So the way to turn around your business that is struggling to be profitable is to make even less profit? Since "making it up on volume" didn't work during the Dot Bomb Era, why would Michael Dell think it'll work now? What's the point of having a larger share of a pie that has shrunk by more than you've gained?
The problem these company had when they get so big is they have suck a large fix set of assets they are trying to cover, the only way is to ship more product so they can spread the costs over a larger numbers of shipped products. but some time you can not stop the death spiral.
Yes, but to actually be able to survive you have to be able to make money. Which as I said in the other post means you have to be able to either subsidize these margin cuts with some other business that is making enough profit to cover or you need to be more efficient so lowering your costs doesn't lower your margins. I don't see Dell having either of those and thus it looks like this will do nothing but further accelerate their profit margins going to 0 and under. Do they really have enough spare cash to burn through long enough?
Revenue neutral or small profit is better than a loss. You live to see another year and hopefully things will turn around.
It sounds to me a gambit to outlast the competition and hopefully things will be better when the dust settles.
That's still a big gamble though. They need to own an emerging market, it's hard for a big player to survive a dying market.
So in effect, Wall Street is no good for businesses, nor consumers. Interesting.
Never has been, especially today. Mergers and acquisitions have one of two reasons. Make a quick buck for investors by saddling businesses with debt so investors reap substantial profit while raping the company and its employees -- this is what Icahn wants to do to Dell. Second is to create monopoly to prevent competitors coming into the market by keeping prices so low, competitors cannot enter the market. This how Amazon works for books, and why Apple's deal with publishers was very good for the business and productivity, and why Amazon's is bad, because under the Amazon model, new publishers cannot make the money to either start up or stay in existence. (And why DOJ's attack on Apple's deals are wrong in every possible way).
This is also why consumers' demands for cheap, cheap, cheap is precisely why there are no jobs, jobs, jobs.
Revenue neutral or small profit is better than a loss. You live to see another year and hopefully things will turn around.
It sounds to me a gambit to outlast the competition and hopefully things will be better when the dust settles.
That's still a big gamble though. They need to own an emerging market, it's hard for a big player to survive a dying market.
Western Digital remains profitable in spite of the number of HDD vendors that have dropped out, so it can happen. I'm not sure it will work out the same way with PCs. Part of it is that some of these companies may be too big for the size of that market going forward.
Dell has made some major strategic acquisitions in enterprise. Sonicwall, Wyse and appassure to name a few. It's a cloud strategy. They won't need to make money off of the endpoints, they're part of a total solution. That's the plan, anyways.
I'm pretty sure that once the dust has cleared and the industry has consolidated, and there is only one or perhaps two PC makers left in the world, that neither of them will be Dell.
Especially not when Intel makes their own low price computers now:
Western Digital remains profitable in spite of the number of HDD vendors that have dropped out, so it can happen.
That's a good example but I think we still have to see the full impact of SSD. People will always need computers in some form and the question is will they always put cheap ahead of quality (in the HDD example, do they put capacity ahead of performance and durability). It's clear that's not the case with the iPad as the iPad vastly outsells tablets that are much cheaper.
Apple's in the best position because they own the high margin segments and they have a couple of buttons they can press to increase volume at the expense of profit. Dell already pressed their buttons and undoing it would be difficult.
Western Digital remains profitable in spite of the number of HDD vendors that have dropped out, so it can happen. I'm not sure it will work out the same way with PCs. Part of it is that some of these companies may be too big for the size of that market going forward.
Did WD go private? Talks started after Dell's initial overtures. If they did, it's too soon to be conclusive.
Comments
Quote:
Originally Posted by Applelunatic
So the way to turn around your business that is struggling to be profitable is to make even less profit? Since "making it up on volume" didn't work during the Dot Bomb Era, why would Michael Dell think it'll work now? What's the point of having a larger share of a pie that has shrunk by more than you've gained?
The problem these company had when they get so big is they have suck a large fix set of assets they are trying to cover, the only way is to ship more product so they can spread the costs over a larger numbers of shipped products. but some time you can not stop the death spiral.
Revenue neutral or small profit is better than a loss. You live to see another year and hopefully things will turn around.
It sounds to me a gambit to outlast the competition and hopefully things will be better when the dust settles.
That's still a big gamble though. They need to own an emerging market, it's hard for a big player to survive a dying market.
Quote:
Originally Posted by TeaEarleGreyHot
So in effect, Wall Street is no good for businesses, nor consumers. Interesting.
Never has been, especially today. Mergers and acquisitions have one of two reasons. Make a quick buck for investors by saddling businesses with debt so investors reap substantial profit while raping the company and its employees -- this is what Icahn wants to do to Dell. Second is to create monopoly to prevent competitors coming into the market by keeping prices so low, competitors cannot enter the market. This how Amazon works for books, and why Apple's deal with publishers was very good for the business and productivity, and why Amazon's is bad, because under the Amazon model, new publishers cannot make the money to either start up or stay in existence. (And why DOJ's attack on Apple's deals are wrong in every possible way).
This is also why consumers' demands for cheap, cheap, cheap is precisely why there are no jobs, jobs, jobs.
Quote:
Originally Posted by JeffDM
Revenue neutral or small profit is better than a loss. You live to see another year and hopefully things will turn around.
It sounds to me a gambit to outlast the competition and hopefully things will be better when the dust settles.
That's still a big gamble though. They need to own an emerging market, it's hard for a big player to survive a dying market.
Western Digital remains profitable in spite of the number of HDD vendors that have dropped out, so it can happen. I'm not sure it will work out the same way with PCs. Part of it is that some of these companies may be too big for the size of that market going forward.
http://www.pcworld.com/article/2019590/dells-acquisitions-not-yet-paying-dividends.html
They say that about Apple too though after a series of record quarters.
Especially not when Intel makes their own low price computers now:
http://www.amazon.com/Intel-Computing-Gigabit-i3-3217U-DC3217IYE/dp/B0093LINVK
It hasn't been approved yet so Dell isn't private:
http://blogs.wsj.com/deals/2013/04/09/southeastern-dell-doesnt-need-to-go-private-and-kick-us-out/
http://www.theinquirer.net/inquirer/news/2260524/dell-shareholder-moans-that-michael-dell-wants-to-buy-his-firm-on-the-cheap
That's a good example but I think we still have to see the full impact of SSD. People will always need computers in some form and the question is will they always put cheap ahead of quality (in the HDD example, do they put capacity ahead of performance and durability). It's clear that's not the case with the iPad as the iPad vastly outsells tablets that are much cheaper.
Apple's in the best position because they own the high margin segments and they have a couple of buttons they can press to increase volume at the expense of profit. Dell already pressed their buttons and undoing it would be difficult.
Quote:
Originally Posted by JeffDM
I thought the Dell deal still had to be approved by shareholders. I didn't see that anywhere.
Last I heard was that there were two 11th hour counter offers, one by a group headed by Carl Icon. Nothing has gotten to a shareholder vote.
Did WD go private? Talks started after Dell's initial overtures. If they did, it's too soon to be conclusive.
Quote:
Originally Posted by JeffDM
Did WD go private? Talks started after Dell's initial overtures. If they did, it's too soon to be conclusive.
I don't think so, at least not yet. I was going by recent quarters.