sleepy

Don't Let the Times Stop You from Taking Action

There is nothing to recommend Dell. Business model that used to be unbeatable but doesn't work any more. So they're tearing up the floorboards and selling them for "cost savings". Product design, manufacturing, support, everything sold off and rented back. Last quarter accounts payable $15.5B; net tangible assets $0.3B. That's one low flying jumbo you're recommending. With undisclosed sub-prime exposure, apparently (see last conf call).

Dell never was a computer company, just the biggest screwdriver assembly and financial smoke and mirrors operation in the market, crucially dependent on growing sales and negative cash conversion cycle to milk the business of delivering Microsoft's monopoly to the world. Microsoft monopoly is dying; netbooks are killing revenue growth, and Apple is taking most of the high margin business.

Far from Michael Dell turning the company round, it was the CEO and CFO who bailed out, who had created the financial smoke and mirrors for Dell, and they set him up with a 2-year cushion to execute his fantasy of a turnaround. Time's up. Expect more bad news.