Without doing a close reading of the materials with my Eberhard Faber No. 2 Blackwings, here's what I put into my notebook.
The advisors agree that the issues for Dell going forward as a public company in the status quo mode include,
- The medium-long term growth of the PC market will be challenging, with low unit growth and lower margin sales driving gross margin downward by historical standards. This would contrast with Dell's historical strength in sales of higher margin machines, driven by its premium name and efficient manufacturing structure.
- The company has yet to demonstrate an ability to penetrate the tablet and smartphone markets.
- Dell has yet to leverage the more than $13 billion of recent acquisitions into a "compelling enterprise stack." Of course, this is the peer sector where the higher valuations reside for a "new" Dell.
- Can the company make the difficult, long and expensive transition from an equipment-based sales force to an Enterprise-based solutions sales force? This is a critical question, which almost certainly accounts for the issue in point (3).
- By all measures, Dell's stock performance has been abysmal, and it has almost no goodwill with equity shareholders, even with "deep value" investors. Over the past five years, Dell's stock performance was (47.6%). HPQ was even worse at (64.1%). Dell's PC-heavy peers were down (11.2%) as a group, excluding HPQ. Dell's Enterprise peers were up 34.7% over the five year period.