Dell Should Buy RIM or Die
However, here's the problem, its other OEM partner, chip giant Intel (INTC), in its most recent quarter announced not only sequential revenue growth of 5%, but remarkably, its PC revenue rose a respectable 4%. So how is it that Intel can see somewhat moderate growth in PCs, but Dell can only produce double-digit declines?
During Dell's announcement, its CFO Brian Gladden was quoted as saying: "The revenue deterioration we saw during the quarter was clearly above anything we expected."
I think that admission should be cause for concern for any investor who is long Dell. The company is now banking on a rebound upon the release of Microsoft's new Windows 8 operating system. Dell is hoping that Windows 8 will be compelling enough to persuade consumers back into the realm of the PC and steal some of the spotlight from Apple. I think this is too much of a wager -- particularly for a company so entrenched in the enterprise.
This is why I think buying Research in Motion makes the most sense, if Dell truly wants to compete with not only Apple, but also Google and Amazon (AMZN). Dell tried this once with its Streak tablet. Granted it was anything but successful, but what it means is that it has the existing platform in place to make a RIM acquisition work.But alas, this may not be an option, at this point. The company needs to reinvent itself in a way that IBM (IBM) once did, by letting go of what it knew and venturing into an area where it can lead. This is Dell's new reality. If nothing else, Dell should make a pre-emptive move to block IBM, Microsoft or even Hewlett-Packard from stealing RIM away, as it makes perfect sense for each of them. For that matter, it also makes sense for Facebook (FB). In RIM, not only will Dell be able to leverage its existing enterprise presence, it will acquire assets such as RIM's BB10 software, a growing music service as well as RIM's Mobile Fusion, a product that supports the collaboration of enterprise mobile devices, even that of competing models such as iPhones and Android devices. Dell becomes relevant again.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV