Split Dell And HP At Your Peril

| About: Dell Inc. (DELL)
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It hard to compete with Apple (NASDAQ:AAPL), but it's especially hard if you are Dell (DELL), a computer company facing the tablet-filled future without a tablet.

Yet the stock ran up 2.06% on Friday. Why? Because Dell is not Hewlett-Packard (NYSE:HPQ). In fact, after an initial dip on Wednesday when Hewlett put the 'down' in downbeat, forecasting all sorts of trials and tribulations, Dell enjoyed a strong tail end to the week, while Hewlett all but bit its own tail.

That implies, of course, that the fates of this pair of rusty-old computer makers will veer. But that's a dangerous implication. As computer makers hit over the head by the future and now unable to reshape or even grasp what is to come, Dell and Hewlett Packard share a fate. They should move in sync. A bad end-of-the-week for Hewlett Packard (and last week defined bad) is also a bad week for Dell.

You split these two at your peril, which is why we suggest selling Dell. It's double vision. Don't stick around until you can't see straight.

And don't think, by the way, it's only Apple doing the damage.

Dell (like Hewlett) is beset by lost-cost competition from Asian firms like Acer and Lenovo. When you are relying on a bum rush of customers to lap up Microsoft's (NASDAQ:MSFT) latest incarnation of Windows (and Dell Packard -- let's just call it that for convenience sake -- is), you know the future is dim.

At the very least, wait it out. Earnings season starts tomorrow with Alcoa's (NYSE:AA) report, which is supposed to come in flat, but has traders wringing their hands because of FedEx's (NYSE:FDX) recent warning.

Dell Packard doesn't report until next month. There seems no reason to rush a bullish stance. Quite the opposite.

In the second quarter, Dell reported an 18% drop in earnings and said things will get only worse. That's not a short seller taking; it's Dell.

Expectations were for more than $2.13 a share for 2013. Dell cut that down considerably. In fact, they did a Freddy Krueger on their poor defenseless estimates, slashing them to around $1.70.

Has something happened to change the fates for Dell's business since late August?

Hewlett announced the same sort of misery and estimate cuts, but that doesn't change the fate of Dell. It just reflects it. Both aim to transform themselves into a latter day IBM (NYSE:IBM), but the change does not seem to be taking.

Until Dell Packard has a way of forging onto into the future that is reflected in earnings -- not ephemeral hopes -- do not touch it.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.