Dell Inc. (DELL) and the Slump in PC Sales

Apple’s had it’s own problems lately, but I continue to believe that most of them are media-driven. Beating on Apple Inc. (NASDAQ:AAPL) is a fun thing to do for some talking heads because they want to be on top of predicting the fall of a giant.

But Apple is still a good buy with a net margin of approximately 26.7% for 2012 and a solid dividend of about 2.7%. The firm hasn’t deserved the share beating it’s received and I believe it’s worthy to have some now – while it’s discounted by the market – before people recover. With a P/E of 8.9, Apple is under-bought.

Another firm that seems to have been predicting the weakening of the PC market is Microsoft Corporation (NASDAQ:MSFT). With the release of the Microsoft Corporation (NASDAQ:MSFT) Surface tablet, the Redmond.-based company has been trying to position its tablet as a replacement for the PC. The on-board full-sized keyboard and installed MS-Office are both designed to allow workers to carry around their workstations instead of being tied to a desk.

Microsoft Corporation (NASDAQ:MSFT) has almost always made its big strides appealing to the large corporate buyer and the way it has positioned the Surface is no different. Now with an announcement that smaller, cheaper Surfaces will be available soon for the consumer market the firm is entering tablets in a big way.

As for its shares, Microsoft is an interesting story. It’s long been trendy to beat on Microsoft as a older, stodgier tech firm that doesn’t play by the traditionally fun tech rules. But honestly, that’s what makes it so attractive. It’s not as flashy as Apple, but it still makes money – a net margin last year of $23% and a Q1 2013 margin of 29.6% – and it pays a 3%+ dividend. Microsoft was, is, and continues to be a good buy for investors who want to be in the tech sector without the ulcers that some other companies can cause.

Moving Right Along

As yet, it’s unclear whether the PC slump is real or a short-term phenomenon. To make it short-term, PC makers are going to have to start providing some reason that a standalone – or even networked – PC with a hard drive is superior to a tablet or smartphone that’s always connected to a cloud-based data storage system. The combination or portability, data protection and lower prices are attractive to consumers. If some of these companies can’t figure that out, they’ll be on the long, slow slide downhill for several years.

The article Dell and the Slump in PC Sales originally appeared on Fool.com and is written by Nate Wooley.

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