Finally, there's some good news from Dell (NASDAQ:DELL).
No, I'm not talking about the job cuts. Yesterday management announced plans to lay off roughly 10% of its workforce, or some 8,800 employees. That might be necessary, but it most certainly is not "good."
Dell's good news is that it's finding ways to earn more from its computers. Average PC selling prices rose 14% as revenue improved by 3%, to $14.6 billion, in the first quarter.
Cost reductions, meanwhile, haven't fully taken effect. Operating margin declined 20 basis points to 6.5%. Net income declined from $762 million to $759 million, though the firm gained a penny in per-share earnings, to $0.34, thanks to a lower overall share count.
In short, Dell still has a very long way to go.
But investors apparently see progress in yesterday's report, and they're celebrating a bit as a result. The stock is up by more than 2% as I write today.
But let's not get too excited. Are we really saying that one quarter's worth of higher prices reveals a competitive advantage? If so, how will it be sustained? Hewlett-Packard (NYSE:HPQ), Lenovo, and Gateway (NYSE:GTW) could cut prices tomorrow, and -- poof! -- there goes your advantage.
For its part, management says it has a five-point plan to regain its footing (please pardon the paraphrasing):
- Reshuffle executives. (Welcome back, Mike!)
- Boost customer satisfaction. (Um, hello?)
- Sell more overseas. (Would you like soy sauce with that?)
- Get more money from services. (If only there was something clever to say here.)
- Cut costs. (Don't let the door hit you on the way out, pal.)
Now, tilt your head, squint carefully, and count to 10. You'll notice that the turnaround plan is like ... every other turnaround plan in the history of Corporate America.
I know, I know, I should be happy that Dell is making progress. And I am. But as an investor, I can't escape the harsh truth that this company, once unique, has become a tail-chaser. An also-ran. A mimic. A copycat. Dell 1.01.
Bring back the sauce, Mike. Reinvent the company. Show me Dell 2.0. Then, and only then, will I be interested.
Get your clicks with related Foolishness:
- Check the Foolish Forecast before you read the numbers.
- Can't you just be done with it, Dell?
- Wait. Is Dell selling computers at ... Wal-Mart (NYSE:WMT)?!?
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Fool contributor Tim Beyers, who is ranked 3,567 out of more than 29,500 rated players in our Motley Fool CAPS investor intelligence database, hates to see Dell suffer like this, but he also can't claim to be surprised. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on Foolishness and investing may be found in his blog. The Motley Fool's disclosure policy once watched a dog chase its tail for two hours. Who needs a TV?
