Nov 16 At least six brokerages cut their price
targets on Dell Inc's stock saying weak PC sales are
likely to persist, and the No. 3 PC maker's shift to enterprise
solutions could be slower than expected.
Dell reported a 47 percent drop in quarterly profit on
Thursday, hurt by lower PC sales and weaker demand from large
Shares of the company were set to open 2.5 percent down on
Friday. They closed at $9.56 on the Nasdaq on Thursday.
"Near-term stability in PCs could be elusive due to macro
challenges, elongating useful PC lives, and the ongoing shift in
IT dollars to smartphones and tablets," JP Morgan analyst Mark
Moskowitz wrote in a note.
He cut his price target on the stock to $14.50 from $16.50.
"Dell's PC business should continue to see challenges from
Apple in tablets and the company may need to make
acquisitions at a rapid pace to stem the declines," Barclays
Capital analyst Ben Reitzes said, and cut his price target on
the stock by a dollar to $10.
Reitzes said he had "fundamental concerns" whether the
company's transition to enterprise can ramp up fast enough and
successfully enough to offset pressures in PC-related
Dell, once the world's top PC maker and a pioneer in
computer supply chain management, is struggling to defend its
market share against Asian rivals like Lenovo Group Ltd
. Dell is trying to bolster growth by focusing on
products and services to corporations.
In October, the company's new enterprise business chief
Marius Haas said Dell intends to push ahead aggressively to grab
a bigger portion of the $110 billion market catering to the
technology needs of corporations.
While Dell said it expects revenue to grow as much as 5
percent in the current quarter, BMO Capital Markets said revenue
and earnings declines would not likely reverse in the near term
owing to weak demand.