Rudedog - I totally agree, with one weak exception.
The two items you cited are critical. There may be others (emerging markets for example), but the two you cited are probably among the top three.
I especially agree as to 1) - servers and storage - these are the first stage in Dell's metamorphosis to a "technology delivery" company. By that, I mean a PC company which successfully makes the transition to what Andy Grove sees as the hardware company of the future. He alludes to that in the interview you can read at www.fortune.com. Dell must (and IMO will) deliver a total broadband computer+communications+entertainment package to business and home.
Not making the transition, will doom any PC company. Gateway, IMO, may not make it. My WAG is that they will flounder and be swallowed by someone else who needs their direct model expertise.
MD has repeatedly stated the importance of broadband to Dell, but IMO his statements have fallen on mostly deaf ears. Its not just about the internet anymore. He continues to repeat the broadband mantra, and I think rightfully so. His reasons for doing so will become obvious in the next couple of years.
As to #2 - I also agree, but I believe MD gave guidance in his interview that margin was intact. I think that it will be, because I think that their business model (including Premier Pages) are focused on preserving margin. And it may have actually improved with product mix.
Assuming that I am right and top line growth is there, I think the key to stock performance, from their perspective, will be their guidance in the conference call.
I expect that to be positive, but guarded.
They have a great opportunity to pick up market share, and if all hell doesn't break loose, they will.
Just some random musings by someone who doesn't want to go mow the yard today. |
