Dell (NASDAQ: DELL), whose tech colleagues include Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Intel (NASDAQ: INTC) and Hewlett-Packard (NYSE: HPQ), had a pretty decent third quarter. The bottom line came in at $0.37 per diluted share. That represented a growth rate of 9%, and it handily beat analyst expectations of $0.31 per share according to Thomson Reuters. I give Dell credit for the significant beat.

However, it should be noted that the bottom line was driven in part by share repurchases. There's nothing necessarily wrong with that, but it does put the big earnings beat in perspective. Indeed, on a dollar basis, profits decreased about 6%. Still, operating income rose 22% on a year-over-year basis.

But then there's the statement of cash flows. Cash was used for operations in the third quarter, a reported $86 million. Last year at this time, Dell generated $998 million from operating activities. That's something to at least think about. In fact, the press release said that slowing demand helped to worsen the cash conversion cycle. Now, I won't crucify Dell on this one cash-flow statement, because the company should still deliver a lot of the green stuff on an annual basis. But even the nine-month statement shows a decline in cash from operations. Again, it's something an investor must consider, and it puts that earnings beat in perspective.

According to Moneyweb, software giant Microsoft (NASDAQ: MSFT) is hooking up with Jerry Seinfeld. No, they're not trying to revive the comedian's sitcom career (although that would be cool). It seems Microsoft is feeling a bit blah about its brand equity, so it's looking to initiate a hip advertising campaign that will tout the company's image and its powerful Windows Vista technology.

No doubt, the advertising campaign from Apple (NASDAQ: AAPL) that makes fun of the PC-Windows platform has a lot to do with it. I love those commercials, and I think it's about time Microsoft came to its senses and decided to do something serious to answer them. A campaign with Seinfeld, if done with a maximum amount of creative wit, will work wonders. But of course, that's the point -- it has to be done right. Seinfeld is a big name, and his presence carries a lot of weight with consumers.

Still, I have reservations about using him in an ad campaign. Am I the only one who wasn't impressed by his American Express commercials? I liked Seinfeld in his famous television show, but seeing him pitch charge cards didn't make me want to apply for one. I thought he was boring in the format.

Apparently, ad firm Crispin Porter + Bogusky will be doing the ads featuring Seinfeld, and they were the creative force behind the Burger King commercials with the creepy King mascot. Those commercials rock. It would be nice if the firm could do something as edgy with Seinfeld and Microsoft, but I'm not holding my breath. I'm not sure that kind of lightning could strike twice.

Most investors probably think that PC sales in the U.S. are a bit slow these days because of the recession. Now, they can sleep better because industry figures for Q2 show they are right. According to The Wall Street Journal, "Gartner Inc. said world-wide PC shipments grew 16% in the period, with U.S. shipments growing 4.2%."

The only real warning sign in the data is that units sales growth is slowing some in Asia. Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) still have the largest market shares worldwide while Apple (NASDAQ: AAPL) shipments grew 38% in the U.S. during the period.

The important news is that Asia may not be able to make up for slowing U.S. sales growth. If formerly hot markets like China and India are not doing terribly well, the entire PC industry is in for a choppy time.

The data contradicts information from the recent Intel (NASDAQ: INTC) earnings. Not only is the company doing well, it said the rest of the year looked bright. Someone must be doing OK selling PCs and servers somewhere. The Gartner research appears to say otherwise.

For investors in PC and chip companies, it appears the information about how the industry is doing has become confused. Now they can join shareholders in almost every other sector of the market where no one seems to have a handle on what is happening.

Douglas A. McIntyre is an editor at 247wallst.com.

The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth reviewing is Western Digital Corp.

Western Digital Corp. (NYSE: WDC) is one of largest, independent hard drive manufacturers in the world.

In general, analysts see 35%-45% revenue growth in FY 2008, reflecting the Komag acquisition, and solid PC hard drive and DVD hard drive demand.

Two pieces of news have come out of Microsoft (NASDAQ: MSFT) in the last day. One is that the software company will cut the retail price of Vista. The other is that Microsoft knew that the specs for the new operating system encouraged users with slow machines to buy the software. Redmond was aware that Vista would not run well on low-end machines.

