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Dell has made attempts to diversify beyond its PC niche, as tablets and smartphones increasing replace laptops and desktop computers. In order to expand its reach, the company acquired the data storage company Compellent Technologies in 2011, reported it was buying the data security service SonicWall in March, and completed the purchased Quest Software last quarter.
“In a difficult global IT spending environment we saw solid proof points that demonstrate progress in our strategy,” said Chief Financial Officer Brian Gladden in the earnings statement. “A highlight has been the strong progress of our newly introduced servers, with our server and networking business up 11 percent. We’re also encouraged by early interest in our new Windows 8 touch portfolio and the opportunities it creates for our commercial and consumer businesses.”
Following the release of Dell’s earnings statement, the company’s shares fell less than 1 percent, and closed at $9.56.
T = Trends Support the Industry in which the Company Operates:
As Bloomberg reported earlier on Thursday, “the PC era is ending,” and the proof is Dell’s third quarter earnings results.
PC shipments offer further evidence. In the third quarter, personal computer shipments were down 8.6 percent year-over-year, according to market research company IDC.
”PCs are going through a severe slump,” Jay Chou, senior research analyst, at IDC said last month when the market data was released. “A weak global economy as well as questions about PC market saturation and delayed replacement cycles are certainly a factor, but the hard question of what is the ‘it’ product for PCs remain unanswered.”
Dell’s woes are shared by all companies involved in the manufacturing of personal computers, especially Hewlett-Packard (NYSE:HPQ). While Microsoft (NASDAQ:MSFT), Dell, and HP have all begun to design and manufacture tablets of their own, their devices lag far behind those of Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG).
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