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Dell (DELL) +3% AH after initiating a quarterly dividend of $0.08/share. That's good for a yield...

Dell (DELL) +3% AH after initiating a quarterly dividend of $0.08/share. That's good for a yield of 2.7% at current levels. Until now, the company has focused on returning cash to shareholders via massive stock buybacks that have failed to keep its stock price from flagging. The dividend announcement comes ahead of Dell's 2012 analyst meeting (webcast). (PR)
Comments (6)
  • Josh Krause
    , contributor
    Comments (1361) | Send Message
     
    They should have been paying a dividend for quite some time now.

     

    Still not a good feeling about holding this beast.
    12 Jun 2012, 04:16 PM Reply Like
  • zagrebzagreb
    , contributor
    Comments (362) | Send Message
     
    I'd like to hear from all the seekingalpha commentators that lecture about how company stock buybacks make perfect sense, dividends don't matter, and the many horrible ways in which capital gains taxes destroy wealth when it is returned to investors... Come on now. Tell us all why this Dell decision is actually bad news.
    12 Jun 2012, 04:53 PM Reply Like
  • remurraymd
    , contributor
    Comments (2287) | Send Message
     
    (DELL) is getting its market and margin sucked dry by (AAPL)
    Compare graph the 2 X 5 years sad for Dell we made 590% on a bear options earnings trade when they fell 18% in one day.Stay away instead buy Apple on pullbacks nice new 2% dividend great grower #1 (GS) Conviction Buy target $850.
    12 Jun 2012, 05:34 PM Reply Like
  • Matt Blecker, CFA
    , contributor
    Comments (168) | Send Message
     
    What the market and many short-term investors are failing to understand is that Dell is not just a PC company. Apple is no longer their primary competitor as they transition to a full services IT firm. Only 23% of Dell's revenue is derived from desktop PCs. The weak revenue numbers were due not only to overall economic weakness but also to Dell's decision to stop pursuing low-end consumer PC sales. EPS and FCF should continue to be strong long-term as the firm derive more business from servers/networking, self-branded rather than third party storage, IT services, software, and cloud.

     

    Right now the firm's enterprise value is about $15 billion (less than CRM) while Dell generates about $4 billion of FCF (over a 25% FCF yield) and CRM generates very little FCF.

     

    On an earnings basis Dell is currently trading for just 6-8x its earnings range, and approx 3-5x earnings adjusted for net cash.

     

    Please no more "dead money" comments. Old tech is not "dead money." It didn't perform well last decade because of overvaluation. Companies like Dell, Intel, Microsoft, Cisco, etc...were all still overvalued until the financial crisis of 2007 (if you don't believe me check the P/E ratios prior to 2008). The period of 2010-now was the first time many of these companies were cheap on both an absolute and relative basis.

     

    Wait 3-5 years and they will generate much better returns than Salesforce.com, Linkedin, Chipotle, Whole Foods, and the list of momentum stocks that will eventually burn people.

     

    As far as Apple goes I agree the company is undervalued, selling for just 10x earnings adjusted for net cash. The firm also still has significant growth potential as consumers globally continue to transition to smartphones, as less than 40% of mobile phone sales are smartphones, and tablet demand remains strong and is expected to triple within the next few years. The one concern I have with Apple is the potential pressure on margins as a big portion of its profit is dependent upon the selling prices of iPhones and iPads. The firm even stated in the latest 10q that the current margin in the high 40s is unsustainable. If selling prices come down due to various factors, Apple may not be as undervalued as some think. However, given its modest multiple today, significant margin contraction is already built in to the current price.
    12 Jun 2012, 06:55 PM Reply Like
  • Freedoms Truth
    , contributor
    Comments (833) | Send Message
     
    Gotta 'like' this. Dell has more 'cloud' offerings than CRM (the much hyped). it is one of the most under-hyped tech companies out there.
    The PC market is not dying, but the margins are so thin DELL and HPQ get not market cap from it, so they look elsewhere for growth and margins. They will be unloved until they show real growth in those markets, but when they do ....
    13 Jun 2012, 12:47 AM Reply Like
  • Efrain Rojas
    , contributor
    Comments (197) | Send Message
     
    They should sell off their assets and give the shareholders their money back.
    13 Jun 2012, 02:21 AM Reply Like
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