Dell Disappoints
Mary is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Dell (NASDAQ: DELL) shares took a dive in after hours trading on Tuesday in response to their disappointing Q1 2012 results. Revenue declined to $14.4 billion from $15 billion the same quarter in the year prior. Analysts were expecting $14.9 billion in revenue for the Texas-based company. Dell had gains in data storage and other divisions, but they struggled with consumer business. For Q2 2012 Dell is expecting revenue to rise by 2% to 4%, or approximately $14.7 to $15 billion.
The consumer market has been changing recently, shifting from laptops to smartphones and tablets. There are many alternatives available to the consumer in terms of mobile devices. This, in turn, hurts PC sales. Dell has been struggling to expand its presence in segments of the tech industry geared toward corporate consumers, but this has proven difficult. It is a slow transition. The global economic crisis and decreased public-sector spending has not done much to help in this endeavor.
Dell's results weighted heavily on the market. Hewlett-Packard's (NYSE: HPQ) shares were down in after hours trading as well. Their financial results for Q1 2012 are scheduled to be released on Wednesday. However, this rival has been more successful at breaching the corporate market, providing services and solutions necessary for large companies for many years. They are a trusted name in the corporate world. Perhaps the market sees Dell's results as a reflection of the market. HP stands on its own and their results should prove that Dell's results are a reflection of Dell.
Both HP and Dell have to contend with Apple (NASDAQ: AAPL). Apple has taken the mobile market by storm, with its iPhone ever gaining in popularity. Also, Apple is starting to find its way into the office. Many design-related firms use Apple products religiously. Apple has long been touted as the creative's computer, but now people are learning that it is efficient and simple for just about any purpose. It is actually difficult to compare Apple with Dell and HP. They seem to be at opposite ends of the spectrum. Even the market did not make this comparison. But they are in the same industry and nobody is bringing down Apple's share price. Just more evidence that Dell's results are isolated within the company.
Dell's results are disappointing. However, they are contained within this company. They do not reflect on HP, which would be expected to have better results. They also do not reflect on Apple, which has a different gameplan. Dell's results are Dell's alone, a result of the company and not the market. Dell is its own company with its own strategy. Of course, just because it isn't so does not mean the market won't see it that way.
MaryPosey has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
