Linked by Thom Holwerda on Fri 21st Jul 2006 15:08 UTC
Hardware, Embedded Systems Dell on July 21 issued a de facto earnings warning, citing an aggressive PC pricing environment in a slowing commercial market worldwide. The PC maker said that its second-quarter fiscal year 2007 results would yield about USD 14 billion in revenue and earnings per share in the range of 21 cents to 23 cents, lower than its first-fiscal-quarter results, reported in May.
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What a surprise
by bolomkxxviii on Fri 21st Jul 2006 15:25 UTC
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Dell citing "an aggressive PC pricing environment"? Gee, I wonder how that happened?

Reply Score: 4

Speaking of Dell
by shadow_x99 on Fri 21st Jul 2006 16:06 UTC
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Does the claim that Apple is worth more than Dell still valid with these numbers?

Reply Score: 1

RE: Speaking of Dell
by alcibiades on Fri 21st Jul 2006 16:45 UTC in reply to "Speaking of Dell"
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Apple market cap 51.4 billion dollars
Dell market cap 50.2 billion dollars.

This is from Morningstar.

But so what? The interesting question about either one is how much you are paying and what you are getting for it in the way of earnings and growth. You can find all these ratios and stuff out on Morningstar or Marketwatch or or the nytimes financial site or a bunch of other places. Dell sells for around 11 times cash flow and 16 times earnings. Apple seems to be on 31 times earnings and about 37 times cash flow. With Apple of course you are getting a business which is half computers and half iPods. The part that is computers is a combination of OS and hardware. With Dell you are getting exclusively a computer hardware business.

Which is better is very hard to see. If you try to forecast the future business prospects, and then use that as a guide to the performance of the stocks, you are in the business of betting that you can see the future and evaluate it better than the pros. Ordinary people cannot do that.

Its really a two by two matrix. The variables are the nature of the news and the likely reaction of the stock. So ask yourself, what is likely to come out unexpectedly for Apple, good news or bad? And how is the stock likely to react? Up or down and by how much? Then ask the same for Del. This gives some kind of a matrix to let you assess risks and rewards in a disciplined way.

A view? History shows its hard, almost impossible, to make money as a longer term investor if you pay 30 times earnings for a mature company. Are there any cases where it was possible? Be interesting to hear of them. There won't be many. But sometimes this time really is different. This could be one.

Reply Score: 2

Dude! Everyone has a Dell!
by ThawkTH on Fri 21st Jul 2006 16:25 UTC
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This was bound to happen, and nobody should be surprised...

You start selling computers for $300 that outclass $1000 computers from a year before, everyone buys one...Then what? People have no reason to upgrade!

My mom has a $300 Celeron 2.0GHZ Dell she got (I believe) two years ago. It has 512 mb of RAM. It handles XP SP2 with EASE. She can browse, torrent, and e-mail. It's all the average household needs. She's learning to download music etc. on her own as well, and iTunes runs just fine.

So I suppose the question is...what did anyone expect? XP's been out forever (so there's no need to 'upgrade' to a new version of Windows), computers are more than powerful enough to handle everything the average user needs right now (computers have been able to do this for a while now).

The market will create reasons to upgrade as it always does - XGL/Vista/Office will help push people to new boxes - but I don't see this happening for a while.

Dude! Everyone got a Dell! And nobody needs a new one for a while yet...

Heck, my 4 year old Athlon 2000+ (hand built) with 512mb and a radeon 9000 pro handles everything I throw at it just fine. Could it be a bit quicker? Of course, it especially needs more RAM - but I can even accomplish most gaming tasks with ease. Even after I buy a new box, this will easily go to another sibling for a few years to come.

I suppose I need to ask - why is anyone surprised? Most families have a computer that can possibly afford one. Windows XP, fully patched, with anti spyware, firewall, etc (which now comes with many ISPs) can run rather well for longer than 95/98/Me (shudder) could.

Hey, companies? Guess what? Time to innovate...

Reply Score: 5

RE: Dude! Everyone has a Dell!
by Sodapop on Fri 21st Jul 2006 17:10 UTC in reply to "Dude! Everyone has a Dell!"
Sodapop Member since:

I agree 100%. My P4 2.8 Northwood does everything I need it to do. And even though from time to time I catch myself browsing hardware sites for an upgrade, truth is I don't need one.

And when the average PC user already has a computer that does everthing he/she needs, they figure they don't need an upgrade either.

Really, all hardware companys are currently doing is providing for the hardcore user that upgrades often, it's the people like me they need to entice.


Reply Score: 1

RE: Dude! Everyone has a Dell!
by butters on Fri 21st Jul 2006 19:44 UTC in reply to "Dude! Everyone has a Dell!"
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You're right. It's time for companies to innovate. It's a good thing you didn't say "hardware companies" or "OEMs," because I'd say you're wrong.

Hardware vendors have been pouring massive amounts of R&D dollars into making PC hardware ever faster and more capable--and they're selling the mainstream parts and systems at cut-throat prices. As demanding consumers, that's all we can expect of them... and more.

It used to be that if you offered a 50% increase in performance over the previous generation, you were golden. Now it's hard to sell upgrades unless there's a doubling in performance, and you can't even do that in some markets.

