Dell Stock Gains May Slacken - BusinessWeek

Dell Stock Gains May Slacken - BusinessWeek

The rally that's lifted the computer maker's shares 55% this year may lose steam after a report indicated corporate demand for PCs isn't as robust as hoped
By Aaron Ricadela

An eight-month climb in Dell's stock price may slacken after the computer maker tempered a previously upbeat forecast of business demand for PCs.

Dell (DELL) reported on Nov. 19 that sales sank 15% and net income tumbled 54% in its fiscal third quarter, which ended Oct. 30. What's more, Chief Executive Michael Dell suggested during a conference call after the results that businesses would take more time than previously expected to replace old computers with newer models running Microsoft's (MSFT) new Windows 7 operating system. "It won't all occur at once," he said.

The remarks contrasted with the CEO's contention in August that the PC industry would enter a "powerful product cycle" in 2010 that would benefit Dell. Wall Street "is going to feel like Michael Dell backed off a little bit on his comments on the replacement cycle," says one securities analyst, who asked not to be named since he hadn't yet published a research report on the quarter. "People are not going to like that." Dell's results look especially disappointing in light of a positive earnings report issued by rival Hewlett-Packard (HPQ) on Nov. 11.

|| shared via AsiaClassifiedToday.com / Geesparks.com / PhilippinesMarketPlace.com