and, more important, up significantly from the average operating margin of 4.8% delivered in 2007-10. We believe this new level is largely sustainable because it is derived from a shift to higher-margin enterprise hardware and services. Sales from these areas now account for 30% of total revenue and 46% of gross profit. Pricing discipline is also visible within the PC segment, where Dell delivered single-digit revenue declines but a double-digit increase in gross margin dollars. Dell effectively lowered its revenue guidance for the second straight quarter, but management reaffirmed its targets for 17%-plus operating income growth. Given the building economic headwinds, weakness in the public sector, and emerging hard disk drive shortages, we view the firm's ability to hold the line on operating profit as a positive commentary on the structural shifts in Dell's strategy. Flooding in Thailand has created a serious disruption in the supply of hard disk drives. In the near term, Dell has done what it can to secure inventory, but units will be scarce across the industry and PC unit shipments will decline. Dell expects deflation in other components to largely offset the price increases in hard disk drives in the near term. Nonetheless, information is very limited and the situation is likely to drag on in some form for several quarters. No PC manufacturers will be immune to the long-term impact of the supply shortage. In the fourth quarter, Dell is most vulnerable on revenue, but we believe a protracted shortage could result in operating margin pressure that may not become visible until the first half of 2012, when there are no longer offsetting supply gluts in other components. |
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HenryTo
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| Posted: Wed Aug 17, 2011 3:23 pm Post subject: |
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Morningstar on Dell's 2Q results:
| Quote: | | Dell's DELL second-quarter results reflect success for the firm's ongoing transition from commodity to high-value products, but the lowered revenue forecast is likely to fuel concerns about the sustainability of recent operating improvements. Revenue was $15.66 billion, up 1% year over year, but it was the firm's revised revenue outlook that stood out. Dell lowered its revenue growth forecast to just 1%-5% this year from the previously provided range of 5%-9%. Areas of weakness include PCs (down 1%), software (up 1%), and storage (down 20%). The decline in storage is misleading, however, as Dell transitions from reseller to intellectual property owner. Sales of EMC EMC gear (formerly a co rnerstone of Dell's product line) was down 62%, while revenue from Dell's proprietary storage solutions increased 15%. Storage revenue growth should rebound to positive territory by the end of the year as EMC falls out of the year-over-year comparables. However, we expect this phenomenon to be repeated across other areas of the business (most notably in networking, once Dell closes the Force10 acquisition) as Dell's business transformation continues. Positively, Dell's transition continues to support impressive margins. The quarter's 22.5% reported gross margin is in line with the new normal Dell has set during the past several quarters. Previously, we have examined the temporary (PC input costs) and permanent (product mix shift to Dell-owned IP) sources of margin expansion. We suspect margins may revert slightly in the upcoming quarters, but expect the company will retain the majority of the 600-basis-point increase it has delivered during the past year. The bottom line is that Dell must choose between revenue growth and profitability as it tackles the issues in the commodity PC part of its business model. In our opinion, the margin expansion story clearly outweighs the setback in revenue growth. Nonetheless, the reduced outlook serves as a reminder to investors that the transition from reseller to technology owner will be slow and volatile. |
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HenryTo
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| Posted: Thu May 19, 2011 2:25 am Post subject: |
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Morningstar on Dell's 1Q results:
| Quote: | | Dell DELL reported another strong quarter of results Tuesday, highlighted by impressive operating margin expansion. Total revenue was $15 billion for the first quarter, up just 1% as weakness in the consumer and public sector restrained top-line performance. However, investors can easily overlook stagnant growth given that Dell delivered an operating margin of 8.1% for the quarter, up 400 basis points from the prior-year period and 80 basis points sequentially. The sustainable portion of this operating margin expansion is derived from a product mix shift to solutions that integrate Dell's direct intellectual property. One of the clearest examples is occurring in storage, where sales from Dell's Compellent acquisition are displacing the historical relationship Dell had reselling EMC EMC gear. Every sale shifted to Compellent from EMC is neutral to revenue, but delivers a greater margin. For the full year, management is cautioning that margins will pull back from current levels. This is not surprising, as some of the current tailwinds are unlikely to be sustainable. First, Dell has benefited from favorable input costs, but even if component pricing continues to trend favorably, we believe the industry players will compete away this benefit. Second, Dell has done an excellent job of streamlining its operations, outsourcing manufacturing to keep costs variable and taking advantage of streamlined transportation by offering a more standardized product set. This is solid work from management, but also a replicable strategy. The benefits may last longer than the next few quarters, but we ultimately believe that the industry players will continue to copy the best par ts of each other's operational models. |
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HenryTo
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| Posted: Tue Aug 17, 2010 5:52 pm Post subject: |
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First review of the Dell Streak - a smart phone and iPad-like device in one:
http://www.anandtech.com/show/3853/the-dell-streak-review
| Quote: | Until we get foldable displays we’re going to see smartphone manufacturers experiment with larger screen sizes. While no one likes to carry around a giant phone, the benefits of a bigger screen are undeniable.
