Dell Weighs On Tech


Dell reported earnings after the close last night and investors appear not to have liked what they heard.

While revenue was up 8.5% and net income 27%, gross margins were a bit below where analysts expected them, US Consumer PC sales declined by 6% and earnings came in a penny below expectations (DELL 3Q FY 08 Earnings Release) (“Forecast Clouds Dell’s Results” (subscription required ), Friday November 30, The Wall Street Journal).

To me, the numbers look pretty good but Dell shares are being taken to the woodshed (which was, fortunately, remodeled by Lowe’s recently), down about 13% and the second most actively traded stock on the NYSE and Nasdaq.

This makes Dell extremely cheap at less than 14 times trailing 4 quarter Net Income and Free Cash Flow.

Anyways, this report seems to be weighing on tech as the Nasdaq is about flat while the other indexes are putting in a decent up day.

UPDATE (Fri 11/30, 12:45pm PST): MarketBeat has a post up citing analysts who say that Dell might reward patient, long term investors.

I agree as I wrote in the comments: “I think some time in the next year or two, Dell will offer massive value”.

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