Why Wall St. Doesn’t Like Dell’s Numbers–Laptops

August 31, 2007 by Douglas A. McIntyre

Dell (DELL) is not up this morning. Most investors thought it would be. The company reported preliminary results for its second quarter of fiscal year 2008, with revenue of $14.8 billion, operating income of $896 million and earnings per share of $0.32 . Those were better than last year’s numbers which are still subject to some accounting changes.

The first culprit for a poor reaction to Dell’s new is that the company said "near-term results could be adversely impacted by a slower decline in component costs in the second half of the year."

But, the other, perhaps more important reason is that Dell is not doing very well in the portable/laptop business. And, the industry is moving away from the desktop.

Percentage of Total Net Revenue:
————————————————-
Desktop PCs                                                    34%
Mobility                                                            26%
Servers and Networking                                     11%
Storage                                                              4%
Enhanced Services                                              9%
Software and Peripherals                                    16%

Laptops are driving the industry now.

Over at HP, desktop revenue rose modestly last quarter from $3.9 billion from $3.569 billion. Notebook revenue moved from $2.815 billion to from $4.084.

Dell did not show that kind of progress.

Douglas A. McIntyre

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