Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  Equities  >  Nasdaq  >  Microsoft Corporation    MSFT

Delayed Quote. Delayed  - 09/29 10:00:00 pm
57.4 USD   -1.09%
12:38p MICROSOFT : Salesforce pushes regulators to block Microsoft`s Linked..
12:19p MICROSOFT : plans to address the ethical issues of AI with new partn..
12:19p MICROSOFT : AvePoint Partners with Rencore to Enhance and Secure Sha..
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector news 

Dell's strategy questioned as shares dive

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/23/2012 | 10:29pm CEST

Shares of Dell Inc (>> Dell Inc.) plunged 17 percent Wednesday after a disappointing revenue forecast spurred fears that global tech spending is weakening faster than anticipated and raised doubts about the PC maker's strategy.

Shares of Dell Inc (>> Dell Inc.) plunged 17 percent Wednesday after a disappointing revenue forecast spurred fears that global tech spending is weakening faster than anticipated and raised doubts about the PC maker's strategy.

The stock plunge erased more than $4 billion in the company's market cap.

Rival PC maker Lenovo Group Ltd (>> Lenovo Group Ltd), which reported results overnight that benefited from its dominance in the rapidly expanding Chinese market, fueled concerns after warning that it too saw a slowdown in U.S. and European corporate spending on PCs.

Shares of global leader Hewlett Packard Co (>> Hewlett-Packard Company) closed 3.2 percent lower at $21.08 on expectations the company would announce a restructuring and sweeping layoffs after the market closed. HP said late Wednesday it would lay off about 27,000 employees or 8 percent of its workforce as it eyed more than $3 billion in savings.

The accelerating popularity of mobile computing devices such as Apple Inc's (>> Apple Inc.) iPad has been eroding PC sales for years. To combat the erosion in sales to consumers, as well as dwindling margins as companies compete on price, Dell and HP have been gradually focusing more on sales to large enterprises.

Dell has been diversifying its revenue base in the face of weakened consumer demand, giving up low-margin sales to consumers and moving into higher-margin areas, such as catering to the technology needs of small and medium businesses in the public sector and the healthcare industry.

The company now finds itself lagging larger rivals like HP and IBM (>> International Business Machines Corp.) in the race to become one-stop shops for corporate IT needs.

Shebly Seyrafi, analyst with FBN Securities, said it was a "tough call" whether Dell's diversification strategy is working.

"The revenue slide does raise doubts about their strategy," Seyrafi said, adding that it appears Dell is waiting for the launch of Microsoft's Windows 8 software that will help it become a stronger player on the tablet market.

"It's all bit of wait and see," he said.

Also, many analysts now see this transition, which Dell began a few years ago, as a lengthy process.

"While we think that Dell's story of improving mix is still valid, it will take a long time to play out," said BMO Capital Markets analyst Keith Bachman.

Dell shares have lost half their value since the high-profile return of founder Michael Dell to the company's helm in January 2007. His return was hailed as pivotal in regaining the market share ceded to an aggressive HP in the preceding years, but in five years Dell has continued losing ground, especially in the consumer arena, to HP and Lenovo.

RUSH TO CUT

Once the world's top PC maker and a mainstay of business-school case studies, Dell has been losing market share and now vies with Asian PC makers like Lenovo.

Lenovo can rely on China to propel revenue growth and boost its bottom line. The company commands more than half of the world's second-largest personal computer market.

"IT demand softened unexpectedly in the month of April," Raymond James analyst Brian Alexander wrote. "While Dell walked away from business as the quarter progressed, it initially took more deals that did not meet its profit objectives."

Dell shares closed 17.2 percent lower at $12.49 on the Nasdaq. Earlier in the day, it forecast revenue of $14.7 billion to $15 billion in the current quarter, well short of analysts' average forecast of $15.4 billion.

Wall Street brokers, including RBC, Jefferies and Evercore, cut their price target on Dell shares.

A cautious IT spending environment and challenges in its PC business will keep dogging Dell in fiscal 2013, BMO Capital Markets analyst Jung Pak wrote in a research report, cutting the price target on the stock to $16 from $18.

