Shaw Wu, tech analyst at Sterne Agee, says his firm’s recent downgrade of Dell is “because of the disconnect between the stock and the fundamentals.” By “disconnect,” he means “losing market share to Apple and high-end PC makers.”

Dell shares

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[DELL  Loading...      ()   ] were down slightly after the PC maker on Wednesday announced earnings that were a penny short of the Street’s expectations, and a 7 percent drop in first-quarter revenue.

In terms of market dominance, Dell is already third in line behind PC makers Hewlett-Packard

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[HPQ  Loading...      ()   ] and Lenovo Group — before Apple is even factored into the picture.

Sterne Agee has an “underperform” rating on Dell, and a $15 price target on the stock, which was hovering around $17 on Wednesday as Wu spoke.

Apple

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[AAPL  Loading...      ()   ], Wu says, is stealing a crucial PC buyer: the public sector.

“A big part of the public sector is the K-12th grade higher education market. That market, frankly, is going to Apple,” said Wu. “A lot of schools and universities are moving to the Apple platform.”

With Apple in such a strong position, many investors are wondering whether HP can avoid Dell’s fate.

Wu thinks HP can thrive, and said that unlike Dell, “HP is a turnaround story, and it is underappreciated.”

Others believe the company’s position in cloud computing is a plus.

“If you take a long-term view of what cloud computing can do, HP’s one of the largest, if not the largest, IT company in the world,” said analyst Jayson Noland, of Robert W. Baird, in a separate interview on Wednesday. “You can’t rule them out.”

Noland went on to concede that while the PC market “is not exciting anymore,” it is still a viable business.

“There’s going to be growth there in emerging markets,” he added. “It’s not the post-PC world. It’s more of a PC-plus world,” he added.

HP reports earnings after the bell Wednesday.

Additional News: Dell Earnings Miss Estimates; Shares Edge Lower

Additional Views: HP Faces Headwinds in 2012

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Disclosures:

Jayson Noland does not own Dell stock, but Dell is an investment banking client of his firm, Robert W. Baird, which also makes a market (matched buyers and sellers) of DELL and HPQ. Sterne Agee makes a market in the shares of Dell and HPQ. 

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