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Thursday, November 02, 2006

Holiday Sales May SInk Dell And Set-Back Apple


The people at Goldman Sachs who upgraded Dell to "neutral" must not read the papers. The scribes at The Wall Street Journal say that computer prices are going through the floor this hoilday season.

Not everyone can be right on this one. Without Vista from Microsoft, some people will delay buying new PCs until early next year. No one knows how many. But, with most of the current generation of PCs running Pentium IVs, there are probably very few performance reasons for moving to a new machine. Why not wait for the hot software?

Analysts are saying that to get people into stores or online, companies like Dell, HP, and Gateway are going to have to do the limbo on pricing. If so, Goldman's theory on Dell may be wrong. The stock is up 3.5% today on the upgrade to almost $25, which means it is back in the middle of its 52-week range of $33.22/$18.95. It doesn't belong there. At least not until Vista is out.

Apple may be another victim of the PC market over the next few months. It is hoping that it computer sales can grow as iPod sales reach a saturation level. The have cut a deal with Best Buy and believe that the success of the iPod and the new Intel-based Macs will bring the new business in. The problem is that it is hard to sell premium PCs when the competition is selling very good machines for under $1,000.

Not a bright picture for anyone except the consumer.

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

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