[quote author=“sleepygeek”]I certainly got the impression from the conference call Q&A that the analysts are weary of the Dell 2.0 “turnaround” story. Why don’t they say Dell’s margins are getting crushed, and Dell’s profitable organic growth is finished, so Dell’s PE needs to come down? Politics and manipulation, if you ask me. Gotta let it down gently.

Business Week did.

Gross margin performance, too, didn’t meet some analysts’ expectations. Gross margin inched up to 18.5% of revenue, from 16.6% a year ago, but still fell below the 19% analysts were projecting. The company blamed component costs, saying they didn’t decline as steeply as the company was projecting. Shaw Wu, analyst at American Technology Research, questions why that’s the case, when some of Dell’s main competitors, including HP and Apple (AAPL) have recently enjoyed the benefits of low component costs.

and on.

I can’t imagine the smoke blinding analysts and investors forever. IMHO Dell has become the ultimate exercise in a press release-based recovery. There’s nothing new in the release and market share continues to suffer. The company is becoming increasing irrelevant and the continued slowing of sales gains, pinched margins, lost market share leads to a shrinking market cap even with a stagnant share price.

Despite the billions exhausted to buy back shares, the share price is below where it was five years ago today . This means to the extent of the net reduction of shares, the company’s market cap has been decreased by the share repurchases.

Dell is a company literally shrinking in size and market clout and competition will be fierce in its targeted markets. Once Dell loses the #1 spot in the US to HP, the company will have essentially lost its critical mass. Remember Gateway?