Analyst Rob Cihra of Evercore Partners said Dell may be forced to cut prices in order to boost revenue.

"We think Dell continues to walk away from just too much business in the name of margin stability," Cihra said in a research note.

"We just don't see how Dell can keep trying to avoid competitive pricing," he added, noting that the company will otherwise have a hard time differentiating its computers, which like rivals' products are based on Intel Corp (>> Intel Corporation) chips and Microsoft Corp (>> Microsoft Corporation) software.

Dell's first-quarter earnings and revenue were also lower than expected, hurt by weak sales to consumers, large enterprises and government units.

"The non-PC transformation is not big enough yet to absorb acute pains in PCs," said JPMorgan Securities analyst Mark Moskowitz, who cut his price target to $19 from $21.

(Reporting by Poornima Gupta in San Francisco, Supantha Mukherjee in Bangalore and Sinead Carew in New York; Editing by Edwin Chan, Joyjeet Das, John Wallace and Matthew Lewis)

By Poornima Gupta

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on MICROSOFT CORPORATION
12:38p MICROSOFT : Salesforce pushes regulators to block Microsoft`s LinkedIn deal
12:19p MICROSOFT : plans to address the ethical issues of AI with new partnership
12:19p MICROSOFT : AvePoint Partners with Rencore to Enhance and Secure SharePoint Cust..
12:18p STARBUCKS : Outlook 2016 Add-ins Coming to the Mac
09:31a MICROSOFT : Cloud|AG Announces New ServicePoint365 Managed Offering for Office 3..
09:23a MICROSOFT : Corridor Company and IACCM to Host Joint Webinar on Leveraging Offic..
09:01a MICROSOFT : Kiron and tts Extend Their Partnership
08:49aDJSalesforce Battles Microsoft, LinkedIn -- WSJ
06:58a MICROSOFT : 18 African countries to automate online intellectual property regist..
05:59a Salesforce urges EU to probe Microsoft, Linkedin antitrust issues
More news
Sector news : Software - NEC
09/28DJApple and Deloitte Form Enterprise Service
09/28DJBusiness Watch -- WSJ
09/26DJAdobe Makes Microsoft's Azure 'Preferred' Service
09/26DJAdobe Makes Microsoft's Azure 'Preferred' Service
09/21 European tech firms tiptoe back to IPO market
More sector news : Software - NEC
News from SeekingAlpha
06:59a WALL STREET BREAKFAST : Deutsche Bank Fears Pile Up
05:54a Facebook at Work set to launch on Oct. 10
02:05a Salesforce looks to block Microsoft-LinkedIn deal
01:22a Why Data Center REIT DuPont Fabros Is A Dividend Growth Stock
09/29 Buying Dividend Growth Stocks Without Looking; 17 Months Later.
Advertisement
Financials ($)
Sales 2017 93 828 M
EBIT 2017 28 286 M
Net income 2017 19 337 M
Finance 2017 64 706 M
Yield 2017 2,67%
P/E ratio 2017 23,41
P/E ratio 2018 18,68
EV / Sales 2017 4,08x
EV / Sales 2018 3,88x
Capitalization 447 290 M
More Financials
Chart MICROSOFT CORPORATION
Duration : Period :
Microsoft Corporation Technical Analysis Chart | MSFT | US5949181045 | 4-Traders
Full-screen chart
Technical analysis trends MICROSOFT CORPORA...
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 36
Average target price 59,9 $
Spread / Average Target 4,3%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Satya Nadella CEO & Non-Independent Director
Bradford L. Smith President & Chief Legal Officer
John Wendell Thompson Independent Chairman
Amy E. Hood Chief Financial Officer & Executive Vice President
Harry Shum Executive Vice President-Technology & Research
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
MICROSOFT CORPORATION3.46%447 290
HEXAGON AB18.65%15 114
RED HAT INC-3.20%14 517
CITRIX SYSTEMS, INC.12.28%13 227
SYNOPSYS, INC.29.53%8 941
SPLUNK INC-1.84%7 767
More Results