Dell Shares Tumble, Analysts Mixed on 3Q

Associated Press ^ | November 30, 2007

[HAL9000]

Excerpt -

NEW YORK (AP) -- Dell shares plunged Friday after the computer maker posted third-quarter results, though at least one analyst called the 13-percent drop in the shares a "buying opportunity."

"We also see several near-term catalysts, including an aggressive buyback beginning next week, cost reductions and additional retail partnerships," wrote Citi Investment Research's Richard Gardner in a note to clients.

On Thursday, Dell posted quarterly results just short of Wall Street's expectations. And in its first earnings conference call in more than a year, executives predicted more restructuring costs as the company reshapes its business through acquisitions, more layoffs and a focus on fast-growing markets and products.

~ snip ~

American Technology Research analyst Shaw Wu called Dell's results mixed, with strong sales offset by lower gross margin.

Wu said the quarter's 18.5 percent gross margin fell short of consensus expectations of 19.1 percent, despite a favorable shift toward notebook computers during the quarter.

"We find this odd as (Apple Inc.) and HP experienced the opposite and our own supply chain checks indicate otherwise. Moreover, Dell's (average selling prices) were flat to up, indicating pricing pressure wasn't a big issue," he wrote.

The analyst thinks "poor procurement execution" was the main reason for the margin shortfall.

"It is interesting to note that Dell's costs may actually now be higher than HP and Apple, something that was unthinkable not that long ago," he wrote.

~ snip ~

[martin_fierro]

The analyst thinks "poor procurement execution" was the main reason for the margin shortfall.

Oh.