Business

Morning Market Roundup: Dell’s Problems, BMW Sales

Here‘s what’s important in the financial world this morning:

BMW: The car manufacture said its expects double-digit percentage growth in the U.S. in 2012. And Cadillac says it will launch two new models to compete with BMW next year. Both brands have had sales improvements this year. Only one of two things could account for that.

The first is that BMW is taking market share from Mercedes, Lexus, Lincoln and Infiniti. Cadillac’s unit sales are up in 2011, so it must have added market share as well. Maybe luxury car sales overall are mediocre. Two or three companies might have the products or prices to outgrow their segment.

The other possibility is that the rich in the U.S. are enough in number and optimistic about their prospects that luxury car sales are up substantially. BMW’s forecasts may be easy to make because all combined high-end car sales will be up by double digits next year. The overall consumer economy is weak, but there is still room for a healthy market for cars and light trucks that cost more than $50,000.

Europe: Panicked bond investors have climbed in off of the ledge, at least for a day. Yields on sovereign debt issued by countries with strong balance sheets, such as France and Austria, rose sharply, especially compared to the yield on German debt. The fear of contagion pressed markets down around the world. But the climb in yield has halted and started to reverse. Equities markets have a good day or two.

U.S.: The relationship between Apple and Walt Disney has come full circle. Steve Jobs joined the Disney board in 2006 after the entertainment company bought Pixar, which Jobs helped to create. As part of the $7.4 billion transaction, Jobs became Disney’s largest shareholder. Yesterday, Robert Iger, Disney’s CEO, joined the Apple board. Apple remains locked in a battle with Netflix, Amazon.com and a host of telecom and cable companies for access to premium content. Iger could be an aid to Apple as it continues to set its digital content plans. There is, of course, the chance that Disney competitors will not appreciate Iger’s presence as an Apple overseer.

Dell’s earnings showed how hard it is to be in the mainstream PC industry now. Quarterly sales were little better than flat. Forecasts were poor, even when interruptions of the supply of computer parts due to the Thailand flood are taken into account. Dell has not been much of a contender in the tablet PC product or smartphone markets. Desktop sales have all but disappeared among consumers. Laptops have begun to be supplanted by lighter and more portable devices. Dell has been flanked by the rapid changes in consumer electronics.

(Douglas A. McIntyre—24/7 Wall St./The Blaze)

Comments (17)

  • CulperGang
    Posted on November 17, 2011 at 12:52am

    Daniel Hannan the voice of clarity and logic:

    http://www.youtube.com/watch?v=EqqdfdPnqAg

    Report Post » CulperGang  
  • truthseekerusa
    Posted on November 16, 2011 at 12:53pm

    I hope the Blaze does this Morning Market column every day. Worthwhile information, not only from the Blaze staff but also from the comments by subscribers.

    Report Post »  
  • Austinsteve
    Posted on November 16, 2011 at 11:51am

    As an ex-Dell employee, I believe the problems start with Michael Dell as CEO and the employees who he hires. First, Dell continues to hire Ivy League-rs, who are over-paid, lazy and self-serving. They arrive with a sense of entitlement and are only out for themselves — not for the ultimate success of the organization. Second, Dell hires too many underpaid foreign H1B and Green card technical people. Most of them do not have the same drive and passion as American workers have. Third, Dell executive managers rely too much on over-paid consultants who play in the fantasy world of long term planning. The executives seem to be incapable of thinking for themselves and fail to earn their huge salary and bonus. Fourth, Dell started his company without much competition and a unique idea, but he is proven incapable of leading an organization in a highly competitive industry. His reliance on his undisciplined entrepreneurial organizational structure will continue to lead to poor business practices and a lack of financial controls, which will ultimately result in lower profitability and negative revenue growth.

    Report Post »  
  • Airabella
    Posted on November 16, 2011 at 11:06am

    If Dell wants to make more money then they need to quit ripping off their customers. I know people that bought those collage deal just to have tone of hidden cost and if they only paid the required amount own they would have never paid off the computer. They add more to the bill every month in interest then the monthly payment is.

    Report Post » Airabella  
  • grudgywoof
    Posted on November 16, 2011 at 10:43am

    Dell is loosing market share because they arn’t inovating. I live in Nashville (Dell Headquarter USA) and have friends in corperate sales and they are under real presure to keep their numbers up and if they don’t they are gone (fired). What does Dell make that’s new? Nothing. They make a good desktop and laptop but the price points are not good. Micheal, you need to take some lessons from Steve Jobs and come up with something that people can’t do without or Dell is done.

