Dell profit falls almost in half; announces informal SEC probe

“Late yesterday, Dell reported second-quarter results that show profit fell almost in half. The company earned $502 million, or 22 cents per share, on $14.09 billion in revenue. A year ago it earned $1.02 billion, or 41 cents per share, on $13.43 billion in revenue,” Ed Stenson reports for Schaeffer’s Investment Research.

Full article here.

“Dell Inc. (DELL : $20.70, -2.10, -9.2% ) saw its shares fall as much as 9%, to $20.74 Friday… Dell also said it has been under informal investigation by the Securities and Exchange Commission since August 2005 over past accounting practices. Goldman Sachs analyst Laura Conigliaro cut her rating on Dell’s stock to sell from neutal on the grounds that the company is likely to perform weakly compared to its main rivals over the next several months,” Rex Crum reports for MarketWatch.

Full article here.

MacDailyNews Take: We will dance on Dell’s grave.

Related MacDailyNews articles:
WSJ: Dell’s back-to-school business may be at risk – August 17, 2006
Dell cannot compete with Apple’s new Mac Pro price or feature set – August 15, 2006
Dell issues largest safety recall in history: 4.1 million laptop batteries due to fire threat – August 14, 2006
Dell warns of earnings miss; shares plunge 15% – July 21, 2006
Apple passes Dell in market value – May 02, 2006
Dell shares fall as Citigroup cuts rating two full notches from ‘buy’ to ‘sell’ – April 21, 2006
Dude, you got a Dell? What are you, stupid? Only Apple Macs run both Mac OS X and Windows! – April 05, 2006
Apple Mac is #1 in European education market, pushes Dell down into second place – February 03, 2006
Why buy a Dell when Apple’s Intel-based computers will run both Mac OS X and Windows? – June 08, 2005

46 Comments

  1. Not to mention their boxes are butt ugly. Worthy only to be hidden in the closet.

    I got a catalog from them the other day. Those boxes have the design aptitude of a … well, I can’t think of anything that equates to how terrible they look.

    A cow flop has more design sense.

  2. Market Cap At Time of Posting

    Apple $ 57,400,784,920
    Dell $ 48,608,991,560

    Earnings Per Share
    Apple $ 2.22
    Dell $1.42

    If I were put in charge of Dell I would break it up, sell the components and give the money back to investors

  3. DLMeyer >

    Or it could be that Apple’s intellectual property has some value that the market recognises.

    Dell could also have some IP, but given their paltry spending on R&D ($128 million against Apple’s $175, which in real terms [expressed as a percentage of revenues] works out as 0.91% to 4.00%), maybe they don’t have any.

    Maybe the market realises that Apple is investing in its future, whereas Dell is paying for Microsoft’s future.

    I don’t know, I’m just spitballing here – help me along.

  4. ROTFFL!!!!!!

    FINALLY people are beginning to see how much Dell sucks donkey. well, give the money back to the share holders…oh wait, I think I might enjoy watching the slow death….. so go ahead ride it out, you can listen to your dj ditties (if they work) on the way to the grave!!!!!!

    HAHAHAHAHA

  5. There is another aspect of Dell’s death spiral that bodes very well for Apple’s future. Apple, Dell and other PC makers use an overlapping set of suppliers for their products. By Apple taking market share from the PC makers, it needs only to contract for more manufacturing for Macs from the same people who are already cutting back production for customers with declining sales. Yes, Apple will have to qualify the production lines as meeting their standards, but that is a whole lot easier and faster than trying to grow a market from scratch.

    The key implication is this. Apple’s victory – which I predict — in taking huge hunks of market share away from Dell, HP, Lenovo and the also rans can occur very quickly. Mac sales will hit like a tsunami, rising up and smashing their competition. If Apple can get the iPhone right, the same dynamic exists. Starting from zero in a huge market is very difficult, but if you succeed, victory can come swiftly.

  6. DLMeyer,

    P/E’s are usually a metric for future value of a company. Apple will be growning way more than two times faster than Dell over the next year or two. This is why the P/E is higher; people are expecting Apple to grow faster (which it will). This is why small companies have high P/E’s and big companies have smaller P/E’s. It’s a lot easier for a company with 5% market share or a market value of $200 million to grow at a fast pace compared to companies with 70% market share and $100 billion market caps.

    I’ve been aginst Dell and Microsoft because I think there is too much good coming from other places for these two companies to keep their huge market share. At least not without a huge change in the company.

    Dell’s R&D is probably going to find out why their batteries explode. Apple’s R&D money is going to create an amazing product.

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