Is Dell Any Better Off Than HP? (HPQ, DELL, AAPL, AMZN, GOOG)

Today was just not a good day for the turnaround at Hewlett-Packard Co. (NYSE: HPQ). We already covered that Meg Whitman was again lowering guidance the PC-maker and IT services. Meg’s new line is that the turnaround is not going to be fully realized for two years, and the company did not even commit to revenue growth being the same as GDP until 2016.

While it is easy to harp on HP over and over, what about elsewhere? The market reaction today is showing that investors believe that Dell Inc. (NASDAQ: DELL) is either no better or at least close to being in the same boat. Dell has been in turnaround mode for some time now and it faces many of the same issues, challenges, and even some of the same strategies as it goes after IT services and wants to diversify away from just the PC model.

Most investors and consumers understand what the deal is here. Apple Inc. (NASDAQ: AAPL) is sucking up all of the interest of consumers. Even diehard PC-fans buy the iPad and/or the iPhone. If they don’t, well Google Inc. (NASDAQ: GOOG) is winning with Android in smartphones and it is trying to gain momentum in the tablet market. Amazon.com Inc. (NASDAQ: AMZN) is also winning with the Kindle for those tablet buyers.

If you lower Dell’s consensus estimate by the same amount that HP lowered its estimates for, it is still hard to do an apples-to-apples comparison because the fiscal year-end of each is more than a half-year apart. That being said, HP trades at about 4.3-times forward earnings now that shares are down over 12% at $15.00 to a multiyear low. If you blend Dell’s earnings to try to get an overlap you end up with a blended earnings of just under $1.50 per share and its 5% drop to $9.40 is also a multiyear low and Dell trades at about 6.25-times a blended forward earnings.

It is a difficulty in just comparing Dell and HP based upon all of the known and unknown issues, but the reality is that both companies face many of the exact same hurdles. That being said, trying to find many H-P and Dell bulls is becoming harder and harder.

For whatever it is worth, market pundit Doug Kass is starting to pan Apple Inc. (NASDAQ: AAPL) of late. What if the Apple losers end up gutting Apple just over price and valuation woes?

JON C. OGG