Investors sold Dell (DELL) stock more than 6% on Oct. 19, after the release of statistics showing that the Round Rock (Tex.) heavyweight lost its lead in personal computer shipments to its Palo Alto (Calif.) rival Hewlett-Packard (HPQ).
For the first time since the fourth quarter of 2003, Hewlett-Packard moved into the No. 1 position for worldwide PC shipments in the third quarter of 2006. HP's lead over Dell is 110,000 units, according to preliminary results by Gartner, Inc. The information technology consulting firm's rival IDC calculated that HP's volume was larger than Dell's by roughly 28,000 units, putting the two at a "statistical tie."
The globally savvy HP has been making a comeback under its newly appointed chief executive Mark Hurd.
"Hewlett-Packard was able to leverage strong growth in international markets and relatively strong performance in the U.S. to boost overall volume incrementally ahead of its rival," IDC said in its press release Oct. 18.
Dell's stock sank 6.1% to $23.19 per share in early afternoon trading on the Nasdaq, while HP's gained 1.4% to $39.56 per share on the New York Stock Exchange.
"Dell felt the effects of the weak sales in the U.S. market, and it gave up some ground," said Mikako Kitagawa, principal analyst for Gartner Dataquest's Client Computing Markets Group, in a press release dated Oct. 18.
Banc of America analyst Keith Bachman said in a research note that the results were negative for Dell. He asked how the company will meet expectations during a weaker, slowing growth environment, if it can't meet revenue estimates during a robust PC demand environment. He maintained a neutral rating on the stock.