Dell Computer (Nasdaq: DELL)

Trading at $25.19 as of June 13, 2001

My father had two ideas of a good time: tinker with tools to repair things around the house, and retreat to his basement office to reconcile the monthly accounts. (Yes, he was an economics and accounting major. Wanna make something of it?) He liked things that worked -- whether drills or adding machines -- and that lasted forever. He especially wanted to buy from manufacturers that stood behind their products, and he invested in companies that operated that way.

It's too bad the PC world passed him by -- he died in 1984, curious but not yet owning a computer -- because I'll bet today he would have a laptop or desktop bought direct from Dell Computer(Nasdaq: DELL). He would see dependable products, excellent customer service, and good prices. I'd suggest the stock to him too, but chances are he would have beaten me to it.

Many people think of Dell as just computers, but the real reason the company is a good idea for Dad today is that it's moving its low-cost provider model beyond the core bread-and-butter PC business into servers and storage. Not only has Dell maintained and expanded its PC market share, but Austin's best accounted for 30% of worldwide server growth in 2000. The scrappy company has built a servers, storage, and systems business to the tune of $6 billion in 2000 revenue in only five years. The storage news may be all EMC(NYSE: EMC) and Network Appliance(Nasdaq: NTAP), but Dell is the stealth competitor.

I learned many things about business from Dad, who retired after 35 years with Eastman Kodak(NYSE: EK). One of his favorites was "all we do is give customers what they want." Dell does it, and succeeds through service and aggressive pricing that can turn sharply through its constant stream of market data. I can't tell you how many times someone I know has said to buy Dell either because they never had any problem with the product or, if they did, it was easy to work with the company to solve it.

Another Dad truism was that you should stick to your business and only areas that are complementary to it. He knew that, watching his beloved Kodak lose its way with misplaced acquisitions such as Sterling Drug. He would see the sense in Dell's moves from PCs to servers to storage. And because his most frequent aphorism was "there's no such thing as getting rich quick," he wouldn't care about how much gain he may have missed during Dell's hypergrowth in the 1990s. He would be very happy to look at its free cash flow growth today and see a good shot at doubling his money in the next five years. My Dad would expect no guarantees -- he lived through the Great Depression -- but he would favor the odds.

If your Dad wants to learn more about Dell, he can check out our Dueling Fools on Dell last fall, and compare the Bull and Bear with what's happened since then. Or catch Mike Trigg's quick take on Dell's price cutting in this tough market environment, and whether the company's boasts of its phenomenal return on invested capital are warranted. Dell is one of the most talked-about stocks today, and investors are dissecting its merits and demerits on our Dell discussion board. Dads are welcome!

Tom Jacobs (TMF Tom9) gave his Dad apoplexy while in high school but made up for it later. He hopes. View his holdings, which do not include Dell, in his profile.

A Stock for Dad represents the opinion of one Fool and should in no way be taken as the opinion of either The Motley Fool, Inc. or the company in question, or as representative of anyone or anything other than that specific Fool's thoughts. Which can be way out there, so do your homework, and review The Motley Fool's disclosure policy.

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