Dell's quarter indicates a slowdown
We'll see lower stock prices until large companies say the downturn is only temporary.
So far, Urban Outfitters (URBN) is in a class by itself in saying that the last 10 days leading up to its conference call were disastrous in at least one of its divisions, Anthropologie. I am still reeling from that startling statement and have tried to back it up with others to be sure that URBN isn't something unto itself.
I didn't get it from Home Depot (HD), which didn't have anything negative to say at all. Last night, when talking to Steven Sadove, the CEO of Saks (SKS), I heard that the days leading up to the quarter have been business as usual, consistent with excellent metrics. I didn't hear it from Howard Schultz on Tuesday either, with Starbucks (SBUX) seeing no slowdown.
But last night on the Dell (DELL) call we got lots of evidence that consumer demand is "weaker and a bit more uncertain," which translated into a hideous outlook: revenue growth going from a 5%-9% increase, totally respectable, to 1%-5%, completely unacceptable, hence why we are seeing so much selling.
Their Urban Outfitters moment, reiterated several times like on the URBN call, specifically identifies "the last few weeks" as the time frame.
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Now, of course, it's easy to say that Dell's problems are Dell's and therefore Apple (AAPL) is taking share. We know that rap.
But I think if we are on recession watch -- and that's certainly the case after the budget fiasco -- Dell is an important indicator of a slowdown.
Here's how I think things will shake out. There are enough companies that aren't seeing a slowdown that prices may have come down too far during the big decline. But there are enough that have seen it that we didn't deserve the big repeal of the decline.
I think it will cut to lower prices until we see large companies like Dells say it was temporary.
Given that we just saw this decline, that's highly unlikely, and I don't think we can make up higher ground of any significance from here until we know more for certain about these fated last 10 days.
At the time of publication, Cramer was long Apple.
Follow Cramer's trades for his Charitable Trust.
Cramer obviously hasn't been to Best Buy lately. PC's are definately no longer the hot item. They're still for sale and all that. But the buzz is the iPad and its clones. They are getting center stage on the display table. Apple stock, by the way, is sitting somewhere north of $350 a share. Dell is not the bell-weather of this economy anymore...at least not the IT/consumer side. Give it a rest, Jim.
Dell's growth is slowing because they lost there way . the only thing Dell predicts is
their own failure... not the economy's
What is the number one reason Dell sales are down? It's called the Apple iPad. Many of Dell's largest customers, school districts, are moving away from laptops and desktops and handing students and staff an iPad...
Dell has not made a great product in sometime, and in hard times the buyers become more discerning.
Hmmm are we having a recession soon or not. is growth maybe plus 2% for the next few qrts or could we see a coulple of minus 1 quarters in there. Its like watching an old man on a bad bike ride up hill What happens if he hits a speed bump will that make him stop, what happens if the soft tire really goes flat........
So how do we compete in a global economy
1. Education Education Education we still have to import folks for alot of high paying jobs since we have a shortage of scientists, engineers, doctors etc
2. build infrastructure in america not afghanistan, or anywhere else
3. develop a national energy policy we should be selling oil not importing it
4. get our debt under control about 4 trillion in debt reduction this decade is minimal. Remember the Obama/Boehner plan that would have about covered it
If we do these step we will have anice economy in a few years until then we are just a bunch of old men praying the leaky trie will not go flat
I have been a loyal customer of Dell for many years. But, I have noticed a BIG drop in service, support, and quality. I am sure the economy is partly to blame; but, I will not continue with Dell if they don't realize that they are hurting their loyal customers and their reputation. Dell should return to the level of professional quality that they had before they became to big for the average consumer. Thumbs down Dell...
Cramer is not the sharpest knife in the drawer for just making his assumption after this one company. Dell is not a good indicator because they have not made a good product in over 10 years. People are starting to figure this out and they are switching to Apple and other companies that are putting out a better product. (HP, Toshiba, etc.) This decline in Dell will hopefully stay in place until they get their act together and decide to build a good computer again. Besides the Dell point Jim has been far too Bearish lately in his outlook. Maybe he will be happier with his stock picks next week.
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