Dell, Inc. and its subsidiaries engage in the design, development, manufacture, marketing, sale, and support of various computer systems and services to customers worldwide. The company's products and services enable customers to build their information technology and Internet infrastructures. It offers various products, including desktop computer systems and workstations; mobility products, such as notebook computers, mobile workstations, MP3 players, and handhelds; software and peripherals that consist of printers and displays, projectors, peripheral products, software titles, notebook accessories, networking and wireless products, digital cameras, power adapters, scanners, and other products; servers and networking products; and storage devices. Dell also provides various services, which comprise assessment, design, and implementation services; deployment services; asset recovery and recycling services; training services; enterprise support services; client support services; and managed lifecycle services. Further, it offers various financing alternatives, asset management services, and other customer financial services for business and consumer customers in the United States, through Dell Financial Services L.P., a joint venture between the company and CIT Group, Inc. The company sells its products directly to large corporate, government, healthcare, and education accounts, as well as small-to-medium businesses and individual consumers. Dell operates principally in the United States, Europe, Middle East and Africa, and Asia Pacific-Japan. The company was founded in 1984 by Michael Dell as Dell Computer Corporation and changed its name to Dell, Inc. in 2003. Dell is headquartered in Round Rock, Texas

Technology Industry Analysis

WikiWealth.com Industry Description: Information technology (IT) or information and communication technology (ICT) is a broad subject which deals with technology and other aspects of managing and processing information, especially in large organizations. Particularly, IT deals with the use of electronic computers and computer software to convert, store, protect, process, transmit, and retrieve information. Over the past 20 years, its prevalence has dramatically increased so that it is now a part of nearly every aspect of daily life. Technology generally includes: computer science, electronics, software, and internet. Read More. Also see the Industry Analysis Home Page.

WikiWealth.com Industry Analysis: During economic recessions, consumers and businesses tend to cut back on technology expenses to save money during tough economic times. Less spending decreases business revenue and eventually decreases stock prices. During economic recoveries, consumers have more income and business investment needs, so spending quickly increases. Higher spending increases business revenue and eventually increases stock prices. During a longer economic expansion, discretionary income and business demand increases, but at a slower pace than during the recovery stage.

¹ Investment potential (margin of safety) is a weighted average of the discounted cash flow analysis (DCF), the enterprise value (EV) market multiple analysis, and the Warren Buffett investment analysis. WikiWealth obtains 80% of their quantitative investment potential from fundamental investment analysis.
² The weighted average cost of capital (WACC) analysis for the industry is a broad representation of the WACC for each individual company. A sub-industry WACC analysis offers both stability and accuracy for each individual company.

WikiWealth.com Profit Analysis: The best way to profit from technology stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street Analysis on left side), and have high Main Street Common Sense investment ratings (see Main Street Analysis on right side). When an economic recovery occurs, technology stocks tend to outperform the general stock market, because consumers and businesses quickly resume spending on items they wanted, but resisted buying during tougher economic times. Eventually those investments become overvalued, because profits and stock prices increase past their fair values. During the last stages of an economic business cycle, just before a recession, it is best to sell technology stocks, because they are likely to decrease in price quickly. Technology makes the lives of consumers and businesses easier, but during tough economic times, people tend to work harder, which offsets the benefits of technology temporarily. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments. For more information on stock research ratings click here.

Investment Moats

Investment Moats are fundamental investing theories developed by Warren Buffett and adapted to the SWOT analysis. Investment moats are general characteristics that separate great investments from average stock investments. The wider the investment moat the better. Read more: Investment Moats. For company-specific investment moats: SWOT Analysis.

SWOT Strengths Increase Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

SWOT Weaknesses Decrease Investor Moats: Below is a list of relevant industry investment characteristics, if any exist

Stock Price Triggers

Triggers were developed by WikiWealth.com to predict changes in stock price direction, which depend on events outside of the control of the company. In general, if SWOT opportunities are greater than SWOT threats, the stock price should raise; the opposite is also true. For more precise measures, examine each SWOT opportunity and threat, then rank them according to importance and timing. The more important the investment characteristic, the greater the impact on stock direction. The sooner a investment trigger may occur, the more influence it will have on stock price direction. Read more: Stock Price Triggers. For company-specific stock price triggers: SWOT Analysis.

SWOT Opportunities are Positive Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

SWOT Threats are Negative Stock Price Triggers: Below is a list of relevant industry investment characteristics, if any exist.

Long Company Description (help)

The multinational company Dell, Inc. — based in Round Rock, Texas — develops, manufactures, sells, and supports personal computers and other computer-related products. As of 2008 Dell employs more than 88,000 people worldwide.

