The market leader in PCs, Dell Inc. (NASDAQ/DELL), had a strong run, but it is now facing the surging shift to tablets. The company beat on its fourth-quarter revenues, but fell short on company earnings. Dell also disappointed after offering soft revenue guidance for the first quarter. The pickup in tablet sales is likely hurting Dell, even though it also makes tablets; however, they’re nowhere nearly as successful as the iPad made by Apple Inc. (NASDAQ/AAPL). I continue to view the latter stock as a long-term buying opportunity.
Hewlett-Packard Company (NYSE/HPQ) also disappointed investors after slightly beating on fiscal first-quarter earnings, but coming in short on revenues. Earnings were much lower than the prior year and revenues declined 7.1% year-over-year. Hewlett-Packard also provided soft fiscal second-quarter guidance like PC market leader Dell.
The commonality is that both of the companies are blaming the declining PC sales on the meteoric rise of tablets as a replacement for PCs and laptops, and hence neither is a buying opportunity.
What I described is why I continue to favor Apple as a buying opportunity, which is that it is edging higher after breaking the $500.00 price level to become the world’s largest company based on market cap. The company has about $100 billion in cash, which is plenty to acquire both Dell and Hewlett-Packard, but I do not believe Apple views either of the two companies as a buying opportunity. Apple is the “best of breed” and a killer in the personal computing market.
I think it will just be a matter of time before tablets have the same functionality as laptops and PCs. For instance, when the first Apple “iPhone” emerged a few years ago, there was minimal functionality. Users could not print e-mails or files sent to them, but now with the “airprint” feature on many wireless printers, you can print from an iPhone or iPad. We will soon be able to work on spreadsheets and other applications on tablets with the same functionality as PCs and laptops. This makes the top tablet makers a buying opportunity.
The reality is that the technology world is ever evolving and there is a constant buying opportunity. Now it’s all about mobility. Microsoft …
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