Browsing the full web is much more pleasant, especially on web sites that you have to interact with (e.g. logging in, filling out an order form, commenting, etc...). Typing on a large touchscreen can be a lot easier as well. Then theres’s the obvious advantage: viewing photos and videos is so much better on a larger screen.
From a screen and ergonomics standpoint, I believe Dell got it very right with the Streak. The phone/tablet is thin, looks good and is a pleasure to use in landscape mode. Sitting around with friends and showing them photos on the Streak is much better than on smaller smartphones. You get better picture quality on the iPhone 4, but it’s just easier to actually see things in a photo on the Streak.
The Streak’s battery life is great. It lasted me a full day of regular usage and the battery life test results put it close to the iPhone 4 in most situations, even besting the Droid X at times.
As a piece of hardware, I have no complaints about the Streak. The problems with the device are almost entirely in software. While the Streak has the potential to make web browsing, photo viewing or general productivity better than on a smaller phone, its horrid performance is a deal breaker for me. You can count how long it takes to snap photos in seconds, transitions between screens are choppy and even scrolling on webpages is slow. It’s not just irritating, it’s unacceptable for a high end smartphone released in 2010.
Launching with Android 1.6 was also a mistake. I suspect many of the performance problems to be solved by the 2.2 update later this year, but until then I view the Streak as untouchable. |
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HenryTo
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| Posted: Mon Aug 16, 2010 11:43 am Post subject: |
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Morningstar on Dell's acquisition of 3PAR and its move to high-end storage technology:
| Quote: | | Dell DELL announced Monday that it has signed an agreement to acquire 3PAR PAR for $1.15 billion, or about an 85% premium to 3PAR's closing price Friday. Although the premium is large, we are positive on the acquisition because it pairs respected, high-end technology from a small firm with the vast distribution and marketing muscle that Dell brings to the table. As Dell makes the transition away from PCs and into enterprise hardware and services, bringing in high-end storage technology is a logical fit. Storage has been a growing source of revenue for the firm; one of Dell's most successful acquisitions has been EqualLogic, a provider of low-end iSCSI storage. However, as clients grow out of EqualLogic's offerings, Dell has historically migrated them to EMC solutions through an original-equipment manufacturer relationship. Now, with its own storage, Dell can keep the value from the higher-end transactions instead of passing the profit along to EMC. Furthermore, Dell's data center solutions group has been focused on building out cloud-scale data centers, such as Microsoft's MSFT Windows Azure platform, but has lacked the high-end storage technologies to pair with its server solutions. The fit is clear, but in true Dell style, the acquisition premium is rich. We have to look at the purchase price to determine if this is creating or destroying shareholder value. At 2 times our fair value estimate for 3PAR as a stand-alone entity and 6 times sales, Dell is clearly not shopping in the clearance section of the market. Nonetheless, Dell paid $1.4 billion, or more than 10 times sales, for EqualLogic when the latter firm was around a $125 million revenue run rate in late 2007 and has increased that run rate to more than $800 million. The high end of the market is unlikely to experience the same growth rates as the iSCSI subsegment, but given the strong growth potential from exponential data creation and cloud computing opportunities, we are comfortable that Dell can deliver enough results from this deal to justify the acquisition premium. |
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HenryTo
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rffrydr
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rffrydr
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| Posted: Fri Feb 19, 2010 5:14 pm Post subject: |
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Here's a long-term Dell holder's reaction today:
| Quote: | Brian Gilmartin
Dell - how to turn an imcredibly-efficient competitor into a "Biggest Loser" contender
2/19/2010 11:29 AM EST
We've followed Dell since the mid 1990's and I continue to be shocked that what was once a brilliantly-managed company which was the low-cost manufacturer producer in a commodity space (a huge competitive advantage per Michael Porter) has now become a mis-directed, fat, also-ran with no differentiation and nothing resembling a competitive advantage.
Although we haven't posted the numbers in the spreadsheet last night's revenue beat with the margin compression continues the same old song and dance where Dell tries to get the retail channel right, but misses on margins, or targets margins and gives up revenues and market share.
Bob Faulkner should be commended for his call on Dell: he's always said that he never knew what the company would look like in 5 years, and the company stills seems to be meandering around the PC space.
We owe a mea cupla to long-time readers and subscribers, as there has been no turn-around with Michael Dell's return. Dell had the perfect model in the 1990's with the secular growth in tech, and then they watched other competitors take share and compete away margin, by letting them get more efficient.
Michael Dell should have stayed in retirement. |
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HenryTo
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| Posted: Fri Feb 19, 2010 12:54 pm Post subject: |
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Morningstar's latest analyst notes with Dell. The company recently came to the UCLA Anderson campus to recruit - and quietly acknowledged that it is still in the midst of a turnaround effort (they admitted that even employees were telling friends not to buy Dell):
| Quote: | | Dell DELL posted fourth-quarter results that were a step in the right direction from the revenue perspective, but underwhelming on the profitability front. Nonetheless, results were in line with our expectations, and our fair value estimate is unchanged. Fourth-quarter revenue was up 11% from the prior year, but includes a full quarter of contributions from the Perot Systems acquisition. At the product level, results were mixed. Several segments, including desktops, peripherals, and storage, remained down from year-ago levels, but all product lines grew sequentially. Despite improving sales, the gross margin declined to 16.6%, the lowest level in the last eight quarters, and the operating margin fell to 3.4%. In contrast, competitor Hewlett-Packard HPQ posted expanded operating margins as its PC business grew sequentially for the quarter. The deterioration for Dell does not appear to be attributable to the Perot acquisition, which management said had a neutral impact on margins. For the first quarter, Dell forecasts a slight seasonal pullback in revenue, but expects the effect to be muted relative to recent years as technology spending improves. Management remained confident that the long-anticipated refresh cycle is ramping up, driven by the adoption of Windows 7, the secular trend toward mobile PCs, and enterprise spending. However, this trend is likely to be spread throughout the year and well into 2011. We have no doubt that Dell can increase volume and sales after an extremely challenging 2009, but given the intense competition and lack of differentiation in its core products, we remain unconvinced that the operating leverage management is aiming for will materialize. |
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rffrydr
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| Posted: Fri Nov 20, 2009 8:43 am Post subject: |
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It was quite a start to see computers inside thrift stores a decade and a half ago. Computer chips have not yet become potato chips but their commodification has been long in the making.
For those inclined to the healthcare move this company initiated earlier this year this might be a buying opp. Still many on the long side heads are still spinning with "tech."
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HenryTo
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| Posted: Thu Oct 15, 2009 4:38 am Post subject: |
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PC shipments did surprisingly well (although not that surprising in light of INTC's numbers), especially with the impending shipping of Windows 7 a week from now. In light of that, Dell is probably going to regain its market share from Acer during the fourth quarter.
--------------------------------------------------------------------------------
Acer passes Dell as global PC shipments rise
Wed Oct 14, 2009 7:38pm EDT
* Acer claims No. 2 spot on global list
* PC market recovery continuing-IDC
* HP increases market share to 20.2 pct (Leads on Acer taking number 2 spot)
By Gabriel Madway
SAN FRANCISCO, Oct 14 (Reuters) - Taiwan's Acer Inc (2353.TW) surpassed Dell Inc (DELL.O) to become the world's No. 2 PC maker in the third quarter as worldwide industry sales proved surprisingly strong, spurring hopes that demand is rebounding.
Global personal computer shipments inched up 2.3 percent in the third quarter to 78.1 million units as the sector continued its gradual recovery, with all regions except Japan either meeting or surpassing expectations, according to industry tracker IDC.
The research house had forecast a decline of 2.9 percent.
Analysts said aggressive pricing from Acer and top PC maker Hewlett-Packard (HPQ.N) and good consumer demand helped both companies grab market share, while business-dependent Dell continued its slide down the global rankings.
HP grew shipments by 9.3 percent, IDC said, and increased its industry-leading market share to 20.2 percent. HP toppled Dell from the top spot in 2006, and has been busy taking market share throughout the economic downturn.
Acer, the upstart that has steadily gained on the leaders, has benefited from the popularity of netbooks, or cheap no-frills laptops meant for surfing the Web. It kept up its meteoric rise, with shipments rising 25.6 percent, propelling it into second place with a market share of 14 percent. [ID:nLE284265]
Acer, founded in the 1980s by Taiwanese tech entrepreneur Stan Shih, began life as an electronic parts supplier, cemented its global venture into PCs when it bought Texas Instruments' (TXN.N) mobile PC arm in the late 1990s.
Over the past few years, Acer acquired PC makers Gateway and Packard-Bell, dramatically expanding its footprint in the U.S. market and narrowing the gap with HP and Dell.
Dell's struggles continued in the third quarter, with shipments declining 8.4 percent. The bulk of the company's sales are made to corporate and institutional customers, which were severely impacted by the recession and have not bounced back the way consumer sales have.
