Dell Needs to Cough Up a Dividend

DELL (DELL) Marketwatch.com

Of course, if Dell wanted to, it could start paying investors for that wait by instituting a dividend. Considering the company's cash holdings of $8.5 billion and what appears to be ahead for its growth prospects, it might be time.

Interestingly, a Houston Chronicle story from 2006 quoted one longtime investor who said company founder and CEO Michael Dell had told her the company would consider a dividend if it ever transformed into a "value company."

Presumably, that means admitting you're no longer a growth company. Well, how do we put this? Expected fiscal 2009 revenue growth of 2.1% really isn't growth. Expectations for fiscal 2010 revenue (assuming they're not still too high) to fall 7% really isn't growth.

As we know by now, more than half of Dell's revenue still comes from the U.S., and the trends in job-shedding this year don't inspire much confidence for pickups in demand from the company's corporate or consumer customers.

Let's also not forget the warning earlier this week from Intel(INTC Quote) that saw the chipmaker lopping off a half-billion dollars in its quarterly revenue forecast due to the stagnancy in global PC demand.

Patience may ultimately (someday) be rewarded by Dell's turnaround strategy, and the company seems keen on cutting costs (sorry about that, Ireland) as the business cycle heads further lower.

In the meantime, however, investors may increasingly consider whether some of that $8.5 billion would do more good in their hands than it will in Dell's.

Dell shares ended Friday's trading session down 1.3% to $11.12.