Dell Inc. (NASDAQ:DELL)’s weak earnings performance during the second quarter drove many brokerage firms to lower their price target for the company.
Analysts cut their price target, following the company decision to revise its full year revenue guidance below the $14.9 billion consensus analysts estimate, down to between $13.8 billion to $14.2 billion. Dell Inc. (NASDAQ:DELL) also adjusted its EPS at $1.70 in 2013, which is also lower than the $1.99 average EPS expectation.
Dell Inc. (NASDAQ:DELL) adjusted its guidance for the remaining quarters of the fiscal year due to current economic uncertainties and strong market competition. Shelby Seyrafi, analyst at FB Securities, believes Dell Inc. (NASDAQ:DELL)’s PC growth is highly affected by a strong competition in the Asian markets, weaker macroeconomic environments, and softer consumer.
Seyrafi said based on Gartner’s data, Dell Inc. (NASDAQ:DELL) is losing its market share to its competitors. During the second quarter of 2012, Dell lost 12 percent market share in Asia, while Acer Incorporated (TPE:2353) gained 4 percent, Lenovo Group Limited (HKG:0992)(PINK:LNVGY) 15 percent, and ASUSTEK Computer Inc. (Taiwan:2357) 39 percent market shares.
The world’s second largest PC maker also recorded revenue growth decreased in the BRIC region by 15 percent year-over-year. Its revenue also declined by 6 percent in America, and 7 percent in Europe during the second quarter of the current year.
FBN Securities retained the perform rating for Dell, and lowered its target price from $14 to $13 per share.
Vijay Rakesh, analyst from Sterne Agee, provided a neutral rating for Dell, with a $12.34 target price. According to him, the next quarters would be more challenging for Dell’s PC business due to the launching of Windows 8, Windows RT. multiple product choices, and competitive platform pricing.
Ben Reitzes, analyst from Barclays Capital, said in his research note to investors, Dell’s guidance for the next two quarters is weaker for its PC business due to the popularity of tablets and impact of the introduction of the Windows 8.
Meanwhile RBC Capital Markets analyst Amit Daryanani told investors Dell’s PC business declined faster than anticipated because of the growth of Apple Inc. (NASDAQ:AAPL) products and the increased competition from Lenovo.
Keith Bachman of BMO Capital Markets also said Lenovo Group Limited (HKG:0992)(PINK:LNVGY) is stripping Dell’s market share in the BRIC markets. He said, “We note that Lenovo Group Limited (HKG:0992)(PINK:LNVGY) has been very aggressive in gaining share in BRIC markets, which would make it difficult for Dell to grow revenues in these markets without participating in low-end PC markets.”
According to Rakesh, upcoming trends in the PC market will be clearer after Hewlett-Packard Company (NYSE:HPQ) reports its earnings today.
Based on the earnings preview reported by NBCNews.com, Hewlett-Packard Company (NYSE:HPQ) is expected to report its biggest quarterly loss of $9 billion, caused by its acquisition of the Electronic Data Systems in 2008. The company is also having difficulty in selling its PC. Consumers are stalling their decision to purchase PCs because of the launching of Windows.
According to the report, investors may not focus on the losses of the company. Investors are more interested to hear Hewlett-Packard Company (NYSE:HPQ) CEO Meg Whitman’s strategy for revenue growth.
Based on the data compiled by Factset, Hewlett-Packard Company (NYSE:HPQ) is expected to report 98 cents per share earnings on $30.19 billion revenue.
Dell’s stock value is down by 6.28 percent to $11.56 per share, while Hewlett-Packard Company (NYSE:HPQ) stock is also down by 3.46 percent to $19.24 per share, during the afternoon trading on Tuesday, 1:54 PM.
