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By Paul Larson (TMF Parlay)

Heck, after reading Rick's arguments, I almost want to go and buy Dell myself! The growth opportunities! The efficiency! The low valuation! But then when you look a bit closer at the numbers and the market in which Dell has to operate, my enthusiasm for Dell slips right back to where it was: lukewarm.

First, let's remember exactly what business Dell operates in. Even with all the emerging opportunities for Dell, it is still a box maker. Last year, only 15% of Dell's revenue came from enterprise systems, and only 8% came from "other" sources beyond servers, desktops, and portables. Despite what Rick would have you believe, the vast majority of Dell's business remains making low-margin, commodity-like boxes.

Portables may be a hot growth area for Dell, but the market for portables has largely the same dynamics as desktops. In fact, it may be a tougher market than desktops to compete in. Moreover, there is reason to believe that sales of portables are cannibalizing sales of desktops to a degree since it is typically a "one or the other" proposition for most buyers.

Besides, Dell's sterling reputation certainly got tarnished quite a bit when it recently had to recall 27,000 notebook batteries because they were a fire hazard. This is on top of the company recalling some 400,000 notebooks earlier this year because of faulty memory chips. Still want to believe that Dell can do no wrong?

Regarding the comparisons of Dell to EMC and Sun Microsystems, I don't know if those are fair comparisons because each market has different dynamics and each company has different competitive advantages and growth rates. As they say, apples and oranges. Dell may be a player in the server and storage markets, but remember, most of its assets are tied up making low-margin boxes.

An extremely tough industry, decelerating growth, increasing competition, and a stock that even after getting chopped in half still trades above its historical valuations -- that's what you get when you buy Dell today. Caveat emptor.

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