The price cut may be a sign of weakness. Microsoft says Vista has sold well, but many people have stayed with older versions of Windows to save money and because Vista has received mixed reviews. Performance problems on inexpensive machines has probably not helped matters.

The cuts are for consumer versions of the software. According to The Wall Street Journal, "The changes are seen as a response to the falling prices of new PCs, which made the software price seem disproportionately large in comparison to that of a new system with Vista installed."

That reasoning seems a bit thin. Reaction to the OS has been lukewarm. Apple's (NASDAQ: AAPL) new operating system has received better reviews and that may be helping the Mac take market share from PCs. PC companies may well have pressured Microsoft to drop prices.

A weak product is not something that a flagging PC industry needs.

Douglas A. McIntyre is an editor at 247wallst.com.

It used to be that all tech companies wanted big footprints in the US market. Asia-based PC firms, lead by Lenovo and Acer, have been trying to get into America for years. Their efforts have been hurt by big domestic operators, especially Hewlett-Packard (NYSE: HPQ), Dell (NASDAQ: DELL), and, more recently, Apple (NASDAQ: AAPL).

Perhaps it is lucky for Lenovo that its efforts here have not worked out so well. It is set to announce profits which will be double what it did last year in the same quarter. The company should have a better year than its US rivals because of its strength in China and the rest of Asia.

"The biggest concern is the slowdown in the PC market this year, but Lenovo is best-positioned within the sector since it has the least exposure to the US market," said CLSA analyst Jenny Lai, quoted by Reuters.

The news also underscores that fact that US PC companies are still behind where they would like to be in Asia. This is especially true of Dell, which is only now making deals with retailers in the region to sell its PC.

For once, having trouble getting into the US market may be a blessing.

Douglas A. McIntyre is an editor at 247wallst.com.

With the Consumer Electronics Show (CES) in full swing this morning, yesterday's cream of the crop kickoff event featured a keynote speech from CES long-time keynoter Bill Gates, the founder of Microsoft Corp. (NASDAQ: MSFT). In his final keynote speech at the CES show before he drops his full-time gig with the world's largest software company, Gates introduced a prototype navigation device that stores photos, music and videos while also suggesting options for shopping and dining. Sounds pretty un-revolutionary for Gates' swan song, eh?

Many of Microsoft's CES introductions since 2000 have fallen flat in the real world, which is not surprising. By trying to keep customers entrenched in its proprietary Windows PC operating system, Ol' Softie puts millions of savvy consumers off its products. Now, there are many other companies guilty of this as well, but they're way better marketers -- Apple, Inc. (NASDAQ: AAPL) is the best example.

Microsoft, though, is realizing that Windows on the PC, along with its Office software franchise, can't sustain it forever. Gates told the audience that consumers want to "interact with digital devices in new ways, such as getting directions from their phones and speaking to their cars." This is true, and it's a reason why Microsoft's Sync has become a hit in some new Ford Motor Corp. (NYSE: F) cars. Now that Apple iPhone owners are interacting with data on their portable devices more than ever, Microsoft -- of course -- wants to ensure that functionality lends itself to devices that feature . . . wait for it . . . software from Microsoft as well. This really is not a new fight for the software giant. It's hard, though, to tell what is different with this version of it.

Depending on who is counting, Apple (NASDAQ: AAPL) has 5% or 6% of the U.S. computer market. That number may have spiked in December. Now the PC companies are in a mad rush to build products that look like Macs.

According to The Wall Street Journal, "Spurred in part by the success of Apple Inc.'s innovative products, as well as a consumer shift toward notebook computers, PC makers have begun a radical overhaul of their machines' appearance." That means thinner notebooks, more colorful housings, better keyboards, and improved processing power.

Hewlett-Packard (NYSE: HPQ) and Dell (NASDAQ: DELL) have already launched upgraded machines and are likely to come out with more as the year passes.

But will being "Mac-like" be enough? Probably not. The Apple machine has a sort of aura from being associated with the iPod and iPhone company. Very few people consider Dell a sexy brand.

So, what do the PC companies do? Probably add lower prices to new features. Macs are expensive. A recession is probably coming. "Cool" may be nice, but not when a consumer can't afford it.

Douglas A. McIntyre is an editor at 247wallst.com.

