Michael Dell stepped down two years ago, and turned the ball over to Kevin Rollins who runs the company on a day to day basis. Dell either has to be kicking himself in the butt for turning the reigns over to Rollins, or be happy that he himself is not on the firing line at the moment.
Dell was innovative in selling directly to the consumer as a business model. It worked brilliantly for years. The firm had no equal in the direct to consumer market. Dell also was encouraged to sell big time to the corporate market. All great technology oriented growth companies hit walls. My work shows that it tends to happen about 7 years or so into the growth process. The exceptional growth company can take longer before it hits the wall, and has to reinvent itself. The word reinvent is the correct one to use.
Microsoft has now entered such a period, having become a cash cow as opposed to being a growth company. In my history of technology investing which goes back 35 years, I have never found a growth company that has not hit a wall somewhere in the growth process.
What happens is that companies at some point tend to rest on their laurels, their past successes and glories. They become so committed to what they are doing, that they become incapable of seeing the next revolution sneak up behind their backs and challenge them for supremacy. It always happens and it's always the same way with the same result. Never have I seen a single growth company that could reinvent the revolution. It's always some new kid on the block that spearheads the next new thing.
The consumer has probably now reached a stage where he wants to walk into a store and see what he's getting for his money as opposed to just reading specs on his computer and talking to an outsourced person in India who is absolutely clueless about American culture.
In the last five quarters, Dell has missed on the estimates that it has given Wall Street. In the last quarter there has been a 51% decline in quarterly profit, and now a recall on 4 million laptop batteries to boot (no pun intended). This is not the way to run a major Fortune 100 company.
Things always get worse before they get better
When a growth company hits the wall and starts to decline, the decline usually has to go for quite a while before a new management team takes the reins and starts to engineer a midcourse correction. This is like turning an aircraft carrier around. First you have to make the decision to go another way. You then have to get everybody else on board quickly. It takes several miles to get a carrier turned around at sea; it's not easy for corporate management to do it either.
Dell will have to re-examine its direct to customer sales model, because right now Hewlett Packard is eating them for lunch. The stock is down 60% from its high for good reason. The stock market is telling you something. Is anybody listening down there in Texas.
Dell bet big on the corporate market, and completely failed to take into account the changing sentiments of the consumer market. Dell needs to grow bigger outside the United States. Everyone agrees that the US market is not really a growth market at the moment. The firm must increase international sales to a point where it's growing 15 to 20% internationally. I don't see it happening.
Somebody and not Rollins has to address the lackluster customer service in this country. Why not Rollins? It's because he was in charge of the company when the problem became a problem. You never want the guy who was involved with the problem to be the guy who fixes the problem. He's too busy protecting himself than to fix the problem. That's management 101.
Dell use to be almost perfectly run. They had the low cost model, and the competition, namely Hewlett Packard, Acer, Apple, and China's Lenovo were always playing catch-up, and stumbling trying to catch up. Why did they stumble, it's the same in football, you go for the long bomb when you are behind in the fourth quarter. Now the competition finds its model working, and Dell is stumbling.
I realize that Dell has spent money fixing customer support, and trying to convince people that their product is no longer a commodity. I have seen zero results from this expenditure at this time. In my own work as a money manager, I have lowered my estimates for this company six times in the last twelve months. I currently do not carry it in a single portfolio. Fortunately, I missed the whole move downward, and I am not willing to bet on this company yet.
Yes, Dell is now considered a value stock by many. The problem is that the growth players haven't been completely washed out of the stock yet. This will take more time. The institutions that have had a tough time performing this year will be under pressure to rid their portfolios of Dell by year end if the stock doesn't perform. Dell has agreed to market processors by AMD as well as Intel. They will probably take a hit to their margins because Intel was probably rebating them back a portion of the sales to be an exclusive with Dell.
The company is still sitting with almost $11 billion in cash on the balance sheet, which works out to about $4.50 per share. Wall Street is in the process of lowering estimates for 07. Here's the bottom line, with Dell you still have a valuation risk. Hewlett Packard is growing faster and selling cheaper. The only reason to own Dell here is its previous extraordinary history, but in stocks the past is not always prologue to the future. A stock has no ideas where it traded yesterday, and Dell has to execute on a believable strategy. Go figure.
The Saga Continues Diddy
Think I can conquer the monster known as Walmart. Men are thick headed. There ladies I said it. We think we can conquer, fix, or figure out anything. Then we wonder why women go to the bathroom together! To talk about the stupid things their men do!
