3 Reasons to Sell Dell Today

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A sputtering economy, implosions at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet while panic is never beneficial to investors, it's good practice to play devil's advocate with investments from time to time.

In Motley Fool CAPS, more than 125,000 members have weighed in on nearly 5,400 stocks, sharing bullish and bearish opinions alike.

In the case of technology retailer Dell (Nasdaq: DELL), a total of 5,404 members have weighed in on its chances of success. I've already plucked out some of the bullish rationale backing Dell today, so here are three counterpoints to consider, courtesy of CAPS:

Best days are over: Companies like Dell, Microsoft (Nasdaq: MSFT), and Oracle (Nasdaq: ORCL), which once provided monster returns to shareholders in the 1990s, are past their prime. They've shown much different results over the past decade. Many CAPS members believe Dell has lost its competitive advantage, and that it doesn't have the innovation necessary to compete with Apple (Nasdaq: AAPL) or Hewlett-Packard (NYSE: HPQ) anymore.

Giving up market share: While he gets credit for Dell's early success, Michael Dell's return as CEO hasn't helped the company recoup any of its still-falling global market share. According to market researcher Gartner, Dell's share dropped to 13.6% of global unit PC sales in the third quarter of 2008, from 16.1% two years ago. In the same period, HP's share jumped more than 2% to 18.4.

Behind the game: Many investors believe that Dell has been too slow to adapt and make necessary changes to compete in today's market. It lags in the server market, trailing IBM (NYSE: IBM) and other competitors. Meanwhile, other tech giants like HP and EMC (NYSE: EMC) have vaulted ahead, increasing revenue through acquisitions over the last several years. While Dell acknowledges that it needs to do more than grow organically, many wonder whether major acquisitions will work in its current culture.

Of course, Dell has survived and thrived in a brutal market in the past. Whether the company will do so going forward is a whole different question -- and one reason why CAPS is such a great resource with which to augment your own analysis.

To see what the very best CAPS members are saying now about Dell, just click on over to Motley Fool CAPS and have a look -- it's all free, and your opinion is welcome, too.

Further Foolishness:

• Sell This Stock. Now.
• Don't Buy Into These 3 Investment Myths
• 2-Star Stocks Poised to Plunge: Dell

On Jan. 12, 2009, Fool co-founder David Gardner, Jeff Fischer, and their Motley Fool Pro team will accept new subscribers to their real-money portfolio service. Motley Fool Pro is investing $1 million of the Fool's own money in long and short positions in a range of securities, including common stocks, put and call options, and exchange-traded funds (ETFs). They also incorporate proprietary CAPS "community intelligence" data into their research. To learn more about Motley Fool Pro, and to receive a private invitation to join, simply enter your email address in the box below.