mollytjm

Dell Gets Ready for a Comeback - Barron's

in a nutshell..what Dell HAD going for it was an appealing guy in an ad during a time when customer support was close to the top (Apple). As soon as customers started putting their $$ on Dell computers, the company sold it's tech support and customer relations to the lowest bidder. Things went from bad to worse and they lowered their prices. Dell no longer has the debt free cash to really innovate which is why this year's improvement is only color.

Now, people are catching on that if one buys a PC one also better buy virus protection...if they're even willing to put up with Vista. And where's their tech support? So it's not all that cheap.

During hard times, people move to VALUE. So those who can spend $ at all on a computer, want value for that money. There are cheaper computers than Dell, cuter computers than Dell and more highly rated, cooler computers than Dell. The only thing it really has left is name recognition. It's not that name recognition isn't important, it is... but it's pretty lonely without anything else to offer.
This company might somehow reinvent itself, but i wouldn't bet the farm on it.

Top Brand Names and Stock Returns

This is a good start to value investing, which is what Warren Buffett talks about all the time. It is essential to know the company, however, not just whether you like it a lot. Take Apple, for instance, which i have as stock. I have loved their products, since 1983. But until the company became financially secure, with no debt and with a top rated reputation, i didn't invest. Then i did and i will stay long term because the company is so secure and VERY innovative. This last is important to know. Don't invest because you love one product, if it's a tech company.
It's ok for Martha Stewart to just change the color of the sheets that have her name on them...but for a tech company, they better have brilliant innovative people...lots of them! And they better have $$$ in reserve and no debt, so if an idea tanks, they'll be ok until the brilliant staff comes up with the next idea.