Dell Can’t Win

There’ve been some more ant-Dell articles in the news. The fear now is that Dell (DELL) is losing market share. Or rather, it’s not gaining market share as quickly as it used to. That’s all you need now to write an anti-Dell piece. Here’s an article on Dell from yesterday’s Financial Times:

Although Dell continued to lead the PC industry in worldwide shipments, its shipment growth rate was 17.6 per cent, compared with an average growth rate of 17.2 per cent worldwide, according to Gartner, the IT consultants.
“Dell normally has a premium,” said Loren Loverde at IDC, the IT research group, whose separate report showed similar results.
Mikako Kitagawa, a Gartner analyst, said the change likely reflected a reduced focus on growing market share and an increased focus on profitability at Dell, which shocked Wall Street in August after second-quarter sales failed to meet forecasts in spite of aggressive price cuts.
A Dell spokeswoman declined to comment on third-quarter shipments. However, she said the company’s strategy had not changed and that the company would “continue to drive balanced and profitable growth”. Dell is scheduled to report its third-quarter earnings on November 10.

This is almost becoming a cliché. Let’s put this in some perspective: The “problems” at Dell are nearly trivial. The company is doing extremely well. Last quarter, Dell earnings were merely inline with the Street, and its sales were slightly below forecasts. From this, everyone is now assuming the worst. The CEO said that the company could have made up the shortfall with a $10-$15 increase in each unit sold. Now Dell is concentrating on higher margins, and the media is complaing that it’s losing market share. Dell can’t win! Meanwhile, the stock is at a 52-week low, and very close to a two-year low.
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Posted by on October 19th, 2005 at 8:51 am


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