Even These 2 Stocks Trailed the Dow

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It's the mark of the beast. The Dow Jones Industrial Average was off 6.66 points yesterday, but it could have been a lot worse. It had been down about 200 points earlier in the day as concerns over the fractured eurozone weighed heavily on stocks. But happy talk from Italy and France helped rally the market to an essentially flat close.

But some companies turned tail and still fell hard, so first let's see whether they had good reason to drop. Sometimes, panic-fueled declines can make excellent buying opportunities.

What's the solution?
The transformation of Dell (Nasdaq: DELL  ) from a computer company to a services company in the mold of IBM (NYSE: IBM  ) is not going so well.

Having essentially ceded the computer field to Apple (Nasdaq: AAPL  ) , Dell embarked on a path to become an amorphous "IT solutions provider," but its first-quarter earnings report showed that it missed badly as it basically admits Apple is eating its lunch when it comes to computers, noting that it saw "spending diverted to alternative mobile-computing devices." You can read that as iPads and iPhones.

The enterprise market it was targeting began clasping a little tighter to its purse strings. Not only did Dell see slower spending, but Cisco (Nasdaq: CSCO  ) and rival computer maker Lenovo also recently said weak IT spending was hurting results. There are many things IBM has done right over the years, but paramount has arguably been its ability to execute to plan. Dell has had no such benefit and attributed the poor showing to the aforementioned reduced IT spending, but also poor execution. Add in stiff competition -- what did it think it was getting into when it went up against Big Blue? -- and it's an all-around disappointing effort.

But perhaps investors shouldn't have been surprised by the outcome, since even IBM was seeing better results in it "big data" department than in services. According to the market analysts at IDC, that's where the real growth will be anyway. Big data technology and services will grow from a $3 billion industry in 2010 to almost $17 billion by 2015, or a 40% compounded annual growth rate.

On CAPS, the Fool's stock-rating service, I previously rated Dell to underperform the broad indexes based on its embrace of becoming a "solutions provider," but CAPS member bignort2001 believes there's a chance for recovery, though it seems an all-encompassing challenge: "Not much good to say, but stock price it probably too low. They need to get better services and expand outside the US/Europe to have a chance to really turn things around."

I don't think it's up to that challenge, but add the computer maker-cum-services specialist to your Watchlist, and then tell us on the Dell CAPS page or in the comments section below whether you think it has the solution to its problem.

Out of print
Considering yesterday's mini-tech wreck over reduced enterprise-level spending, it shouldn't raise too many eyebrows that business printing service Cenveo (NYSE: CVO  ) was dragged down as well. Just two weeks ago, it reported that revenues fell 4%, generating a 26% drop in operating profits because of lower demand as customers had more product launches last year than it did this time around.

That may be, and it could be that its forecast for better direct mail business in the second half of the year will come through as anticipated, but rival Vistaprint enjoyed a nice 27% increase in sales, partially boosted by acquisitions, but mainly from a 21% increase in volume as it added 5.8 million new customers. Profits were down dramatically from the year-ago figure, but it still recorded $0.09 per share in earnings when analysts were predicting a $0.09-per-share loss.

Cenveo has not improved since its last quarter, when it first began addressing its lingering debt problem. It still has $1.2 billion in debt and only $9 million in cash. Although management says the debt markets remain open and it'll continue to address the looming repayment schedule, the company has yet to live up to the expectations I had that it was moving in the right direction when I rated it to outperform the markets in March. Still, I gave it a year or so to get its house in order, so I'll be maintaining my rating on CAPS, joining with 101 other members -- 84% of those who've weighed in -- who think it can come back and beat the Street.

Tell me in the comments section below or on the Cenveo CAPS page why you think this is not all the news fit to print on this stock. Then add the printer to the Fool's free portfolio tracker to see whehter it can get ink-stained hands from greater volumes of business.

Ready for a resurrection
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Fool contributor Rich Duprey owns shares of Apple and Cisco Systems, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of IBM, Apple, and Cisco Systems. Motley Fool newsletter services have recommended buying shares of Vistaprint, Dell, and Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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