When Dell, Inc. (NASDAQ: DELL) reported earnings just recently, the world's second largest computer maker showed above-average revenue but profits lagged expectations due to higher costs in the quarter. Meanwhile competitor Hewlett-Packard Corp. (NYSE: HPQ) reported a stellar quarter on everything from revenue to profit to future guidance. It seems as though Dell and HP have completely traded places from where they stood in 2004, no?
Dell brings up the issue of bigger-than-expected costs being a problem in the third quarter as it tries to explain why its profits sunk. Inquiring investors want to know why component prices were a problem for Dell in the back half of 2007 when HP saw lower component costs in the same period?
Your guess is as good as mine, but the questions won't stop there. For a company that built a reputation around being lean all the way around, what happened to Dell's cost structure recently? That has not been answered directly -- yet.
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