Dell shares dropped by about 3 percent on NASDAQ on Monday, after news that an analyst for UBS Securities cut his financial estimates and rating on the Round Rock, Texas-based direct PC company.
The downgrade comes a week after Gartner Group and IDC both said they found Dell lost still more market share ground to rivals, including Hewlett-Packard:
Our checks indicate that Dell's struggles in the US PC market have picked up since last quarter. We believe corporate desktops and consumer segments are
particularly weak in the US and we believe Dell is losing share in Europe. Also, the ramp up of sales of AMD-based systems may be slower than expected.
AMD, which officially reports earnings Tuesday, warned Wall Street earlier that while its unit shipments increased during the fourth calendar quarter of 2006, pricing essentially collapsed and will cause the Sunnyvale, Calif.-based chip maker to miss analyst targets. Dell is one of AMD's largest customers.
UBS analysts had been expecting rough waters for Dell as it works to transition from low-margin to higher-margin products in its lineup -- a strategy that many believe will slow down its sales. Still, they said, the amount of decline they apparently are seeing from Dell has caught them off guard.
"While we have been cautious about Dell's revenues for a long time, we were still surprised at the recent level of (year-over-year) PC shipment declines (both worldwide and in the US) that were recent reported from IDC and Gartner," said the UBS analyst report. The consulting groups found that Dell's shipments in the fourth quarter actually declined by eight percent.
