We all know the giant of computer hardware, Apple Inc. (NASDAQ:AAPL), but several other companies in the sector are often ignored.
Apple Inc. (NASDAQ:AAPL)’s fellow American computer hardware competitors include Dell Inc. (NASDAQ:DELL), and Hewlett-Packard Company (NYSE:HPQ), both of which receive a high trading volume, but nowhere near the average $4.5 billion daily volume at Apple Inc. (NASDAQ:AAPL). Dell Inc. (NASDAQ:DELL) receives about $525 million worth of trades in a day, while Hewlett-Packard Company (NYSE:HPQ) receives about $364 million.
The massive attention on Apple Inc. (NASDAQ:AAPL) could signify over-excitement for the company, and a lack of excitement over Dell Inc. (NASDAQ:DELL) and HP. However, the market caps at Dell and HP are significantly lower, with Dell at $22 billion and HP at $50 billion, making a higher trading volume understandable. Apple Inc. (NASDAQ:AAPL)’s market cap indicates the company is worth about $413 billion.
But is the massive attention over Apple Inc. (NASDAQ:AAPL) warranted? Let’s take a look at its two major American computer hardware competitors and see if investors are missing something.
Dell could go private
Dell’s founder, Michael Dell, raised his offer price for the company on July 24, saying his group is willing to pay $13.75 per share, which is $0.10 more than his previous offer. Given the stock’s price on the day, that represents a 6% premium. But before the company can be sold, shareholders need to give their approval. That vote is scheduled for Aug. 2.
The $0.10 increase comes with a catch: Shareholders who don’t vote won’t be counted. Prior to the offer’s price increase, shareholders who didn’t vote would be counted in opposition to the sale. That makes it much more likely for the deal to go through, but it isn’t enough for me to buy shares of the stock.
In case the deal isn’t approved, I need assurance that the company is solid enough to be profitable in the years ahead. That’s where things get murky. In fiscal 2014, earnings per share is expected to drop by 83%. However, it looks set to rise 24% the following year. But that is an ugly outlook, and I wouldn’t bank on picking up Dell shares on a hunch that the company could go private with a 6% premium to shareholders.