Lackluster Stocks to Watch out for
Watch out for Dell’s stock price over the next few quarters. It’s still a relatively strong company, but they are facing some huge competition from other PC makers. In addition, they have a huge liability in that much of their revenue comes from the Federal government. I’ll explain later. Suffice it to say, if you are just learning how to invest in stocks right now, I would steer clear of stocks like this, although their business is still relatively strong.
IBM sold their computer business a little while ago to focus on software and services. They saw that the PC market was becoming commoditized. It ended up being a good move for them. A company called Lenovo bought IBM’s PC business and the ThinkPad is now being sold under that brand.
As far as competition goes, most of the other PC makers are diversified in other lines. Take HP for example. They sell computers, but a big chunk of their business is in software and switches as well.
The other problem is that almost a quarter of Dell’s revenues come from the Federal government. Everyone knows what they are trying to cut their budget by a sizable amount. That means there will be less employees and less of a budget for PC’s.