Don't bet on a comeback at Dell

No matter who prevails in the ongoing buyout drama, crumbling PC sales signal even harder times are ahead.

By Jonathan Berr Apr 12, 2013 9:17AM
When Michael Dell returned as CEO of Dell Inc. (DELL) in 2007, investors were optimistic that he could lead the company he founded in his dorm room more than 20 years ago back to the greatness it once enjoyed. Instead, Dell the CEO has left Dell the company in even worse shape than it was before.
Not only did the Round Rock, Texas, firm lose the top spot in the PC market to Hewlett-Packard (HPQ) but it has been a day late and a dollar short for every technology trend over the past few years.

Michael Dell' strategy of focusing on higher-margin business customers is starting to pay off, but again he's playing catch-up to rivals such as IBM (IBM), which have done this for years.

Unfortunately, the $22.4 billion bid he made with Silver Lake Partners to take Dell private undervalues the company. Activist investor Carl Icahn and private equity firm Blackstone have made rival offers for Dell, which major Dell shareholder Southeastern Asset Management has said are superior. Now it's possible that Michael Dell may get pushed aside.

While the Dell drama unfolds, its struggles continue. It saw a 10% drop-off in global shipments in the most recent quarter, according to market researcher IDC. Surprisingly, that's actually an improvement from recent quarters, but PC sales overall crumbled by 14% in the period -- the worst quarterly drop ever. 

Shares of Dell have surged almost 30% in the past three months on the buyout hopes, but investors should stay on the sidelines with this stock because plenty could still go wrong.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

More on moneyNOW

9Comments
Apr 12, 2013 11:51AM
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Funny headline considering your corporate parent (Microsoft) is betting $2 Billion on a comeback at Dell!
Apr 12, 2013 2:12PM
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Sometimes poor customer service and indifference to your customers does affect your bottom line...When you call their tech support and you get hold of idiots from india that can barely speak english because that makes a multi-billion dollar company a few extra dollars is one possibility of why hp is running away with their customers.
Apr 12, 2013 1:02PM
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The PC market has gone nuts in the past couple of years however we needed to purchase a new one. We had a Dell setup since 2003. We called Dell to get a quote on a new setup and were very unhappy with the service. Dell manufactures in China, sells out of India and their home office is in Texas. We shop at Costco and just by chance we went to the computer area, spoke with a very knowledgeable young man who pinpointed an HP computer that would fit our needs. We bought it almost two years ago and have not had any problems.
Apr 12, 2013 2:24PM
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I have dell and had a problem with it and they sent a prepaid return box and I sent it back and they fixed it and returned it with a brand new battery.
Apr 12, 2013 1:36PM
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I hate Dell. $1200 worth of computers and 3 year warranties. Bothcomputers died at 6 or 7 months. Could not even get an english speaking person to talk to. They kept sending me back to QVC who also did nothing. The 2 companies just kept shifting the blame from one to another and no one ever helped me either get a refund or a repair under my warranties. DELL SUCKS!
Apr 12, 2013 3:39PM
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I used to buy dell. No more. I cannot understand the people when I call for help.
Apr 12, 2013 2:04PM
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Really? is this the "news"? there is nothing *new* in this article/video that is not known for a while.... yes PC shipments are all time low, Dell is late in the game... what else?
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