Wall Street Watch Wednesday: Dell's Not Swell
Although the company reported a better than expected adjusted profit of $0.50 a share, it's the 8% drop in revenue that's drawing attention for all of the wrong reasons. Analysts were only expecting a top-line decline of 6%.
No one is surprised to find that desktops and laptops just aren't selling these days. The success of smartphones and tablets as "good enough" computing gadgetry has come at the expense of traditional PC manufacturers. The market's also expecting to see Hewlett-Packard's (HPQ) revenue slip when the larger PC maker reports after Wednesday's market close.
However, investors have been holding out hope that the release of Microsoft's (MSFT) Windows 8 in a few weeks will make things better. New installments of the software giant's popular operating system have historically triggered an upgrade cycle. Why go through the clunky process of swapping out an operating system when powerful systems with Windows 8 preinstalled can be had at reasonable prices?
Well, that might not be happening.
Dell disappointed the market with its outlook. The tech bellwether sees revenue during the current quarter dipping 2% to 5% sequentially. It's also now expecting to earn "at least" $1.70 a share for the entire fiscal year. Wall Street was banking on sequential revenue growth during the current quarter and a profit of $1.95 a share for the year.
Dell's a disappointment, and now all eyes are on HP's report that will hit the wires shortly after the closing bell.
Other Things Worth Watching
Dell may have missed on the top line, but that didn't happen at La-Z-Boy (LZB). The seller of the signature recliner and other furniture items posted better than expected revenue on Tuesday night, fueled by an impressive 8.2% spike in same-store sales. (Maybe Dell should start selling leather recliners.)
Williams-Sonoma (WSM) also posted encouraging results after Tuesday's market close. Unlike Dell, the upscale retailer of house wares and stylish furnishings actually boosted its guidance. (Interested in getting into the Dutch ovens and powered juicers business, Dell?)
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services have recommended buying shares of Williams-Sonoma and Microsoft.