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Even though Dell Inc. (NASDAQ: DELL) is seeing a leveling off of slack demand for its computer products, the company also doesn't see any uptick in PC sales for its July quarter, according to the company. Dell will host its annual shareholder's meeting this Friday in Austin right outside its Round Rock, Tx. headquarters. Investors will most likely have plenty of questions about strategy at that time.What Dell has sought -- but has been mostly unsuccessful to date -- is a diversification away from the PC and server business. Larger competitor Hewlett-Packard Corp. (NYSE: HPQ) knows this lesson and although it's been hit hard in PC and computer sales also, it has many other pieces of revenue flowing in to make up for it. Dell doesn't.
To add to the pain, cheaper computing alternatives like netbooks and increasing component costs will shrink margins in the current quarter -- never a good thing to have to report on. Dell CFO Brian Gladden did say that "We continue to believe that customers are deferring IT purchases, and that we will see demand return to more typical levels at some point."
He's probably right -- but when is the "some point?" That's a hard question to answer -- and who is to say Dell will keep market share at that point? Is Dell going to just make PCs and servers forever and ever? Taiwan PC maker Acer may even surpass Dell in PC sales to become planted in the #2 spot. What then? Dell investors should want to know. Do you?
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