Market strategist: Dell’s poor quarterly showing shouldn’t hurt Apple Computer

“In light of the negative reaction to Dell’s poor quarterly showing, it’s worth revisiting the stock, to see just how vulnerable it is now,” Richard Suttmeier writes for “Dell’s second-quarter EPS was in line with consensus analyst expectations, at 38 cents, but sales missed. Sales for the quarter were $13.4 billion, higher than the same quarter last year but short of the expected $13.7 billion. The company expects third-quarter earnings of $14.1 billion to $14.5 billion and EPS of 39 cents to 41 cents. The Street anticipated that Dell would offer third-quarter EPS guidance of 41 cents on sales of $14.6 billion. This soft guidance is what prompted the negative market reaction.”

Apple “shouldn’t be too damaged by Dell’s selloff,” Suttmeier writes. “Apple Computer (AAPL) is currently 5.9% overvalued with fair value at $41.53, and it has a positive weekly chart profile. This is a much better screen than what we saw when I first profiled the stock on March 1. Back then, the stock was around 77.9% overvalued, trading near $44.50. After declining more than 20% into April and May, Apple held my annual value level of $34.22 and was 12.4% undervalued. With the success of the iPod and its positive halo effect on sales of Apple computers, Apple can hold up better than Dell on weakness. I view Apple’s current fair value level of $41.53 as support, but shares should have difficulty rising above my monthly risky level of $45.38.”

Full article here.


  1. Wow, Dell makes “only” 13.4 billion instead of 13.7 billion and already they’re clamoring about Dell beginning to fail? To me that still looks like a huge amount of income and a LOT more money than they made the year before. This isn’t a sign that Dell is going down so much as it is that they were a little off in their predictions. Whoops; it happens. I just don’t understand the stock market sometimes.

  2. Somewhere I read recently that Apple now has it’s production costs down to a level equal to or lower than Dell. Apple’s making money at record rates and Dell is underperforming it’s expectations. Maybe Dell should raise it’s prices.

  3. Why should this hurt Apple? Dell has been essentially giving away computers based on the prices they are charging, these results are only proof of that. You can’t sell large numbers of PCs at what’s most likely a loss and expect to have great results.

  4. I agree with you, confused, the market is all about FAG “fear and greed”

    Take the title of this very article, Why should Dell’s problems affect Apple’s stock price? Why on earth would Creative’s woes affect it either? It is totally ridiculous that in a quarter when Apple has stellar results and the direct competition is having problems, the bad news for the competition causes a drop in Apple stocks, totally effing stupid.

    Time for the stock market to back off, it has been given too much importance. The price of oil is a good example, a litre of gas in Venezuela is only seventeen cents! (approx. 75 cents/gallon) Essential commodities should not be put in the hands of the greed merchants!

  5. The stock market is very last century. I agree, it’s given too much importance. It’s not a good barometer to gauge the health of a business or industry. It’s too volatile, and people use it like a slot machine or a lottery.

    Disney is a perfect example of a company that’s too interested in appeasing its stock holders at the expense of its product and customers.

    The housing market is the new stock market, and the old stock market is the new Atlantic City.

  6. God how I hate Dell…this article made me smile though.
    You know I want to eat a barbwire biscuit everytime some one tells me how great their $399 (or other cheap computers, often Dells) is. It’s like somebody told me that they got a brand new car or truck for $1200. They go on and on about how spiffy it is and they tell me that it does what they want to go and so forth. They act like there is nothing else.
    My wife bought one of those Dell boxes and she hates it and very seldom uses it! Now Macs are not that expensive, very reasonable for all you get anyway.
    Friends, good is never cheap and cheap is never good.
    To Mike Dell: Get a clue, get a life, get a Mac!

  7. What amuses me most about the recent spate of chatter about Apple is the fact that analysts have latched onto the term “halo effect” as the new buzzword. It wasn’t too long ago that they were dismissing it as nothing but wishful thinking on Apple’s part [iPod sales spurring interest in Apple’s other products], but since the last quarter’s numbers caught them with their pants down, they’re “halo effect”-ing all over the place like the words were going out of style.

    In fact I’m heartily sick of it now, and I wish they’d stop saying it; they’re trying to sound hip and with-it, but they come across like a mom trying to seem cool to her teen-age daughter’s friends.

  8. I hate it when people come in to the store and tell me they are having problems with their computers, and then tell me they have a Dell. I REALLY want to blow them off, and tell them to go ask Dell. Oh right Dell doesn’t have a retail space. Don’t come wasting my time tapping my expertise when you have shopped somewhere else, especially Dell! What nerve!

    MW = volume
    as in, how appropriate since Dell is all about volume of sales.

  9. About the so call “iPod halo effect”

    I guess the fact that Apple has opened about a hundred retail stores has nothing to do with the rise in sales?

    Mw = space
    as in, the thousands of square feet in retail space and signage is a big factor.

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