A few days ago I bought some Dell at $19.53, and I bought more shares yesterday at $19.21.  The stock is down even more today ($19.09 as we speak), but I thought I'd write a little more on why I like Dell at current prices.

1. If you look at the one year and five year charts, Dell is trading near all time lows. ($18.87 is the one year low, but resistance level is around $19.00.)
2. If you look at the one month chart, the stock has been fluctuating between $19.00 and $20.50.  This should be an easy swing trade if I'm willing to wait a few days, or a week or two.
3. They are moving production to China/buying more compenents from China, slashing the Austin, TX workforce, and more labor cuts are coming, and they're saving money in a variety of ways.
4. They bought back $4 billion worth of stock in Q4, and are buying back $1 billion worth of stock this quarter (Q1).  The buyback alone should help support the stock price. 
5. They're branching out with a few new products to compete with HP.  Dell said they would also launch a mini-laptop to compete with HP on that front, and there has been rumors of Dell entering the cell phone / smart phone market for a while.  Michael Dell keeps talking about new devices.  See here: "He said that while there would be devices in the future that "blur the line" between smart phones and computers, "in the near term, Dell will be focused on devices ... you think of as computers. There are a lot of opportunities to grow in the core business we are in."  Basically, that sounds like they're going to continue the laptop/pc market for now, and release a phone in the future.  I could be wrong, but to me, that's what his words imply.  I'm not sure that they'll do extremely well or do poorly at selling phones, but it's good to hear that they're at least branching out the business some more.
6. They're selling their "consumer lending" business. That should provide some quick cash and unload an expense. 
7. Plenty of cash on hand.
8. If I remember correctly, at the recent conference call, Michael Dell said that the company was still growing at a "slight premium" to the industry.
9. They're expanding into more retail outlets and changing their business model a bit.  I like the old model just fine, but with increased competition, getting more products in Wal-Mart and the like sounds like a good idea.  It's worked well for HP so far.
10. They're growing well internationally (India, China, etc. -). 
11. So what's the real problem with Dell?  Why is it down so much?  Well, last quarter, they missed the analysts average consensus estimate by two cents.  They had to lower prices to compete at retail, so now they're going to slash some jobs, buy more from China, etc in order to shore up margins.  Basically, their actions make sense to me, and I think the cost cutting plan will work.  Analysts were dissappointed, so the stock is suffering.  Of course, I think analysts are only right about half the time, and even then, they're often "late to the party".   I'm guessing that increased competition from HP and Apple also is a concern, but I'm not too worried about that.  Dell is a leader in their market, and will continue to be.
12. Finally, although the stock is near rock-bottom prices, Dell is buying back about $10 billion worth of stock.  As I said before, they bought back $4 billion in Q4, and are buying another $1 billion in Q1.  That means that there is at least $5 billion in buybacks left to go.  By taking that much stock out of circulation, I can't help but think the price will eventually be affected in a positive manner.  At the very least, it should provide support and keep the stock from falling lower. 

Anyways, I might go back and update this again later today, but there are my thoughts for now.  If the stock keeps falling, I'll probably just buy up more and "price in". (Look at that, I'm learning from those TK All-Star posts. :)  Besides, assuming worst case scenario, that the stock hit a new all-time low, I could always sell a covered call or two if I want to make some money in the short term. Dell is a larger cap stock than I normally trade, but the high volume, cheap price, ability to trade options (which many of my small cap picks don't have), and large cap stability in a tough market are positives right now.

I see a low potential downside, and a moderate to high upside, depending on how long I choose to hold the stock.

Thoughts? Comments?

DannyUpshaw wrote: the market is boring me today

Zzzzzzzzz.  Zzzzzzzzz.  Zzzzzzzzz.  Huh?  Huh?  Oh.  Make that three days.

DannyUpshaw wrote: the market is boring me today

Zzzzzzzzz.  Zzzzzzzzz.  Zzzzzzzzz.  Huh?  Huh?  Oh.  Make that three days.

Michael Dell is a very bright person, built his college dorm based business into a multi billion $ business.  However consider these facts about the computer business:

Computer industry, since 1955,   50 or so personal computer companies, eight major mini-computer makes and five competitors to IBM mainframes. 

For PC's only HP, Dell, Acer and Apple remain. All eight minicomputer makers are gone, every one of the mainframe competitors except IBM have departed from that business and just three are in business at all, doing something else.

The computer trade show COMDEX, started by Sheldon Adelson's Interface Group grew to be the largest trade show in the United States.  In 1995 it was sold to Japan's Softbank Corp.  for $862,000,000 - by 2003 it was GONE.

For history's sake, I bought a 10 Meg hard drive from Dell when he was still in his dorm room doing business as PC's Limited.  Still have the IBM PC with the hard drive and they both still work. 

I disagree with haymore TGP, Dell built there new assembly plant last year  in NC. Very efficient and plenty of orders from what I hear (rumor) Of course there facility in TN is by the airport. Plus they are green. http://www.dell.com/content/topics/global.aspx/about_dell/home_page/about_dell?c=us&l=en&s=corp

So really not that boring, and the minicomputers ASUS announced they are starting up again on TECH TALK.

Dell is now powering 100 percent of our 2.1 million sq. ft. global headquarters campus with 100 percent green power, the latest step in meeting our 2008 carbon neutral commitment.

I think a good play in this market all the way around if your bored.

Haymore, the thing is, Dell is the company that put so many of those other guys out of business.  With a ton of cash on hand and a well-established, they aren't going anywhere.  Thanks for the input though.  It's cool that you actually bought from Dell way back when they (he) was small time.

My biggest worry about Dell is that they may set a new record low.  I think the buyback will hedge off some of that, but still, it's a worry.

WSK - green power is good. plus it saves the company money.  I wish I could power my house on "green power".  Utilities keep going up. sigh.

http://us.creative.com/local/1/seasonal/springsale/welcome.asp?&campid=20997&WT.cg_n=Mailer&WT.cg_s=SpringSale_LandingPage&WT.mc_id=13488