    Report Post » grudgywoof  
  • I_Hate_Libs
    Posted on November 16, 2011 at 10:14am

    Dells problems are the same as Microsoft problems thats is because Microsoft software straight up sucks! Awful software = awful platform.

    TEA!
    Anyone But Obama 2012!

    Report Post »  
    • CatB
      Posted on November 16, 2011 at 10:50am

      I don’t know .. I have had Dells for years .. and now also have an HP which I heard were good .. I have many more problems with the HP than I ever had with the Dell.

      TEA!

      Report Post »  
    • lukerw
      Posted on November 16, 2011 at 1:11pm

      I have the ability to create my own Operating System and Networking… but given the Time, why bother. I go for the cheap… MS, Intel Proc, Mem, and MB… that gives me the performance that I want… slap it together… and never consider the Big Brand Packages. Nothing is ever perfect… but it is fun designing & shopping.

      TEA!

      Report Post » lukerw  
  • DrFrost
    Posted on November 16, 2011 at 10:13am

    As computing power continues to increase these small portable devices will be able to easily do the tasks most people ask/need a computer to do for them (word processing/email/web browsing/movies/etc). So I can see why people are moving to more portable devices. And right now tablets are the FOTM… so that hurts Dell.

    But Dell has another problem. I used to buy a new Dell every 2 years. I would go through the exercise of pricing out what it would cost me to put together the machine I wanted myself and then I would price a Dell with that configuration. The Dell was usually about $200 more (for a machine in the $1300-$1500 price range). This was acceptable to me because that $200 bought me Dell’s excellent service.

    But several years ago that $200 started inching upwards. Now it would be considerably more expensive for me to buy a Dell with the same specs as the machines I put together for myself. To equal the last machine I put together (~$1500 cost to me…. 16 gb ram, asus motherboard, 2 video cards, liquid cooled, sandy bridge i-7, etc) would require me to step up to an alienware machine and it would cost me over $3000. As excellent as Dell’s service is (and as great as the alienware machines are) I’m not paying 2X to get what I want.

    Report Post »  
  • Thevoice
    Posted on November 16, 2011 at 9:41am

    That’s good news …So in a year I can pickup a like new $65,000 BMW for $5,000 again…Great I love this…

    Report Post » Thevoice  
    • lukerw
      Posted on November 16, 2011 at 10:08am

      Yeh… but that’s 5k in Chinese Yuan!

      Report Post » lukerw  
  • boca_chica
    Posted on November 16, 2011 at 9:29am

    This is the same article you would have seen in the 80‘s 90’s even the 70′s. The rich still buy what they want and the articles still say the high end/quality vehicles are still selling. Nothing new here. What would be news is if the U S government would allow 50 mpg diesel cars from Europe into the U S.

    Report Post »  
  • RIGHTHOOK
    Posted on November 16, 2011 at 9:15am

    BMW sales (along with other brands like Hyundai) are way up for a number of reasons not the least being aggressive, low interest lease programs managed by the manufacture’s captive finance company and “subvented” (discounted interest rates via buy down) by the manufacture’s themselves. They all have enormous budgets to sponsor attractive monthly payments on the lease programs and some finance programs by buying the rate way down. That is how cars move off the lots. Seldom do people plunk down 50k or whatever for a car anymore and furthermore nobody pays window sticker prices unless the car is rare or in very short supply.

    Report Post » RIGHTHOOK  
  • Rothbardian_in_the_Cleve
    Posted on November 16, 2011 at 9:11am

    Oil over 100 again. Latest print suggesting deflation….on things you don’t need, but inflation on energy, food, fuel, and clothes. This is what we call biflation, which had been theoretical until now. Yay!!! Everything you need costs more, everything you own is worth less and your wages in real terms are declining.

    The Europe thing is far from over. This is just the lull before the storm. Wait until Italy bails. That‘s the one that’s gonna set this whole thing off.

    Buy bullets, beans and bullion. Stay safe.

    Report Post » Rothbardian_in_the_Cleve  
  • Snowleopard {gallery of cat folks}
    Posted on November 16, 2011 at 9:07am

    So the up and down, and the left to the right and back dance continues?

    Report Post » Snowleopard {gallery of cat folks}  
    • lukerw
      Posted on November 16, 2011 at 9:23am

      It is hard to predict… the series… in which the Dominos will fall!

      Report Post » lukerw  

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