Dell’s (NASDAQ:DELL) core business as a personal computer manufacturers puts the company in competition with big names like HP (NYSE:HPQ), Apple (NASDAQ:AAPL), Acer (TPE:2353) and Toshiba. But Dell has lately diversified away from its core business by acquiring high-end technologies, such as storage and security systems, as well as extending its services portfolio. (See Could Dell’s Cloud Push Complete its Transition to a Service Firm?)
In a recent interview with The Wall Street Journal Mr. Dell, the founder and chief executive of Dell Inc., talked about the firm’s strategic shift:
Two-thirds of Dell’s profit is not the PC. Of the one-third that is the PC, the vast majority of that is not consumer. I’m just level-setting what Dell is today, because I think a lot of people look at Dell and they go, “Oh, Dell is a consumer PC company.” That’s not really at all what Dell is today. [1]
Our estimates show that the PC business (including both desktops and notebooks) is worth only 23% of the company’s stock value, which we pin at $22.39 – our number notably stands about 40% above market price. The low value contribution of the PC business, coupled with the fact that tablets pose a rising threat to the PC genre, create a substantial incentive for Dell to pursue its strategic shift into other produce lines.
See our complete analysis for Dell stock here
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