Dell grew during the 1980s and 1990s to become (for a time) the largest seller of PCs and servers. As of 2008, it held the second spot in computer-sales within the industry behind the Hewlett-Packard Company. The company currently sells personal computers, servers, data storage devices, network switches, software, computer peripherals and televisions.

In 2006, Fortune magazine ranked Dell as the 25th-largest company in the Fortune 500 list, 8th on its annual Top 20 list of the most-admired companies in the United States. In 2007 Dell ranked 34th and 8th respectively on the equivalent lists for the year. A 2006 publication identified Dell as one of 38 high-performance companies in the S&P 500 which had consistently out-performed the market over the previous 15 years.

History

Background and origins

While a student at the University of Texas at Austin in 1984, Michael Dell founded the company as PC's Limited with capital of $1000. Operating from Michael Dell's off-campus dorm room at Dobie Center , the startup aimed to sell IBM PC-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer-systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs. Michael Dell dropped out of school in order to focus full-time on his fledgling business, after getting about $300,000 in expansion-capital from his family.

In 1985, the company produced the first computer of its own design — the "Turbo PC", sold for US$795 — which contained an Intel 8088-compatible processor running at a speed of 8 MHz. PC's Limited advertised the systems in national computer-magazines for sale directly to consumers, and custom-assembled each ordered unit according to a selection of options. This offered buyers prices lower than those of retail brands, but with greater convenience than assembling the components themselves. Although not the first company to use this model, PC's Limited became one of the first to succeed with it. The company grossed more than $73 million in its first year.

The company changed its name to "Dell Computer Corporation" in 1988. In 1989, Dell Computer set up its first on-site-service programs in order to compensate for the lack of local retailers prepared to act as service centers. Also in 1987, the company set up its first operations in the United Kingdom; eleven more international operations followed within the next four years. In June 1988, Dell's market capitalization grew by $30 million to $80 million from its initial public offering of 3.5 million shares at $8.50 a share. In 1990, Dell Computer Corporation tried selling its products indirectly through warehouse clubs and computer superstores, but met with little success, and the company re-focused on its more successful direct-to-consumer sales model. In 1992, Fortune magazine included Dell Computer Corporation in its list of the world's 500 largest companies.

In 1996, Dell began selling computers via its web site.

In 1999, Dell overtook Compaq to become the largest seller of personal computers in the United States of America with $25 billion in revenue reported in January 2000.

In 2002, Dell attempted to expand by tapping into the multimedia and home-entertainment markets with the introduction of televisions, handhelds, and digital audio players. Dell has also produced Dell-brand printers for home and small-office use.

In 2003, at the annual company meeting, the stockholders approved changing the company name to "Dell Inc." to recognize the company's expansion beyond computers.

In 2004, the company announced that it would build a new assembly-plant near Winston-Salem, North Carolina; the city and county provided Dell with $37.2 million in incentive packages; the state provided approximately $250 million in incentives and tax breaks. In July, Michael Dell stepped aside as Chief Executive Officer while retaining his position as Chairman of the Board. Kevin Rollins, who had held a number of executive posts at Dell, became the new CEO.

In 2005, the share of sales coming from international markets increased, as revealed in the company's press releases for the first two quarters of its fiscal 2005 year. In February 2005 Dell appeared in first place in a ranking of the "Most Admired Companies" published by Fortune magazine. In November 2005 BusinessWeek magazine published an article titled "It's Bad to Worse at Dell" about shortfalls in projected earnings and sales, with a worse-than-predicted third-quarter financial performance — a bad omen for a company that had routinely underestimated its earnings. Dell acknowledged that faulty capacitors on the motherboards of the Optiplex GX270 and GX280 had already cost the company $300 million. The CEO, Kevin Rollins, attributed the bad performance partially to Dell's focus on low-end PCs.

In 2006, Dell purchased the computer hardware manufacturer Alienware. Dell Inc.'s plan anticipated Alienware continuing to operate independently under its existing management. Alienware expected to benefit from Dell's efficient manufacturing system.

On January 31, 2007, Kevin B. Rollins, CEO of the company since 2004, resigned as both CEO and as a director, and Michael Dell resumed his former role as CEO. Investors and many shareholders had called for Rollins' resignation because of poor company performance. At the same time, the company announced that, for the fourth time in five quarters, earnings would fail to reach consensus analyst-estimates.