Why do I go to Walmart? Well, where I live it is the closest and only place that is open after midnight. You would think it would be very easy to get in and out of there. Ummm, no, not when you have the 20-30 night owls trying to checkout at the only register open that late. Anyway here is what happened to me the other night...
I am lying in bed minding my own business when my wife says, "you need to go to walmart". Nails on a chalkboard, fork scrapping teeth kind of thing. So, as I curl up in the fetal position and stick my thumb in my mouth, I say "WHY!?" My wife says, "we need milk" and she wants to get a new bed set for our son's bed. "Please tell me you are not serious." My wife turns her head and gives me that "look". Nuff said. I had my shoes on before she could finish the glare.
When a woman wants something she wants it now. Not in a minute. Not in a second. Right now. It is a prerequisite for being woman, hear me roar, blah, blah, blah. Please don't tell my wife I said that...lol. But, I digress. Back to the torment.
I head to walmart and I figure I might as well get gas and spend my monthly PIP budget for 5 gallons of fuel. I get to the pump and gas tank is on the other side. My car has the tank on the right, my wife's is on the left. Why can't that kind of crap be universal? So, I fill up but only end up with half a tank.
I start toward the entrance and the hairs on the back of my neck start to stand up. The inside of me is screaming "NOOOOOOOOOOOOOOOOOO! Not this again"!!! So, I take a deep breath and head in. Look around, not too many people, it's late, piece a cake.
Oh, come on now, who am I kidding.
As soon as I walk in, there is a new orientation group standing right in where they store the carts. So all 10 of them greet me. I am all for civility, but who on God's green earth does orientation at midnight?!?! So after getting my choice of the 3 carts they pushed at me, I move on.
I know that milk and bedding are very close to each other on the far side of the store. So, I grab 2 days supply of food and water and start the journey. After walking for about 30 minutes I see this guy stocking and struggling with a weight set as he is trying to get it on a shelf. So, I go over to help him. He says, "this is my job and I can handle it!". So, being the sarcastic butt I am, I have to say something.
Cannot just say "fine" and walk away. I tell him, "Dude, I never said you were a wiener or anything. Just did not want you to drop that on your head. But, if you got it you got it. But don't look for me to help you when your spine drops out of your tailpipe."
He said, "Kiss my @$$". This kid was probably 20-21 and I looked at him and said, "I may have deserved that, but what did you just say to me?" I liked this guy. He said, "Sir, kiss my @$$ and thank you for shopping at Walmart". I laughed. Man that was funny! I told him that I would go get the girls in the flower department to help him lift those weights next time and started to walk away.
Next thing I know a super or manager or something says, "Excuse me sir, is my employee bothering you?" I said, "Where in the world did you come from? Were you hanging in a light fixture?!" I told him, "no, he is fine, just trying to do his job". So, instead of letting it go, this supermanger says, "I think he is bothering you."
Why can't I just walk away!!
I turn to him and say, "The guy is doing his job, please leave him alone. I want to go get what I came to get from this torture chamber and go home. I don't know what your shift is, but mine does not go until 6AM." You would think the guy would say, "OK sir, you have a nice evening". No. Of course he would not. He says, "Sir, please stay here for one second". He then gets on his two-way that looked like it came from the toy section and heads back my way.
He says, "Sir, I would like you to file a complaint". I told him that there was no complaint to file. I just wanted to partake in the great bargains of their lovely store and the wonderful items. I was a bit grumpy now if you could not tell.
This guy was adamant! He had security come over and also the night manager! All the while the weightlifter kid was looking and had a smirk on his face. He could care less. Mom and Dad making him work in the real world while he is in college. Little punk. I guess he and I were the only ones not taking it seriously. Maybe I should have the wiener drop the weights on supermanager! Oh, wait, he can't lift them, so nevermind.
The security guard had to have been 70 years old. He comes up and they are having this discussion. Top secret stuff. The night manager says, "can you handle this" to them and goes back to more important things. I told them they had 2 minutes to resolve this or I would be gone. The security guard says, "Sir, please calm down".
I laughed because I just asked a question. He must be watching too many Hawaii 5-O or Cops reruns. I had my head down now trying to be polite because I respect my elders and wanted to finish this freaking ordeal.
The supermanager asks if I will file a complaint and again I said no. Then I told him if he had any other questions for me, the answer is---no. You know that tolerance gauge that is built into you? Mine was starting to break. I started walking away. 20 minutes was enough
and I was irritated like when one of those pine needles gets stuck in your sock and you can't get it out.
The security guard must have given up because he was already back in the electronics section watching TV.
