Farmer in the Dell

Where is Dell going?

In the ‘90s Dell was the darling of the PC revolution. By taking orders over the phone and sourcing parts in bulk, Michael Dell was able to provide custom-built desktop computers at cheaper prices than the off-the-shelf competition. The company expanded rapidly, as more and more everyday processes became automated. The development of the internet turbocharged this movement.

But Dell’s approach didn’t work well with laptops, much less tablets. Now Dell’s model seems a quaint artifact of another age. His push into servers seems reminiscent of Sun’s dominance there. That didn’t work out so well.

Still, the company has generated loads of cash over the years, which they have efficiently destroyed by buying their own stock back and watching the price go down. Now the founder says he wants to take the company in a new direction, but where? I confess myself bewildered over these fights over decimals. The real question isn’t whether 13.6 or 13.8 dollars a share is fair, but whether Dell can even survive as a going concern.

Computing has changed. Mobil platforms are being supplanted by an internet of things. If Dell doesn’t want to be sold for scrap, they’d better do something new.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2013-08-09T09:25:55+00:00 August 9th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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