Chris Lau - Seeking Alpha

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Friday, August 29, 2008

Does Weakness in Dell Represent a Concern for Global Economies?

Dell reported earnings dropped to $616M (31 cents per share), from $746M (32 cents per share) in the same period last year. On closer inspection, earnings dropped because Dell was too aggressive in its pricing, especially in Europe, the Middle East and Africa.

In contrast, HPQ faced no such earnings drop.

It is important to monitor computer hardware/software earnings. It gives insight to the spending patterns of both corporations and consumers. Since the earnings weakness was endemic, other indicators will be required to monitor any changes in the global economy.

Below is a chart for Dell, illustrating the rally was suspect. Notice the drop in volume on each rally, indicating a lack of conviction.


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