Thursday, August 17, 2006

More Bad News For Dell?

Now they are being investigated by the SEC for revenue recognition and other accounting matters.
Shares of the world's largest personal computer maker fell 4.8 percent
in after-hours trading. Dell said the U.S. Securities and Exchange Commission
told it in August 2005, that it was conducting an informal investigation of the
company.


This shouldn't be more then a distraction for the company. However this distraction comes at the worst possible time for Dell
Net income for the three months ended August 4 fell to $502 million, or
22 cents per share, from $1.02 billion, or 41 cents per share, a year earlier.
Revenue advanced 5 percent to $14.1 billion, the slowest growth in at least
three years, even though Dell cut prices to boost market share.


This means that their margins are shrinking due to price cutting, their revenues growth is anemic and HPQ is stealing their market share. So they are cutting prices and losing market share at the same time. That is the receipt for an ailing stock. I wonder how low Dell will go?
No. 2 personal computer maker Hewlett-Packard Co. (NYSE:HPQ
-
news) on Wednesday reported better-than-expected quarterly profit as it took market share from Dell, which can no longer rely on price advantages from its
direct-sales model to trump rivals and is struggling to improve its battered
image.

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