(DELL) will be reporting after the close tonight and the results represent a pivotal moment in the company’s long-running turnaround. Recent quarters have disappointed investors with the slow and plodding pace of change. Will this be the breakout or a breakdown?
One thing is certain: Dell’s competitors have put performance stakes in the ground that are going to be tough to beat. But they’ll have to in order to demonstrate that they're a force to be reckoned with in the PC market.Acer
hasn't announced details of its quarter yet but it did issue a press release last week indicating that December quarter revenue was a record $5.2 billion, up 25% from the year-ago period. That’s a huge increase considering nearly 60% of their revenue derives from the EMEA region and only about 20% comes from the Americas.
We know that Apple
(AAPL) had a big December quarter with its Mac line-up. Revenue was up 25% year over year and units gained 33% led by a 70% unit gain in desktops.Lenovo
reported its December quarter a couple weeks ago and the numbers were huge. Units grew 42% led by notebooks up 68% and desktops up 18%. Total revenue was up 33% from December 2008 with notebook revenue up 46% and desktop up 17%. In the all-important China market, units increased 56% and the company believes it gained market share. In non-China emerging markets, units grew 52% and they gained share as well.
(HPQ) reported last night and it was more of the same. Notebook units grew 37% year-year with revenues up 25%. Desktop units increased 13% with revenues up 16%. In the all important consumer-commercial split on personal systems, consumer revenues increased 26% versus only 16% for commercial accounts.
That last point is critical for Dell given its heavy reliance on commercial demand for the bulk (approximately 80%) of its revenue. Management acknowledged share losses last quarter because consumer demand was much stronger than commercial business. The only area the company could claim it improved its position was in x86 servers. That’s great, but it's only 12% of total revenue. Overall, management claimed to be “holding or gaining share in the right kind of price points,” but that’s little more than a throw-away line for investors when faced with the brutal reality of competitors’ results.
Dell’s stock has become the classic value trap. At only 0.36-times EV/Sales, it’s a fraction of the valuation of its competition. However, rather than attack market segments that are growing, thus far it appears to be waiting for its base to recover. Maybe we’ll see evidence of that changing tonight? Then again, maybe we’ll just see more of the same.For more on Dell and many other stocks take a FREE 14 day trial to our Buzz & Banter. More than 30 market pros share their trading ideas and insights in real-time. Learn more.
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