The deck is now stacked against Dell on almost every front. It’s not a mobile player like Apple (NASDAQ:AAPL) or Google (NASDAQ:GOOG). It doesn’t compete in software like Microsoft (NASDAQ:MSFT). And it doesn’t have the heft of Hewlett-Packard (NYSE:HPQ), another struggling tech giant.
In a shrinking PC world, Dell continues to pump out products that fewer and fewer people will buy, evidenced by three of the last four quarters showing negative growth, and at an EBITDA margin that has slowly eroded over the last four quarters, now just below 8%. In fact, Dell hasn’t shown double-digit growth since January 2011.
Dell’s year-to-date market return of minus 35% virtually mirrors its one- and three-year returns. The stock is down almost 65%, including dividends, over the last five years.
The good news for any possible suitor is the stock is cheap, so much so that it has seen an uptick in options trades, according to Nasdaq.com. Dell also sits on over $11 billion in cash. Free cash flow has been up and down, with the most recent quarter showing just over $500 million, so Dell isn’t going away anytime soon.
Which is a good thing, because I see no company ready to shell out the $20 billion or so it would likely to take to buy the PC maker.