Computer users are starting to think outside of the box, and that's bad news for Dell (DELL) and Hewlett-Packard (HPQ).
The two PC giants will be reporting this week -- Dell on Tuesday and HP on Wednesday -- but investors aren't holding out for much. Analysts see both company posting modest declines in profitability.
Global desktop and laptop sales have stalled. The iffy world economy isn't helping. But the real culprit here is the trend that finds consumers turning to smartphones and tablets for their basic computing needs. Why not? Casual users that were relying on their PCs for checking email, surfing the Web, and playing social games can probably get by with a portable mobile device.
Microsoft (MSFT) was supposed to save Dell and HP with the release of Windows 8, but now even Mr. Softy is thinking outside of the box with plans to release its own Windows-propelled tablet later this year.
If Dell and HP have any ideas on how they plan to combat the trend that's working against their core business, this week would be a great time to let investors know.
Other Things Worth Watching
• Best Buy (BBY) and Barnes & Noble (BKS) -- two retailers that have seen better days -- will also be reporting this week. Best Buy is dealing with the "showrooming" trend that's sending deal-seeking shoppers to cheaper online retailers. Barnes & Noble is struggling with the migration from physical books to digital editions. Yes, Barnes & Noble is a significant player in the e-reader market with its Nook, but it's been a money-losing business so far.
• Moving on to good news, Salesforce.com (CRM) checks in with its latest quarterly results on Thursday. The poster child for cloud computing has seen its business take off as companies flock to its Web-based enterprise software solutions that are cheaper and more portable than traditional offerings. Analysts see Salesforce's profitability soaring 30% for the quarter. That's what you get for thinking outside of the box.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Best Buy, salesforce.com, and Microsoft. Motley Fool newsletter services have recommended buying shares of salesforce.com and Microsoft, creating a synthetic covered call position in Microsoft, writing puts on Barnes & Noble and shorting salesforce.com.
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