This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Dell's Founder Strikes Deal To Turn It Around

"What Michael Dell was all about was getting products to people faster and more directly and at a lower cost than anyone could," said Forrester Research analyst David Johnson.

While Dell PCs are still used in offices and homes around the world, the industry has proved unforgiving to those who don't evolve with it. With smartphones booming, PC sales falling 3.5 percent last year, and tablets expected to outsell laptop computers this year, Dell's old slogan is more likely to be phrased as a question, as in: "Dude, you're getting a Dell?"

Dell Inc. is now selling itself for a price that is about 80 percent below its peak market value of more than $150 billion in March 2000. The company is now the world's third-largest PC maker, having fallen behind Hewlett-Packard and Lenovo. Apple has a smaller share of the computer market but more than makes up for that with its sleek iPods, iPhones and iPads.

IBM managed to reinvent itself during the 1990s when its main business of selling mainframe computers began to suffer as desktop machines grew increasingly powerful. But it took nearly a decade.

Michael Dell stepped down as CEO in 2004, staying on as chairman. But the Round Rock, Texas, company faltered under CEO Kevin Rollins and saw its first-ever profit decline. Customers complained of poor service, and sales slowed as Dell faced a market glut of cheap PCs from other makers. The company lost its No. 1 position to HP 2006 and never regained its standing.

Michael Dell returned as CEO in 2007 and began carrying out a turnaround plan, dubbed "Dell 2.0," that included improving customer service, thinning the managerial ranks and expanding into new businesses.

Moorhead said it will probably take Michael Dell at least another three to five years to transform his company. That's a timeframe that probably would have caused Wall Street to grow even more frustrated with Dell Inc.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
SYM TRADE IT LAST %CHG

Markets

DOW 17,841.98 -86.22 -0.48%
S&P 500 2,080.15 -9.31 -0.45%
NASDAQ 4,919.6440 -19.6830 -0.40%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs