Dude, The Selloff in Dell is Not a Buying Opportunity

In any era where consumer electronics is a zero sum game for everyone but Apple, Dell looks especially horrible.

Consumer electronics has always been a difficult business.  To be successful in this industry, a producer needs to be on the cutting edge and incorporate all of the latest features, yet at the same time give consumers exceptional value for money.

Apple has set itself apart and is a one-in-a-lifetime company.  The are constantly innovating and coming up with new products.  Their products are unique and reliable and they can command a premium for their hardware because it is tied to software.  To boot, Apple now produces a lot of its own electronic components, including its own chips, which keeps costs very low.

Dell is the antithesis of Apple today.  Their products are utter junk.  There is nothing innovative about anything they make and their computers last for a single season.  They are also tied to the Microsoft operating system which explains who Michael Dell describes himself as a fan of Ubuntu.  As a company, Dell pays its suppliers a fortune to be able to offer the latest and greatest features in the jumk they are selling.

In the 1990's, Michael Dell figured out just-in-time production, and he figured out how to pay suppliers and creditors in 180 days while being paid by consumers up front (making money on the float).   His mastering production and financial gimickry gave the public a reason to own the stock.

Today, there isn't one.

Jason Rodgers
Jason Rodgers: Jason Rodgers was an experienced research analyst for a major bank prior to retiring to run his own investment consultancy in beautiful Lihue, Hawaii. Jason contributed articles to BestCashCow from 2008 to 2014.

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