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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerHewlett-Packard (NYSE: HPQ) says it is doing fine. It said it expects its earnings to stay strong. That should carry over to other PC and printer companies as what is good for one is good for all. But it looks like that logic is wrong this time. In the case of Dell (NASDAQ: DELL), it may be so wrong that investors might wish Michael Dell would have stayed in retirement. When his company was in trouble almost two years ago, he stepped back into the CEO job.
Dell comes out with earnings this afternoon and Wall Street is worried. According to The Wall Street Journal, "Research from Gartner, an information-technology research firm, shows that Dell is losing market share globally."
Even H-P is not immune from the market downturn. Its shares are off about 32% in the last year, which is slightly better than the DJIA. But Dell's shares are down 60% as very few analysts believe Dell has renewed its product line enough. They don't think Dell has new products with prices and features that are likely to pull in customers from the likes of H-P and Apple (NASDAQ: AAPL).
Dell's troubles bring up another subject: founders are not saviors. The other high-profile founder who came back to work to "save" his company recently was Howard Schultz of Starbucks (NASDAQ: SBUX). His company's shares are down 70% in the last year. His coffee shops look like ghost towns. Layoffs and other cost cuts have not kept up with falling earnings.
The market cheered the news when Dell and Schultz came "home," but the skills of creating a company may not match those of running it when the operation gets larger and more complex. At least not if Wall Street looks at Starbucks and Dell.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
11-20-2008 @ 9:20AM
Beltway Greg said...
Well he should just close the company and return the money to the shareholders.
11-20-2008 @ 10:46AM
BHarrison said...
Well, we are becoming a nation of "dogs biting their own wounds" . . . things are bad enough as it is, and so many of us are trying to tear down what little good there is. I bought a DELL Precison 390 a little over a year ago . . . there were a few "problems with the purchase and the PC was delivered with the factory software installation not having been 100% completed.
In trying to get the matter resolved, I finally talked to a guy who told me that "he was "god" when it came to resolving the matter . . ." and he did not handle the matter properly and reasonably. After much wrangling with them, I finally got the matters resolved (and I had to do a lot of work to get the PC operating properly) However in the long run they sold me a Gold Service contract at a very reasoanble price because of all of the problems. Since then they have provided excelllent service support, and even replaced the mother board and other components.
People should not expect any more than they pay for; and that includes factory service. All businesses have problems, its just a matter of how they handle it, right?
It certainly isn't in our best national interests to tear down our manufactuers, is it?
11-20-2008 @ 2:24PM
chano said...
Dell can't compete. The market has moved on and unimaginative low margin products are a swift path to bankruptcy. They have no franchise in what they do and their window of opportunity is closing. The survivors will be those with some technical investment franchise in this sector.
We should not mourn Dell's passing. They did it to themselves wasting decades of opportunity to build a true brand franchise.