{"id":649894,"date":"2013-04-01T13:11:41","date_gmt":"2013-04-01T17:11:41","guid":{"rendered":"http:\/\/gigaom.com\/?p=625957"},"modified":"2013-04-01T13:11:41","modified_gmt":"2013-04-01T17:11:41","slug":"dell-proxy-lays-out-damned-if-we-do-damned-if-we-dont-quandary","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/649894","title":{"rendered":"Dell proxy lays out damned-if-we-do, damned-if-we-don\u2019t quandary"},"content":{"rendered":"

No wonder Michael Dell (and friends) want to take his company private. \u00a0According to the company’s proxy, Dell must invest heavily in tablets — where Dell has thus far fallen short — and other areas to get competitive. But investing heavily is just the sort of thing that spooks shareholders of the beleaguered PC-and-server maker. Big time.<\/p>\n

In a research note UBS analyst Steven Milunovich wrote:<\/p>\n

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“Mr. Dell and Silver Lake intend to pursue a more aggressive PC\/tablet strategy and invest significantly in the enterprise segment. Consequently, earnings could be weak for two or more years, which would not please the public market.”<\/p>\n<\/blockquote>\n

The\u00a0Dell proxy<\/a>\u00a0lays out a raft of problems besetting the company including\u00a0a “deteriorating outlook for the PC market” due \u00a0in part to the cannibalization of PC sales by smartphones and tablets. It also mentioned a faster-than-expected decline of PC sales into emerging markets, uncertainties around Windows 8 adoption and slower Windows 7 upgrades. As a result of all that, Milunovich is reducing his earnings estimate for Dell’s 2014 fiscal year from $1.70 to $1.30 and cut his estimate for the following year to $1.12.<\/p>\n

The proxy also said that Boston Consulting Group \u00a0(BCG) warned Dell management of a shift to lower-margin products and services in its “end user computing” (EUC) business. And BCG concluded that “as a result of a likely persistent decline in the premium segment of the EUC business, unless the Company changed its strategy to become more competitive in the lower-argin segment… [it] would require\u00a0years of aggressive restructuring in order to maintain its value, and would face the risk that its decreasing scale would render it less competitive.”<\/p>\n

BCG said Dell’s Enterprise Solution and Services (ESS) business also to invest in research and development and hire a bigger sales force. As we all know R&D and enterprise sales folks are pricey.\u00a0All Things Digital<\/a><\/em> has more on the proxy’s depressing take.<\/p>\n

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DELL<\/a> data by YCharts<\/a><\/p>\n

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