I look back and see the supermanager yelling at that kid. The kid is just smiling and I can read his lips. "Whatever dude, whatever dude". What was the point of trying to help that young turd?
We are supposed to I guess. Then, my wife calls and says, "What is taking so long?"
As I deflate, I explain the story and she is smart butt like I am. She says, "Hurry it up slacker".
I finally get to where I was headed and decide to get the bed set 1st. I have no intentions of letting milk sit in the cart and spoil because I know something will happen. I call my wife and I ask which
bed set she wants? "Tell me what they have". GRRRRRRRRRRRRRR!!! I had her look online at home and pick one. So as she is going through them I pull one down I like and sit it by my cart.
This little Oriental lady, about 50 walks by. This was her section. I found that out very fast. She sees the bed set I have lying on the floor and points at it. I tell her I am looking at it and she walks over and grabs it and puts it back on the shelf!! I pull it back down and tell her I am looking at it. So she goes away. Talk about customer service over-kill. Geeez.
My wife can't decide. I love my wife. I would not put myself through this if I did not. I tell her can we get a rush on it because it is almost 1 and I am tired. I said, "You should have came with me". She is good. She says, "What do you think I have you for"? I pull down 2 and I have them stacked by my cart and go grab another my wife likes so I can describe them to her on the phone.
I go back and the 2 I pulled down are gone! I see that little lady putting them away! I tell her I want to look at them and she points at me and walks away? Huh?
I tell my wife that I want to go so she needs to pick one.
Know the answer I get. "I'm tired, you pick one and hurry up and get home". AHHHHHHHHHHHHH!!!! I told her I love her, but was going to beat her when I got home.
I grab one, head back to my cart and now my flipping cart is gone!!!!!! I see the little lady halfway across the store taking my cart back with the little things in it I grabbed on the way back to bedding. So, I grab a gallon of milk and the bed set and yell at her, "HEY"! She stops turns around and brings it back to me. I put my stuff back in the cart and I thank her and she points at me and walks away. Huh? That was starting to weird me out.
So, I have everything and head toward checkout. I am standing in line at checkout and guess who? The supermanager asks if that lady was bothering me! I said, "Look. To be honest, you are the only one who is bothering me and here is a tip for you. You take your job a little too seriously".
Bad move. Why can't I just be quite.
He goes on this spree about how he takes pride in his job and has been employee of the month, etc. I handed him a home business flyer I had in my pocket! HAHAHA "Your a slave"! He took it and walked away. I am sorry, but I could not resist. I was tired, grumpy, and now hungry.
2nd in line from cashier and baby I am home free. Guy in front of me
gets everything scanned and left his wallet in the car. Welcome to "Walmurphys". I don't cuss, but I was under my breath now. @#$@#$%^& %$^&$#& &*%&* **%*(%^@%^&$* 245@ @$%$@ 46 sfgwb7b y!!!!!
The guy finally comes back, on his cell with no care of the 5 others behind him waiting on his turtle moving @$$!!! I finally check out and leave the store.
Guess who is outside of the store? The wiener.
He says, "Dude, you got me in trouble". Huh?!!?! I told him I just tried to help him out. Then he says, "I should kick your @$$". The big man that could not lift 50 lbs over his head. I grabbed the bed set by the handle and hit him in the head with it and told him to get back to work! He went back in cussing me out all the way in. What is it with all of the chips on the shoulders of these people?
I saw on the news where a guy got fired from Walmart for posting on myspace that if they dropped a bomb on walmart that the national IQ average would go up. I could not agree more. The bad thing is, I go there so maybe that rocket has my name on it. I imagine I will be on there hit list soon. Right up next to the shoplifters.
God Bless,
Doug Gorman is owner of Work Be Gone! and writes on multiple topics from business to humor. To receive more information from or to request written material for use please visit: http://www.workbegone.com
Both John Smith & Doug Gorman are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
John Smith has sinced written about articles on various topics from Programming, Health Insurance and Site Promotion. Richard Stoyeck's background includes being a limited partner at Bear Stearns, Senior VP at Lehman Brothers, Kuhn Loeb, Arthur Andersen, and KPMG. Educated at Pace University, NYU, and Harvard University, today he runs Rockefeller Capital Partners and Sto. John Smith's top article generates over 110000 views. to your Favourites.
Doug Gorman has sinced written about articles on various topics from Work From Home, Email Marketing and Affiliate Programs. Success thrives upon failures demiseDGorman . Doug Gorman's top article generates over 14800 views. to your Favourites.
