Dell Computer recovers after stock declines to 52-week low

Dell Computer Corporation, the world's leading direct computer systems company and No. 2 personal computer maker, experienced a tremor in its solidified veneer as its stock declined to a 52-week low in the Nasdaq Stock Market Sept. 28. Dell recovered somewhat during the day, finishing at $32.44, a $1.19 drop.\nThe Round Rock, a Texas-based company, announced the same day that it would be reducing prices on some of its computer servers. Among the affected products: the Dimension desktop PC, with a 15 percent price slash as low as $799; the Inspiron notebook computers, whose prices will experience a 15 percent cut to $1,099; and the PowerEdge servers, whose value descends from 14 to 47 percent to a retail price starting at $1,199, according to The New York Times.\n"Dell's stock price is more of a measure of things than an influence," said Thomas Lyon, associate professor of business economics and public policy. "In general, you can certainly say that PCs seem to be becoming a commodity, and that is indeed forcing prices (and corporate margins) down."\nIndeed, Robert C. Klemkosky, chair of finance for IU, believes the stock-market dip is more a bruise on Dell's ego than anything else.\n"The market has certain expectations about revenue growth and earning per share and Dell disappointed it," Klemkosky said.\nThese expectations were Dell's hope for a 30 percent increase of revenue over the last fiscal year, where it earned $25.2 billion. Dell spokespersons now say they're projecting third-quarter estimates to be 3 percent lower than usual. They claim the weak demand for PCs in Europe attributed to the slight sub-performance, according to the London Times.\n"The frequency with which people are likely to replace a PC is an important factor, too," Lyon said. "You could argue that there is a slower expansion of software capability than in the past, which drives slower demand to faster hardware."\nLyon said this demand could rise quickly through concentration on alternative markets.\n"One of Michael Dell's arguments recently has been that more focus on the server business will help offset margin pressure on the desktop area and capture some of the opportunity that the continued growth of Internet sites (which require servers to run) presents," Lyon said. "So it's not strictly a matter of PCs."\nBut Dell's sub-par performance was upstaged by Apple's drop, which saw its stock plunge $27.25 to a stock of $25.75. Other companies such as Compaq (which dropped 65 cents) and Gateway (which declined by $7) also have endured the inevitable.\n"I think that there is a question about the personal growth of PCs," said Professor of Finance William L. Sartoris. "A lot of stock prices were rejected by announcements by companies that they have anticipated the same growth of PCs."\nIndeed Dell, ranked No. 3 on the list of Fortune's "most admired" companies will work hard to retain that admiration, broadcasting a fall analyst meeting in Austin, Texas Thursday night over the Internet. "You can't keep growing at the same percentage rate as you get larger and larger," Sartoris said.\nThe Associated Press contributed to this story.