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Tuesday, November 14, 2006

Better Visibility At Dell (DELL)(MSFT)

Dell’s stock was upgraded by Deutsche Bank based on the firm’s belief that it has “better visibility” into the company’s near term prospects. The new price target is $28. The stock trades at $25.50, so investors might argue that the slightly higher price does not show boundless confidence on Deutsche’s part.

It is hard to say what might go well at Dell, at least this year. For a stock that has been pounded in the press and on Wall St., Dell actually is trading OK. The stock has run from under $20 in July to over $25. The stock was, however, over $41 just a year-and-a-half ago.

Conventional wisdom says that Dell will bleed until Microsoft Vista comes out and pushes PC sales back up. During the holidays, Dell and its competitors will cut prices to bring in customers ahead of the Vista launch in early 2007. Some customers will simply pass and wait for the new Microsoft OS no matter how attractive the pricing is.

Looking over Deutsche Bank’s shoulder, Dell does not look so hot. At least not until next year.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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