Four Steps To Rebuilding Dell

Aug. 7.06 | About: Dell Inc. (DELL)

Excerpt from our One Page Barron's Summary (receive it by email every week by signing up here):

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Highlighted companies: Dell Inc. (NASDAQ:DELL)
Summary: Something is seriously wrong at Dell, which has seen its stock collapse 45% in the past year, and recently pre-announced a huge earnings miss (30% short of expectations) for this quarter. Barron's believes Dell -- the top PC maker worldwide and #2 in servers -- must take four bold steps to redeem itself: (1) Stop Denying Problems: the most recent earnings shortfall should have been acknowledged much earlier, and it might be time for CEO Kevin Rollins to go; (2) Freshen Up the Operating Model: Dell's built-to order production and direct sales no longer provide a competitive advantage, as they've been broadly copied -- consider adopting Apple's store model; (3) Seize the High Ground in Product Design: Bring design innovation and 'marketing sizzle' to the brand; (4) Restore Customer Confidence: inadequate customer service needs more than the $100 million Dell recently allocated to its improvement.
Quick comment: Carl Howe notes that Dell marketed its efficiency for years, but that Apple could now teach it a thing or two in that department as well. 'Superinvestor' Wallace Weitz is buying Dell at these levels, citing 'its cost structure, balance sheet, returns on investment and strong management [that] provide the company with significant and sustainable competitive advantages.' Dell has managed to gain PC market share during the past quarter. Read Dell's latest conference call transcript