What's wrong? The software companies. Like a few posters already mentioned, it's hard these days to find a real purpose for all of that horsepower, and even harder when you consider the needs of the average user. When software companies do release new versions that demand more resources, it's usually because of unnecessary features, over-complicated interfaces, and incredibly poor code quality/optimization.

It's gotten so bad that free software projects with a fraction of the funding of the big ISVs are turning out software that compares favorably in many cases. I'm a diehard believer in FOSS, but I don't think the movement could have become as successful as it has today without the blundering and complacency of the proprietary software industry--and the inconceivably high prices.

It's gotten so bad that web service providers with a fraction of the funding of the big software vendors are driving revenue that makes Microsoft execs throw chairs. Google is a bad example because it has grown so large, but consider MySpace, for example. This poses more problems for companies like Dell because you don't need a powerful computer to use rich and powerful web services.

The PC market is slowing a little bit, but it's still growing at 9-10% annually. The second quarter is always the slowest quarter for computer and consumer electronics vendors, and many customers are holding off until Vista to upgrade their PCs. However, Dell's new initiative to focus on matching computers with lifestyles and emphasizing their high-end offerings isn't going to work. They're going to find that most people's "lifestyles" match well with $400 desktops and $700 laptops.

The average user is not seeking performance or features. They're seeking an easier, more integrated computing experience. That's something that Dell isn't in the position to offer. They're beholden to Microsoft and the Windows ISVs, and that's not a good place to be.

Reply Score: 3

RE: Dude! Everyone has a Dell!
by aent on Fri 21st Jul 2006 20:43 UTC in reply to "Dude! Everyone has a Dell!"
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The market will create reasons to upgrade as it always does - XGL/Vista/Office will help push people to new boxes - but I don't see this happening for a while.

Xgl isn't going to push people to upgrade to new boxes... Xgl runs perfectly fast on my GeForce 2 Go on my laptop, and my GeForce 2 MX on my old PC. Stuff thats encouraging me to update is stuff like Google Earth that is way too slow on my GeForce 2s...

Reply Score: 1

RE[2]: Dude! Everyone has a Dell!
by ThawkTH on Fri 21st Jul 2006 23:12 UTC in reply to "RE: Dude! Everyone has a Dell!"
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I'd agree that XGL doesn't have steep requirements at the moment. I do believe, though, that the capabilities of such systems will increase over time. Hardware acceleration, 3D desktops, etc. should allow more powerful hardware to be taken advantage of. The FOSS difference, though, might mean that a geforce 2 will handle XGL just fine for year(s) to come ;)

I wonder what else will encourage people to update...

Reply Score: 1

RE[3]: Dude! Everyone has a Dell!
by devtty on Sat 29th Jul 2006 00:06 UTC in reply to "RE[2]: Dude! Everyone has a Dell!"
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I wonder what else will encourage people to update...

a dead machine, I guess

Reply Score: 1

Upgrade woes
by Anonymous Coward on Fri 21st Jul 2006 17:25 UTC
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I have an Athlon 1.33GHz... the only thing I need to upgrade for is Premiere Elements (SSE)

I have a P-III 750 that does some tasks, a 1.2 Athlon for Linux, and my little 700MHz Dell Latitude L400 for portable stuff...what more could I need? (other than to replace XP with Linux on the 1.33GHz Machine too... beforre the FORCE me to install the WGA "patch" so they can start spying on me.

Reply Score: 1

v osnews...
by bonjour on Fri 21st Jul 2006 17:31 UTC
RE: osnews...
by peejay on Fri 21st Jul 2006 18:28 UTC in reply to "osnews..."
peejay Member since:

i'm a huge fan of osnews, but i gotta say, ibm and apple's earnings results really have nothing to do with operating systems.

True to our tagline, "Exploring the Future of Computing," we're always on the lookout for the next major advance in computing technology, and eager to speculate on how it might change the way people use computing power in their daily lives. With this in mind, it's important to stress that though our focus is operating systems, there will always be other computing-related news that catches our attention.

You've been here a year and you haven't run into that, or the hundreds of other comments by Thom et al. referencing that?

You sound more like a mediocre fan, to me. ;)

Reply Score: 2

RE: osnews...
by elsewhere on Fri 21st Jul 2006 18:41 UTC in reply to "osnews..."
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i'm a huge fan of osnews, but i gotta say, ibm and apple's earnings results really have nothing to do with operating systems.

I assume you meant Dell instead of IBM? Personally, I don't think it's that much of a stretch anyways. Dell represents the largest seller of Windows-based systems, Apple represents, er, the largest seller of OS X based machines.

Analyzing performance of those two particular companies, at least with regards to system sales and profitability, is simply a very generalized metric as to how the market views and responds to the maneuvering, positioning and development going into OS related technologies. It's not absolute, and not necessarily relevant on it's own, but still worthy of non-faboish/trollific discussion. It may not be directly OS related, but then neither are discussions about Intel/AMD's latest goodies or Google's latest perma-beta web application yet they all have their place in the big picture.

Just my 2c anyways.

Reply Score: 1

yo mike
by pixelmutt on Fri 21st Jul 2006 18:54 UTC
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If I were Michael Dell, I'd shut it down and give the money back to the shareholders

Reply Score: 1