- JP Morgan comments on Dell Computer (NASDAQ:DELL) after the co announced that it would delay announcing its preliminary fiscal third quarter 2007 results. The results, originally expected tomorrow, will now be furnished by the end of the month. According to the company, the delay is a result of complexity associated with ongoing SEC and Dell Audit Committee investigations. The company also announced that the SEC has now entered into a formal order of investigation.
According to the firm last night's announcements continue to add uncertainty over events at Dell. The formalization of the SEC investigation does not bring hope that the issue will be resolved without impact to Dell's financials. The US Attorney's investigation into the matter is also ongoing.
With little evidence of any fundamental improvements in Dell's current financial condition, they believe it is best to avoid the shares at current levels. Firm continues to believe that that major structural and strategic actions are necessary to begin a bottoming process for the stock. These changes should include, but not be limited to the following: substantial changes in business leadership structure; significant refinements to the direct model in the consumer space; restructuring initiatives to lower discretionary spending and product cost structure; and aggressive attempts to exploit the microprocessor industry's profit pool (i.e., a more substantial move to AMD).
Notablecalls: I would not be surprised to see DELL go below the $25 level today. While several high profile investors have been positive on DELL over the past couple of months, I continue to be pessimistic regarding the co's future. Profit margins will never be the same. But that's a LT issue.
According to the firm last night's announcements continue to add uncertainty over events at Dell. The formalization of the SEC investigation does not bring hope that the issue will be resolved without impact to Dell's financials. The US Attorney's investigation into the matter is also ongoing.
With little evidence of any fundamental improvements in Dell's current financial condition, they believe it is best to avoid the shares at current levels. Firm continues to believe that that major structural and strategic actions are necessary to begin a bottoming process for the stock. These changes should include, but not be limited to the following: substantial changes in business leadership structure; significant refinements to the direct model in the consumer space; restructuring initiatives to lower discretionary spending and product cost structure; and aggressive attempts to exploit the microprocessor industry's profit pool (i.e., a more substantial move to AMD).
Notablecalls: I would not be surprised to see DELL go below the $25 level today. While several high profile investors have been positive on DELL over the past couple of months, I continue to be pessimistic regarding the co's future. Profit margins will never be the same. But that's a LT issue.
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