Dell Investors Hear Some Unfamiliar Advice: Sell

Sell Dell?

That was the opinion Friday of Citigroup’s Richard Gardner, who slapped what may be the first “sell” recommendation by a U.S. analyst on the world’s largest computer maker. The move sent Dell Inc.’s shares sliding $1.23 to a three-year low of $27.01.

Lower-cost rivals “have significantly closed the gap between themselves and Dell,” said Gardner, who previously had rated the stock a “buy.” He said the Texas company’s glory days of growing two to three times as fast as the personal computer market “are gone forever.”

Indeed, Dell lost market share in the first quarter, according to Gartner Inc., the first time that has happened since the research firm began tracking PC sales in 1989.

Most of Dell’s revenue comes from mature markets with slow growth such as the United States, Western Europe and Japan, Gardner said, and the company is a small player in the fast-growing markets of China, India, Brazil and Russia.

Competition from Hewlett-Packard Co. and Lenovo Group -- China’s biggest PC maker -- is adding to Dell’s woes.

Currently, 22 investment firms rate Dell a “buy” and 11 a “hold,” according to Bloomberg News. Dell had no comment on the downgrade.

Analyst James Ragan of Crowell, Weedon & Co. in Los Angeles, who rates Dell a “buy” and owns the company’s shares, agreed that the computer maker faces some rough sailing, at least in the short term.

“The long term still looks fairly bright,” Ragan said, “but it could be a difficult year.”