To paraphrase Mark Twain, rumors of Dell's death have been greatly exaggerated -- exploding laptops notwithstanding.

Oh, don't get me wrong: Dell (NASDAQ:DELL) has been struggling recently. There's no question about that. Its stock fell to a five-year low last month, when the company told investors that second-quarter profits would land 30 percent below forecasts. Now the world's largest computer maker, once seen as being synonymous with the corporate model of efficiency in production and distribution, has become a laughingstock of the tech world as images of its "exploding laptop" find their way all across the Internet.

There was even a cruel joke circulating for a while involving those North Korean missile launches. Remember that episode? Pyongyang launched seven missiles, and they all fizzled out after about 30 seconds. Anyway, that got people suggesting that Kim Jong Il might be loading up on Dell laptops, because they worked better than his rockets.

A half-full glass
What gets me is that Dell's problems didn't just happen in the past two months, yet that's how investors have been behaving. When a stock's been sinking for a year and a half, as Dell's stock has, the price action should've been a warning a long time ago that the company's business was experiencing a slowdown.

Over the past 18 months, nearly $100 billion in market cap has been lopped off, yet Dell has managed to produce record profits all the way through its recently completed fiscal 2006. Dell admits that profits are currently running behind last year's results; however, it's likely that the worst has been factored in, particularly given the deep slide in the stock price.

Moreover, the company sits on an $8.5 billion cash hoard. This will likely be put to use, either through increased stock buybacks or maybe the declaration of a dividend. Dell doesn't pay any dividends right now, but more and more big-name tech stocks are starting to, and it has been talked about in Dell's case.

There is also the possibility of another acquisition. Earlier this year, Dell purchased gaming PC maker Alienware. Although the deal was tiny in terms of size, Alienware's status among gamers has some observers thinking that it could inject a breath of creativity and even "coolness" into Dell's products, which have long been criticized for their lackluster design. The new XPS 600, a gaming desktop that comes with four graphics cards, a custom paint job, and a 30-inch LCD monitor, and which sells for almost $10,000, is evidence of Dell's new attempts at getting hip.

In another new development, Dell will use, for the first time ever, Advanced Micro Devices' (NYSE:AMD) chips in both its Alienware-designed game PCs and its servers. Up until now, Dell computers ran exclusively on Intel (NASDAQ:INTC) processors. The addition of AMD will give the company more flexibility in product development.

An improving macro outlook
All of the above might sound great, but perhaps you're left wondering, "What about the 'macro' outlook?" After all, while business investment into equipment and software is currently at record levels on a nominal basis, the pace of growth is nowhere near what we saw in the 1990s. That rapid pace of investment fueled the huge gains in the entire tech sector.

The good news? We may be in the early stages of another giant acceleration in investment. When looking at five-year rates of change in capital spending on equipment and software, we see two periods in the past 20 years that marked the starting point of big upward cycles: 1983 and 1991.

In 1983, the five-year growth rate in capital spending on equipment and software was a paltry 5%. However, spending accelerated to 50% by 1988. That five-year period saw tremendous appreciation in hardware- and software-company stocks.

Even more impressive was the move that began with 1991's trough in capital spending. What followed was an eight-year bull run that saw spending rise sevenfold. Few investors need to be reminded of how tech stocks performed during that period -- before the bubble burst.

So where do we stand now? Well, the second quarter of last year gave us the lowest level of capital spending on equipment and software in 22 years, based on the five-year rate of change. However, investment has been picking up steam recently, and it's starting to look as if the worst is over. Even more bullish, perhaps, is that the deceleration we saw between 1999 and 2005 was enormous -- the largest ever! To me, this means the recovery is likely to be equally powerful, and that it will catch many investors and economists unaware.

For Dell, this all means that while the world's biggest computer maker may be struggling with some image problems and other short-term negatives, investors who shun Dell at these price levels may be missing the bargain of a lifetime. Sure, the company's days as a growth stock may have come and gone, but no one ever said you can't make money in a high-quality cyclical business, which probably describes Dell accurately. The secret, of course, is to wait for the value, buying just as the cyclical tide starts to come back in. Well, the tide's coming back in, and Dell's boat will soon be rising once again.

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Fool contributor Mike Norman is the founder and publisher of the Economic Contrarian Update and is a Fox News business contributor. He is also a radio show host at BizRadio Network. He owns shares in Dell. The Motley Fool has a disclosure policy.