Does a Huge Earnings Miss at Dell Inc. (DELL) Signal the End of the PC?

Alternatively, sector bears can consider similar positions in Hewlett-Packard Company (NYSE:HPQ), which recently lost its position as the world’s largest PC maker to Lenovo.  Looking at Hewlett-Packard Company (NYSE:HPQ) stock in terms of relative valuations, HP’s higher P/E ratio (at 11.5, versus Dell’s 9.9 P/E value) makes it another option for sector bears.  The most recent earnings release from HP shows that quarterly revenue dropped by 10% (to $27.6 billion) where analysts were looking for a result of $28.12 billion. These downside surprises show that the industry weakness is not isolated at Dell, but rather indicative of a wider set of of difficulties in PC markets as a whole.

The combination of all these negative factors will likely continue to put downside pressure on the PC sector, as weaker profit performance continues to be driven in major changes in consumer behavior.  Forecasts for PC sales continue to show a negative outlook so it makes sense to consider selling these companies while they continue to hold at elevated levels for the year.

The article Does a Huge Earnings Miss at Dell Signal the End of the PC? originally appeared on Fool.com and is written by Richard Cox.

Richard is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.