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9/5/2008 4:00 PM

Dell, Inc. (DELL)

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**

Provider of products and services worldwide that enable customers to build their information technology and Internet infrastructures; offers a range of enterprise systems, client systems, printing and imaging systems, software and peripherals.

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Avatar NetscribeRetail (83.72) Submitted: 3/21/07 8:34 AM : Outperform Start Price: $22.59 DELL Score: 2.17

Personal Computers (PC) are the core of Dell’s business. PC hardware itself directly accounts for 60% its revenue and drags along with it sales of services, software, and peripherals, which contribute another 26% revenue. The remainder of Dell’s business comes from enterprise products, namely servers and storage systems. Dell commands the third spot with a 17% share of the global PC market. Its operations are conducted in the US, Canada, Latin America, Europe; Middle East, Africa, Japan, India and China.


The global PC market is estimated to be around $200 billion. Computer sales are estimated to pass 250 million units in 2007 with enhanced demand in developing markets of China and India. However, the US, Canada and Japan have been witnessing a lackluster performance in the recent past as desktop sales continue to wane and notebook sales, previously a torrid growth story, are not nearly strong enough to compensate.


Fundamentally, companies with lower fixed cost structures and lower demand volatility tend to outperform during periods of slowing IT spending. Dell’s strategy centers on its build-to-order direct model. It has the lowest fixed-cost basis owing to its low-cost manufacturing assembly process and outsourced R&D budget. Depreciation and R&D expenses each make up less than 2% of sales. Dell faces stiff competition from HP, Toshiba, Sony and Apple. However, none of these competitors have a concentrated and efficient business model as Dell, which works to the advantage of Dell.


Sales growth was tepid, advancing 7% for first three quarters of 2007, while operating margins increased 10% reflecting a sickly demand from the US, Canada and Japan where the company is paying increased attention to the missing customer experience factor. Also, the company is planning aggressive sales activity in China and India which would help the company to gain market share. All these factors make Dell a compelling story on the macro canvas of growing business activity.

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Avatar NetscribeRetail (83.72) Submitted: 5/30/07 6:23 AM

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India is one of the centers of the world's technology transformation as the total number of people online will increase from one billion today to two billion over the next few years. The company's plans for India include opening a new manufacturing plant soon in Chennai. With local manufacturing in place, Dell's most comprehensive presence in the world outside the US will be in India-domestic sales, research and development, manufacturing, customer support, services and analytics.

In March 2007, Dell announced the availability of the Dell Cloud Computing Solution, the first offering developed by its new business unit – the Dell Data Center Solutions Division. Dell’s Cloud Computing Solution is designed to provide data center optimization, increased energy efficiency, and lower deployment and overall management overhead for customers whose IT infrastructure, or compute cloud, is the “factory” for their business. These data-intensive customers include major providers of goods and services over the internet, financial services organizations, national government agencies, institutional university and laboratory environments and upstream petroleum producers. The move is designed to address a new business opportunity for Dell, the unique needs of businesses operating hyper-scale computing environments that require rack and data center optimized “design–to–order” technology and services.

PC Tune-Up is the latest customer-support tool designed by Dell to help prevent common computer problems from occurring, and if they do occur to help correct them quickly. The new tool extends the reach of the highly successful DellConnect, a remote-diagnostics tool used by technicians to fix hardware problems under warranty. With the India story, data center solutions center, and customer support tool unlocking value, Dell is grabbing investor’s attention.

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