Yet it has publicly expressed little concern, emphasizing "profit share" over market share, and deriding netbooks as poor substitutes for standard PCs.
China's Lenovo (0992.HK) and Japan's Toshiba (6104.T) rounded out the global top five.
RECOVERY AFOOT
IDC analyst Jay Chou said the third-quarter numbers "bode well" for the remainder of the year.
"The recovery is happening sooner than expected," he said. "The decline certainly lasted a lot shorter than people had thought."
Shipments of low-cost PCs and netbooks continued to bolster overall sector. Although IDC has not yet compiled data on the quarter's pricing, Chou said "ASPs (average selling prices) are taking a big hit."
But the unit growth in the third quarter was still an encouraging sign following year-over-year declines in the previous two quarters of 2009.
Separately, industry tracker Gartner reported a better-than-expected 0.5 percent increase in global PC sales.
Gartner analyst Mikako Kitagawa said the results were good, but in a statement cautioned that, "Ongoing price declines continue to be a major issue in the PC industry. PC vendor performance cannot be determined solely by unit market share gains alone."
Third-quarter PC shipments in the United States were slightly ahead of the overall market, rising 2.5 percent. HP and Dell were neck-and-neck for the lead in the market, with each claiming around one-quarter.
Although Apple Inc (AAPL.O) does not rank in the top 5 worldwide, it is No. 4 in the United States with a 9.4 percent market market share. The Mac maker has been making steady share gains for years and continued to outpace the market, with shipments rising 11.8 percent. |
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HenryTo
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| Posted: Tue Sep 22, 2009 10:55 pm Post subject: |
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| The only parts in the computer (including the monitor) that deserve a premium are the microprocessor (CPU) and the graphics processor (GPU) and has been that way for awhile now, although OEMs like Dell may get a boost once Windows 7 is released on October 22nd. |
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rffrydr
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| Posted: Tue Sep 22, 2009 6:59 pm Post subject: |
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Everyone wants to become a service company now--or get into healthcare. You're no longer buying a computer company when you buy Dell.
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HenryTo
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| Posted: Mon Sep 21, 2009 6:34 pm Post subject: |
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Morningstar's notes on the acquisition of Perot Systems by Dell. Note that Dell is down 4.1% today but is still up 56.4% on a YTD basis:
http://quicktake.morningstar.com/stocknet/san.aspx?id=309282&djnsection=SAN2
| Quote: | Dell DELL announced Monday that it will acquire Perot Systems PER for $30 per share. The $3.9 billion all-cash deal is consistent with Dell's stated strategy to expand its information technology services business. However, we do not believe this acquisition by itself is enough to change the competitive position of the company, and given the limited upside relative to the cost, we believe the deal will be neutral from a financial perspective.
revenue from Perot Systems creates an $8 billion annual services business, jump-starting growth of Dell's service arm. However, the combined entity remains a far cry from the service arms of larger rivals IBM IBM ($55 billion) and Hewlett-Packard HPQ ($34 billion). We do not believe this deal greatly improves Dell's ability to compete with IBM or HP on large enterprise service contracts, and it does little to accelerate Dell's desire to offer remote modular services, such as desktop management, online backup, and e-mail management, in our opinion. We believe it merely adds a stable customer base, primarily in health-care and government IT services, that promises modest growth opportunities.
We think Dell is paying a steep price for Perot Systems' niche business. Not only is it paying a significant premium to Perot's recent stock price and our fair value estimate, but also it is paying significantly higher sales and cash-flow multiples than previous services acquisitions, namely HP's acquisition of EDS. Dell claims it can jump-start Perot Systems' growth through its corporate ties, but we are skeptical that this exposure will be enough to justify the acquisition premium. We estimate that Dell would need to double the cash flow from the business in order to break even on its investment. In contrast to Dell's technology-based acquisitions, such as Equalogic, Perot Systems' asset is its workforce. Therefore, even if we accept optimistic revenue forecasts, we see limited operating leverage as incremental revenue is accompanied by near linear growth in costs. We see limited room for cost synergies from what we believe to be a relatively lean operating model for Perot. Despite our concern, incremental earnings from Perot Systems would be less than 10% of the combined company, and we are maintaining our fair value estimate for Dell.
This acquisition has more upside for Perot, as it opens up access to Dell's solid customer base and hence could strengthen its growth prospects. While the company has carved a niche for itself in the health-care and government services markets, its growth performance slightly lagged its peers because of its limited geographic reach and high industry concentration. Perot derives about 85% of its revenue from the United States, while health care and government services together account for 70% of its revenue. While we don't see any significant cost synergies, we do expect this acquisition to provide Perot with access to Dell's large customer base, opening up cross-selling opportunities. |
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