Dell Inc (DELL) Has a Good Quarter on PC Demand
The leading maker of PCs in the United States, Dell Inc, put together one of their better quarters since the US economy began to sour but the stock remains expensive after a recent run-up. The stock of Dell has rallied over the past three months from $11.50 a share to over $16.00 as the outlook for technology companies worldwide has improved.
Second Quarter Earnings
This morning the company announced 2nd quarter earnings which beat expectations. On lower revenue they were able to post 28 cents a share of income well above expectations of 23 cents. Revenue is expected to decline 16% this year compare to last year and finally rebound 4.5% next year.
The company has reported stabilized demand from consumers and businesses for PCs but they feel business demand will not improve until 2010. Windows 7 is one of the catalysts that should increase PC demand among business owners as companies will want to take advantage of the upgraded operating system with better performing machines.
Long Term Trade
With a current price/earnings (P/E) ratio above 15, revenue decreasing, and earnings still falling, any investment in Dell needs to be long term. Next year earnings are expected to increase 18.6% compared to the current year which would allow for some slight appreciation in the stock price.