In February 2007, Dell became the subject of formal investigations by the US SEC and the US Attorney General for the Southern District of New York. The company has not formally filed financial reports for either the third or fourth fiscal quarter of 2006, and several class-action lawsuits have arisen in the wake of its recent financial performance. Dell Inc's lack of formal financial disclosure would normally subject the company to de-listing from the NASDAQ, but the exchange has granted Dell a waiver, allowing the stock to trade normally.

On 1 March 2007, the company issued a preliminary quarterly earnings report which showed gross sales of $14.4 billion, down 5% year-over-year, and net income of $687 million (30 cents per share), down 33%. Net earnings would have declined even more if not for the effects of eliminated employee bonuses, which accounted for six cents per share. NASDAQ extended the company's deadline for filing financials to May 4.

Dell and AMD

When Dell acquired Alienware early in 2006, some Alienware systems had AMD chips. On August 17, 2006, a Dell press-release stated that starting in September 2006, Dell Dimension desktop computers would have AMD processors and that later in the year Dell would release a two-socket, quad-processor server using AMD Opteron chips, moving away from using Dell's traditional Intel processors.

CNet's News.com on August 17, 2006 cited Dell's CEO Kevin Rollins as attributing the move to AMD processors to cost-advantage and to AMD technology. AMD's senior VP in commercial business, Marty Seyer, stated: "Dell's wider embrace of AMD processor-based offerings is a win for Dell, for the industry and most importantly for Dell customers."

On October 23, 2006, Dell announced new AMD-based servers — the PowerEdge 6950 and the PowerEdge SC1435.

On November 1, 2006, Dell's website began offering notebooks with AMD processors (the Inspiron 1501 with a 15.4-inch (390 mm) display) with the choice of a single-core MK-36 processor, dual-core Turion X2 chips or Mobile Sempron.

First attempt (2000)

In 1998 Ralph Nader asked Dell (and five other major OEMs) to offer alternate operating systems to Microsoft Windows, specifically including Linux, for which "there is clearly a growing interest" Possibly coincidentally, Dell started offering Linux notebook systems which "cost no more than their Windows 98 counterparts" in 2000, and soon expanded, with Dell becoming "the first major manufacturer to offer Linux across its full product line" However, by early 2001 Dell had "disbanded its Linux business unit."

The reason(s) for such a quick reversal remain the subject of debate. Court documents accused Microsoft of coercing OEMs to drop Linux:

Microsoft executive Joachim Kempin described his plan of retaliation and coercion to shut down competition from Linux: "I am thinking of hitting the OEM harder than in the past with anti-Linux actions" and will "further try to restrict source code deliveries where possible and be less gracious when interpreting agreements — again without being obvious about it," continuing "this will be a delicate dance"

While in a 2003 interview Michael Dell denied that Microsoft pressured Dell Inc. into doing an about-face with regard to desktop Linux, citing a lack of sales: "unfortunately the desktop Linux market didn't develop in volume. It's more of a server opportunity" but adding: "We continue to offer Linux on the desktop and there is nothing else to say." However, a 2004 report noted that Dell no longer offered pre-installed desktop Linux:

So what does it mean "factory installed Linux"? If you want Dell to install Linux for you, first add on $119. But here is the annoying part. They won't send you a computer with Linux pre-installed. They sell you the computer and the boxes of software on the side, and then they make an appointment to send you someone who comes to your house or business and installs it there.

Products

Scope and brands

The corporation markets specific brand names to different market segments:

• Business Class: including OptiPlex, Latitude, and Precision, where the company's advertising emphasizes long life-cycles, reliability and serviceability:

• OptiPlex - office desktop computer systems
• n Series - desktop and notebook computers shipped with Linux or FreeDOS installed
• Vostro - small-business desktop and notebook systems
• Latitude - commercially-focused notebooks
• Precision - workstation systems and high-performance notebooks. (Some of them including Linux pre-installed.)
• PowerEdge - business servers
• PowerVault - direct-attach and some network-attached storage (NAS)
• PowerConnect - network switches
• Dell EMC - storage area networks (SANs)
• EqualLogic - enterprise class iSCSI SANs

Home/Consumer Class: including Inspiron and XPS brands, emphasizing value, performance and expandability:

• Inspiron - consumer desktop and notebook systems
• Studio - medium-end consumer slim hybrid desktop and laptop systems
• XPS - enthusiast and high-performance desktop and notebook systems
• Alienware (XPS Extreme) - high-performance gaming systems

Peripherals: Dell has also diversified its product line to include peripheral products such as USB keydrives, LCD televisions, and printers.

• Dell monitors LCD TVs, plasma TVs and projectors for HDTV and monitors

SWOT Analysis

Quickly add a comment to improve this analysis. Remember, volunteers like you created this SWOT Analysis.