Dell’s (DELL) shares moved up as much as 6% after hours. The would put them at $28.50. That is about where the stock traded in November 2005.
Dell has made remarkable improvements since Michael Dell reclaimed the CEO job. The price the company gets per computer is up. Component costs are down. And, the company’s server line continues to grow and has the largest market share in the US.
But, revenue is still flat at around $14.6 billion. And, one quarter does not a recovery make.
In 2005, Dell had revenue of $49.2 billion, up from $41.4 billion in 2004. Operating income was $4.3 billion compared to the 2004 figure of $3.5 billion.
Granted, Dell was entering a difficult period, but it was still about to report a banner year.
The figures raise a critical question. Is a stock more valuable as it is beginning a rough patch or when it appears that it might regain its footing? It is too early in Dell’s revival to say whether using retail outlets like Wal-Mart (WMT) and cutting 10% of its staff will do the trick. Hewlett-Packard (HPQ), Acer, Lenovo, and Apple (AAPL) still want Dell’s customers.
And, there is still very little evidence that Dell can start to get its revenue going again. Firing almost 9,000 people is a trick that only works once.
Douglas A. McIntyre can be reached at [email protected]. He does not owns securities in companies that he writes about.
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