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.
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.
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