Dell's Bells Ring on Higher Notebook Sales

 |  Includes: AAPL, DELL, HPQ
by: Trefis

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Dell (NASDAQ:DELL) competes with HP (NYSE:HPQ) and Apple (NASDAQ:AAPL) in the growing global notebook market. We have updated our price estimate for Dell from $13.88 to $14.03 partly to reflect an increase in revenues from higher notebook sales. Below we explain the significance of the notebooks and netbooks business for Dell and how growth in the global notebook market will help Dell’s business.

Notebooks & Netbooks 17% of Dell’s stock

Dell is the second biggest PC maker (desktops and notebooks) after HP. Dell’s notebook offerings are targeted at consumers as well as businesses. The company’s popular notebook brands include Latitude, Inspiron and Precisio. Dell recently introduced a new series of notebooks, “Vostro”, aimed at small businesses. We estimate that the Notebooks & Netbooks business constitutes 17% of Dell’s stock price.

Global Notebook Shipments to increase to 238 million

Global notebook shipment grew by close to 5% year over year to 150 million in 2009 attributable to strong demand from consumers as well as enterprises during the second half of 2009. Dell saw a slight improvement in its notebook market share owing to lower pricing of notebooks (down by 10% in 2009) which attracted strong demand.

Dell shipped an additional 1.2 million notebook PCs in 2009 over 2008. We expect growth in the global notebook market to drive Dell’s notebooks sales in the future. We estimate that Global Notebook Shipments will increase from 150 million in 2009 to 238 million by the end of Trefis forecast period.

You can modify the forecast below to see how Dell’s stock price will be impacted if Global Notebook Shipments were to rise more than we have forecast.

For additional analysis and forecasts, here is our complete model for Dell’s stock.

Author's Disclosure: no positions