Tuesday, May 22, 2007

Dell Lenovo Acer Scramble For Relevancy

Dell (NASDAQGS:DELL) continues to stumble along and there is no sign of their return to world beater status. Lenovo (LNVGY.PK) and ACER (2353.TW) have exchanged the number 3 and number 4 positions.

While the respective press releases will spin the relative merits of the position changes the Asian boardrooms cannot be happy. They are not interested in lower tier status.

Everyone is showing up on everyone else's home turf with a cheap product designed to inflict financial pain first and meet end user requirements second.

If Dell continues to fail at crafting a compelling reason for continued investment watch for either Lenovo or Acer to take-over Dell. Enormous synergies and stopping the pain of hyper competitive price competition will make a great deal of sense for all involved.

Dell's stock is not really catching fire and the jury is still out on too many issues. Watch Dell's cash generation (if you can guess at the numbers). As cash generation slows panic will set in and the vultures will circle.