Optimism for Dell Notebook Market Share and Pricing

Jul.15.10 | About: Dell Inc. (DELL)

Hundreds of Trefis members have created forecasts for two key drivers of Dell’s (NASDAQ:DELL) stock over the last week: (1) Dell Notebook Market Share, (2) Dell Notebook Pricing. Their forecasts suggest that Dell’s Notebook Market Share and Dell’s Notebook Pricing will trend higher than the Trefis forecast. These projections may not bode well for the stocks of Dell’s notebook competitors such as HP (NYSE:HPQ) and Apple (NASDAQ:AAPL).

Dell’s Notebooks & Netbooks business constitutes 18% of the $17 Trefis price estimate for Dell’s stock. In comparison, Managed Services, Consulting & Perot is 27%, Storage about 4%, and Desktops less than 3% of the Trefis estimate for Dell’s stock.

Considering the importance of the Notebooks & Netbooks business, Dell’s stock is quite sensitive to both 1) Dell Notebook Market Share and 2) Dell Notebooks Pricing. Below are the charts showing recent estimates created by Trefis members for the two drivers.

1. Dell Notebook Market Share

The average of forecast for Dell Notebook Market Share created by Trefis members indicated a small projected increase from 14.8% in 2010 to 16.0% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from 13.8% in 2010 to 13.2% by the end of the Trefis forecast period. The member estimates imply an upside of about 5% to the Trefis price estimate for Dell’s stock. In the past, Dell Notebook Market Share has decreased from 18% in 2005 to 12.8% in 2009.

You can drag the Dell Notebook Market Share forecast trend-line above to express your own view, and see the sensitivity of Dell’s stock to Dell Notebook Market Share.

Our complete analysis for Dell Notebook Market Share is here.

2. Dell Notebooks Pricing

The average of forecasts for Dell Notebook Pricing created by Trefis members indicated a projected drop from about $810 in 2010 to about $540 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from $820 in 2010 to $435 by the end of the Trefis forecast period. The member estimates imply an upside of 4-5% to the Trefis price estimate for Dell’s stock. In the past, Dell Notebook Pricing has dropped from nearly $1,300 in 2005 to about $860 in 2009.

You can drag the Dell Notebook Pricing forecast trend-line above to express your own view, and see the sensitivity of Dell’s stock to Dell Notebook Pricing.

Disclosure: No positions