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From Bear Stearns analysts Andrew Neff, Bill Hand and Ted Chung's note to clients yesterday:

With DELL’s April quarter closing on Friday (5/5), the company’s aggressive PC promotions – which first began on 4/27 – appear to continue, with many exclusive and limited time deals scheduled to end today. Some of these deals... could be in response to DELL’s sharp unit growth deceleration in calendar 1Q06 (as shown in IDC/Gartner data), particularly in the US. Stock impact: mixed for DELL (promotions could boost unit growth but at the expense of profitability).

Based on our discussions with contacts at HPQ on the topic of DELL’s PC pricing strategy, the company does not see DELL in a similar position collapse margins/pricing as it did in late 2000 in order to reaccelerate growth given: 1) margins have already eroded (particular in DELL’s recent qtr where efforts to drive growth were offset by EBIT compression), and 2) DELL has fewer levers to pull in order to improve its cost structure, thus diminishing its capability to mitigate gross margin deterioration.

Further, HPQ’s PC cost structure is vastly improved versus five years ago and the PC industry has less opportunity for consolidation, such that DELL’s share growth strategy isn’t likely to find the same level of success. Despite lack of clarity on DELL’s approach to profit/share going forward, HPQ is not engaged in pricing for the sake of share gain and continues to compete in higher-margin areas with a focus on upselling. Stock impact: mixed for HPQ (unclear what DELL will do, but could be an overhang).