Why Dell Inc. Could Be Dead Money for Another Decade

Dude, you�re not getting a Dell.� And apparently nobody else is either. In a time when consumer spending is down, it seems that computer maker Dell Inc. (NASDAQ: DELL) is taking a particularly hard hit.� Year-to-date, Dell�s stock has dropped -19.3%, and is currently trading at $11.65.� The company famous for building PCs and laptops is a shell of its former self; down over -68% since this time in 2005.

Dell was hoping it could revive its sales with the purchase of data storage company 3Par Inc. (NYSE: PAR) last week.� 3Par provides utility storage systems for financial service companies, government entities and even Web 2.0 companies.� The company would have been a nice way for Dell to diversify its product line and client services.

Dell placed a bid of $18 per share to 3Par executives last week.� However, PC competitor Hewlett-Packard (NYSE: HPQ) quickly outbid Dell, offering $24 per share or $1.6 billion for 3Par.� It appears that the two companies will now compete in a bidding war for 3Par � though experts claim that Hewlett-Packard has already grossly overvalued 3Par with their counterbid of $1.6 billion � so it�s unlikely a higher offer will be thrown out there. What�s more, while Dell may boast annual revenue of $53 billion, that numbers is dwarfed by Hewlett-Packard�s $115 billion.

Not winning the 3Par battle could prove very costly for Dell, as their line of PCs and laptops have apparently grown stale with consumers, as evidenced by the company�s performance over the last several years.� Competitor, and tech innovator Apple Inc. (NASDAQ: AAPL) has had a successful 2010, up +13.2% since January, a sign that the down economy is not affecting all tech companies equally.

While consumer spending may be down, Dell has been able to find hope in their sales to corporate clients.� According to ChangeWave, 80% of Dell�s PC sales are attributed to the corporate market. That has lessened the blow from declined consumer spending.� In fact, Dell even saw a +22% increase in revenue last quarter, as compared to last year.

However, Dell will no longer be able to hide behind their corporate clients.A recent ChangeWave poll indicates a downturn in corporate spending, with only 69% of those surveyed indicating that they will purchase new laptops in the fourth quarter, down from 73% last quarter. Likewise, the same report showed a planned -4% decrease in PC purchases to 65%.

Even more disheartening for Dell, only 29% of those in the laptop market plan on buying their brand, while only 30% in the PC market plan on picking Dell.� That represents a -2% and -3% decline in each market, respectively, and the lowest future buying trends since February of 2009.

If things continue they way they have, and Hewlett-Packard wins the bidding war for 3Par, Dell may find itself in crisis mode sooner rather than later.� Without this acquisition, Dell will undoubtedly have trouble surviving in a landscape where consumer spending is down and competitors are dominating.

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