Friday, April 21, 2006

Citi Downgrages Dell to Sell

Hmm, it seems that the once mighty PC company is having some troubles.

The brokerage slashed its price target on the computer company's shares to $28 from $37, saying Dell must adjust its profitability expectations in order to kick-start growth and market share. In premarket trading Friday, the shares slipped 74 cents, or 2.6%, to $27.50.

Or maybe Dell should start putting out a quality product and not cutting every corner in the book to make their PCs super cheap. Lenovo will always beat them in price because that company's labor force is really cheap. HP then dominates them in the buy-the box-from-CompUSA market. I think many computer buyers don't want to pay $70+ for shipping when they can go down and buy a very comparable quality HP at the store.

Dell is still strong in the corporate market and should really concentrate on growing market share there. Maybe they can provide all in one service for a company that wants to upgrade say to Windows Vista. So the company will pay a certain set price and Dell provides the desktop and laptop PCs and server upgrades as well as charge a service to get everything up and running. They could even dispose of all of that companies old PCs. Call it something like the Dell Total Upgrade Plan or something like that. This way they can sell a bunch of product and provide a high margin service as well. Whatever the case Dell just can't compete with the Chinese in the cheap PC space.

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