Join        Login             Stock Quote

Dell (NASDAQ: DELL) Earnings Report Causes Traders To Dump Stock Before The Bell - Fred Dunsel (02/22/12)

 February 22, 2012 01:39 PM

Dell Inc. (NASDAQ:DELL), which reported its quarterly results after the market closed this Tuesday, closed at $18.16 last Friday, marking a 2.3% gain for the week. The company giant's stock is currently up 23% for the year. It is trading down over 7% from yesterday's close in pre-market action.

Dell reported a profit of 43 cents a share, for the fourth quarter ended Feb. 3, which was down 48 cents, from the prior year.

This was a big disappointment, because analysts were expecting Dell to come in with earnings of 51 cents per share. They also were projecting earnings of $2.13 per share for the fiscal year. Revenue was expected to be $15.93 billion for the last quarter, 1.5% higher than the year before. Annual revenue is expected to be around $62 billion.

[Related -5 Key Takeaways From International Business Machines Corp. (NYSE:IBM)Troubles]

The declining profits have been attributed to several factors. Firstly, like other PC companies, Dell was also affected by the disk-drive shortage in the aftermath of floods in Thailand last year. Secondly, the continuing economic uncertainty in Europe has depressed PC demand there. Thirdly, Dell remains in a tough competitive position as it is sandwiched between lower-cost players such as Lenovo and Acer, and higher-end ones like Apple which is also encroaching more in its core PC business with Macs and iPads. Fourthly, the company's reliance on government sector technology purchases, which make up about 28% of its revenue, is a cause for concern in an era of budget tightening.

Given the above, while most analysts still rate the company a "Buy", there are also growing doubts about Dell's continued profitability. Last week, Sterne Agee's Shaw Wu downgraded it to "Underperform" from "Neutral", with a 12-month price target of $15. Wu cited the company's large exposure to the weak PC market, as well as the fierce competition within the PC industry. Referring to the recent stock price surge, Wu noted that "we believe investor sentiment on Dell shares has gotten too positive and arguably complacent." In addition, Standpoint Research analyst Ronnie Moas also downgraded Dell from "Buy" to "Hold", noting that the current stock price "may be near fair value."



Comments Closed

rss feed

Latest Stories

article imageAutomating Ourselves To Unemployment

In this current era of central planning, malincentives abound. We raced to frack as fast we could for the read on...

article imageFed: Waiting For June… Or Godot?

The Federal Reserve left interest rates unchanged yesterday, as widely expected. But the possibility of a read on...

article imageThe Single Best Place To Invest Your Money For Retirement

It was never supposed to be this daunting. At least that's what we were read on...

article imageNegative Blowback From Negative Interest Rates

The Federal Reserve is widely expected to leave interest rates unchanged today. But perhaps standing pat read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.