Dell, Inc. (DELL)

Geowolf (65.73) Submitted: 9/19/06 8:16 AM : Start Price: $21.61 DELL Score: -17.03

I've been hovering on the sidelines thinking that DELL might fall lower. Recently the stock price has seemed to be resistant to falling lower, despite an SEC probe. Bad news in the delayed quarterly report might cause share price to decline, but I wouldn't be surprised if any bad news there is already baked into the price.

My take is that in the short term the stock is hovering, waiting for a positive catalyst. Long term, I expect DELL to recover and, given its current valuation levels, outperform the market. I believe that Dell is a solid company that's stumbled recently, but that its problems are eminently fixable.

An article on statesman.com: http://tinyurl.com/hcmqa convinced me that Dell execs understand are working to correct two of their main difficulties: customer service and retail exposure. Dell calls their plan to fix their problems "Dell 2.0". Details are still lacking, but two major areas of focus encouraged me:
* Improving customer support including cultivating one-to-one relationships where consumers would have a dedicated rep (or rep team) (similar to Dell's corporate customer support)
* Improving Dell's retail exposure while maintaining the efficiencies of their direct sales model. They still intend to have consumers place orders that will be shipped, but by increasing their retail presence they will allow more consumers to see for themselves what products are like (believe me, 360 rotating pictures only go so far).

"Dell 2.0" is also supposed to incorporate "edgier" product designs. I expect that will mean more of their XPS systems, perhaps incorporating specs and design aesthetic from Alienware (acquired by Dell earlier this year).

Another previously reported very positive sign: Michael Dell purchased $70 Million of DELL Stock at $23.99 on May 24th. SeekingAlpha said that purchase was "the largest by any corporate insider, at any company, in at least three years": http://hardware.seekingalpha.com/article/11436.

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