Novice Investing - Nice Quarter for Dell, H-P

Date: Monday 01st 2008f December 2008 05:25:27 PM

Nice Quarter for Dell, H-P - 02/17/2006

By: Novice Investing Staff

Dell Inc. (DELL) reported a 52% increase in 4th quarter profit. Profit came in at $ 1.02 Billion or 43 cents per share. Revenue topped $ 15.18 Billion. Analysts had been expecting revenue of $ 14.82 Billion and 41 cents per share of profit. That sounds like good news, isn't it? Not until you read about management's guidance for the future. For the first quarter of 2006, Dell expects revenue of $ 14.2 - $ 14.6 Billion, below analysts' forecast of $ 14.73 Billion.

How about Dell's rival, Hewlett-Packard Co (HPQ) ? In contrast, share of the computer and printer maker rose to a four year high after reporting a 30% increase in fiscal first-quarter earnings. On the surface, HP earning doesn't look as stellar as Dell's. But considering that they have lower bar to begin with, share price jumped more than 7%. Share price has risen 70% since March of last year after delivering pleasant earning surprise after another. The improved profit is due to selective cost cutting and better execution at the sales front. That is the best in both worlds; generating profits without sacrificing long-term revenue figure.

Who says only Dell can be profitable in the computers industry? Hewlett-Packard reported that its PC division has a year over year 8 percent increase in sales. Furthermore, it reported the highest operating profits HP has had in years. That is an important thing since most analysts feel that printer division has been covering the weakness in the PC division.

As of right now, Hewlett Packard has higher market capitalization than Dell. HP shares are trading close to its four year high while Dell is trading closer to its 2.5 years low. This is a 180 degree turn from the beginning of last year where Dell always seem to be able to do no wrong and Hewlett Packard seemed to be able to do no right.

For the US PC market, there only remains two strong players; Hewlett Packard and Dell. Gateway, with little market share, seemed to flounder itself, with the recent departure of its turnaround CEO, Wayne Inouye.

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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Dell Inc. (DELL) or any other securities.

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