Dell, Inc. (NASDAQ: DELL) will be releasing a new all-in-one PC, ala Apple, Inc. (NASDAQ: AAPL) iMac soon, according to information from the company this week. In addition, the computer maker will be releasing a touch-screen tablet computer that may operate in part like Apple's iPhone -- but with full PC capabilities.

Is this an homage to Apple or an attempt to set itself apart from the competition? Well, all-in-one PCs have been around for a while, but most consumers would be ashamed to own one. The lone exception: the iMac. It's a full PC that looks like a slightly-thicker LCD computer monitor. It's amazing that Dell has not yet developed a tablet PC under the Dell brand new, but the Latitude XT tablet PC would be the first. The new Latitude will be on sale "in the next few months" according to Dell CEO Michael Dell, and will feature stylus or fingertip control instead of a keyboard and mouse combination.

Will this cause customers to flock to Dell for its award-winning industrial and all-in-one design? Nope, that designation goes to Apple, whose iMac is the company's best-selling desktop PC. Although the desktop is handily being replaced in households and businesses by the laptop computer, there is -- and will be for a long while -- a need for desktop PC systems.

If Dell's new all-in-one design is, you know, actually attractive and features decent performance, it may have something to reckon with in the market. Competitors Hewlett-Packard Corp. (NYSE: HPQ) and Taiwan's Acer really don't push these designs in the consumer segment very hard at all, so if there's a market there, it could be Dell's for the taking.

Are PC sales dead? Far from it! The personal computer's demise has been predicted in many circles for years now as applications and tools move to the internet from the computer hard drive. But then again, you have Microsoft Corp. (NASDAQ: MSFT) and Apple, Inc. (NASDAQ: AAPL) both releasing brand-new operating systems this year and trumpeting them all over the world. In Microsoft's case, it's Windows Vista and in Apple's case, it's the Leopard operating system.

The market continues to shift from powerful but bulky desktop PCs toward notebook PCs, and that trend will continue into the holiday season this year. It's scary to think that PC sales would eventually slow down after everyone has bought a notebook, but just in case that happens PC makers are shifting sales focus to markets outside the U.S., something that has been increasing in scale this year.

Let's put it this way -- out of the top consumer electronics "must have" items as measured for this holiday season by the Consumer Electronics Association, computers beat out big-screen TVs, clothes and money (among other things). As measured in the third quarter of this year, PC sales in the U.S. grew at about a 5% rate compared with a 15.5% rate across the rest of the globe.



So PCs are catching fire in many other areas outside the U.S. even as respectable single-digit growth happens here. For an old technology that just continues to apparently get better, PCs are long from dead. My guess is that the hardware is basically no more than a strong commodity, but the internet is what is driving sales of PCs. If you're not connected, then who are you? Someone in the market for a PC, that's who.

It's hard to imagine a personal computer in 2007 shipping without Microsoft Corp.'s (NASDAQ: MSFT) Windows operating system. For many consumers and business users, the Windows operating system is the computer. If Ubuntu Linux or some other operating system arrived on that new PC, I bet hundreds of millions of PC buyers will start scratching their heads. That tells of the power Microsoft has over the PC market (and has had for years).

But, don't tell that to an intellectual think tank in Europe, which has suggested that European Union members somehow unbundle the Windows operating system from PCs in order to break the monopoly Microsoft has on the market. While I support this thinking in principle, Microsoft does not make a PC. Computer makers like Dell, Inc. (NASDAQ: DELL) and Hewlett-Packard Co. (NYSE: HPQ) do. Want that new PC to show up without Microsoft Windows? Talk to them.

Now, in many cases, computer manufacturers have bowed into public pressure to have more than Microsoft's popular Windows operating system available on new PC purchases. Dell has offered Linux on its PCs for months now (though it's hard to find how to configure one with it), and Microsoft is facing more pressure from competition in many areas, including operating systems.

However, the stranglehold Microsoft has on the operating system market has caused the average consumer to "get used to" using Windows. Do most people like change? Doubtful. But, if consumers want more choice, they should tell computer makers to offer more options and flexibility. Should governments step in and force them to offer the solutions if the consumer is not asking for them? That's never stopped the EU before. I'd like to see the data that supports this statement from the European Commission: "Microsoft's dominant position is not in the public interest. It limits the market and has slowed technical development to the prejudice of consumers."

