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Friday, July 21, 2006

Dell's Hell Part 2 (or is it Part 12)

This morning Dell (DELL) stunned the NASDAQ and the tech sector by announcing yet another earnings and revenue warning.

I noted in an article just on July 12 (ARTICLE HERE) that things would be getting worse and the stock may break under the $20's handles. Guess what, it is down $3.40 at $18.70 pre-market.

Here was the summary: So far about all anyone bullish in the name can cheer is two issues. The bulls can bet on the idea that perceptions are now so bad that any news not showing a bloody forecast may be rewarded in a relief rally, and they can try to discuss "compelling valuations" and "overly negative sentiments". Maybe that is three things, but you can get the drift. This really makes you wonder if the shares will break under $20.00 before the tides in this sector change.

Someone needs to figure out the magins for appliances like dishwashers and refrigerators, because that is the path that Dell and likely other PC makers are on. The only difference I can point out is that dish washers and refrigerators do not have a major software upgrade cycle coming (even if it is delayed time after time).

Jon C. Ogg
July 21, 2006

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