Why Dell Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, computer giant Dell (UNKNOWN: DELL.DL  ) has received an alarming one-star ranking.

With that in mind, let's take a closer look at Dell and see what CAPS investors are saying about the stock right now.

Dell facts

Headquarters (founded)

Round Rock, Texas (1984)

Market Cap

$18.2 billion

Industry

Computer hardware

Trailing-12-Month Revenue

$58.7 billion

Management

Founder/Chairman/CEO Michael Dell
CFO Brian Gladden

Return on Equity (average, past 3 years)

36.4%

Cash / Debt

$11.3 billion / $9.0 billion

Dividend Yield

3.1%

Competitors

Hewlett-Packard (NYSE: HPQ  ) IBM (NYSE: IBM  ) Lenovo Group

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 39% of the 267 members who have rated Dell believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, JohnStuartMill, succinctly summed up the Dell bear case for our community:

Sluggishness moving into new markets has never been favorable in the technology industry. Clearly [Dell] is behind the eight ball. Where improving manufacturing inefficiencies has been beneficial in the past, that type of business plan can only go on for so long. The move out of PCs into IT and more servers and networking services has also been slow and management may not be capable of moving fast enough.

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  • Report this Comment On December 21, 2012, at 12:07 PM, will1946 wrote:

    I don´t agree at all. (Of course, I have a position in Dell.) Dell is making an effort to expand into other things than computers, and this effort is obviously successful. Just yesterday it announced the acquisition of Credent, I believe,and it has been acquiring other companies with expertise in the areas it wants to diversify in.

    Also, the fact that Michael Dell is actively managing his own company is positive. He is a capable manager and he WILL bring Dell back, in my view.

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