[Disclosure: I own MSFT shares as of 10-1-07]

Dell, Inc. (NASDAQ: DELL) looks to be increasing its partnership with global retailer Wal-Mart Stores, Inc. (NYSE: WMT). The Round Rock, Texas computer maker stated this week that it would begin selling desktop and laptop personal computers in Wal-Mart locations throughout Brazil and Mexico [subscription required] in the coming weeks.

This is a good move for Dell. Although it's not entirely clear how many PCs the computer maker has sold in U.S. Wal-Mart locations since first entering into a partnership with the retailer, expanding into retail locations outside the U.S. will only pump those numbers higher, and Dell needs all the sales and retail recognition it can get.

Dell's fast and furious entrance into retail is much needed, although it should have started years ago. After starting up the Wal-Mart relationship early this summer, the computer maker has signed on to sell retail PCs in the United Kingdom and Japan, and inked a deal with China's Gome Group to sell computers inside the locations of the largest retailer in the world's most populous country.

Is this the beginning of Dell's brand dilution to the everyday masses, or a brilliant strategy to run up sales in an important market segment that only the competitors like Hewlett-Packard Co. (NYSE: HPQ) have enjoyed in recent years? It's a little of both.

According to The Wall Street Journal (subscription required), Dell (NASDAQ: DELL) has set up a partnership with Gome, the largest electronics retailer in China.

Gome has 1,000 stores in 168 cities. Dell has had only modest market share in China, behind HP (NYSE: HPQ), Leveno, and Acer. This is primarily due to its lace of retail distribution.

The WSJ adds "China's PC market is expected to sustain annual growth of 25% in the coming three to five years, according to IDC's estimates."

Douglas A. McIntyre is a partner at 24/7 Wall St.

Dell, Inc. (NASDAQ: DELL) has rolled out what it is calling a "budget supercomputer" in a London event. The computer maker wants its newer and cheaper supercomputer offering to be used in research dealing with custom cures for cancer as well as searching for universe origins in all the radio wave data that spills into the earth these days using large collection dishes.

Is this a move into a new area of computing or a publicity stunt? Neither, but it is Dell's attempt at some good press, something that has been lacking for the company in recent years. With commodity computer parts available to just about anyone who wants them, Dell will once again be assembling commodity machines (supercomputers) to sell to large clients that need a lot of processing power to sift through all the data available to them. Dell's entrance (if it can be called that) is not really all that unexpected, as both competitors Hewlett-Packard Company (NYSE: HPQ) and Sun Microsystems, Inc. (NASDAQ: JAVA) have been in the supercomputer field for a very long time. Google, Inc. (NASDAQ: GOOG) made the practice of stringing together many standard PCs to make a supercomputer popular years ago as well.

Dell's new 'Legion' system will have the processing power of 3,000 desktop PCs and will target those who need cheap computing power available from commodity components without spending a fortune on proprietary systems and parts in the process. As Dell basically defined the role of commodity computer supplier in the last decade and a half, it should be primed to fill this role while giving in to the need of "adding value" to what could be seen as a boring commodity market. If Dell can bring more and more cheap supercomputing to the field and compete against International Business Machines Corp. (NYSE: IBM) (which leads all others when it comes to built supercomputers), then it may just have something.

According to Barron's, PC shipments should be better than expected this year. Research firm IDC revised its figures from 12.2% growth this year to 12.6%, but the growth will come with a cost. Buyers of PCs are drawing sharp competition among the major manufacturers, and that is pushing down price-per-unit.

IDC expects that PC prices could drop as much as 5% per quarter over the next several quarters.

Why? PC manufactures are all piling into high growth markets like China. They find there existing vendors, like Lenovo, and have to drop price to get market share. This strategy works as long as a company can afford it. Firms like Dell (NASDAQ: DELL) that are already facing questions about profits from Wall Street can't take their retail prices lower and lower.

There has been great enthusiasm about the potential of markets like China and India where there is a chance for unit growth which no longer exists in mature markets like the U.S. and Europe. But if prices keep dropping down, market share gains will be a Pyrrhic victory.

Douglas A. McIntyre is a partner at 24/7 Wall St.