The Dell Saga continues to the End

Mr. Icahn and Michael Dell are locked in a struggle for control of the once proud computer maker of the same name: DELL. Dell revolutionized the business of computer retailing with its telephone order philosophy which achieved dominance pre-internet. After that distribution channel was rendered obsolete by the Internet, the Company struggled for relevance in a crowded market place. More importantly, since Apple’s introduction (should we say creation?) of the IPad, the PC itself has struggled for relevance. PC sales as a whole are now declining at a double-digit rate—which decline is forecasted to continue for the foreseeable future.
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July 16th, 2013 Posted by Professor Zangwill

Lessons from JC Penney.

Corporate Transformations promise much but rarely succeed in reality, and in any event, the transition is always likely to result in a sharp fall in near term revenues and earnings. Finally, the risk that the transformation will simply fail is not accurately calculated by investors.

All of these elements were present in the JCP situation. A transformation strategy seduced Wall Street, but failed to take into account that customers, employees and the brand’s core identification were all anchored in the past. All of these have to be jettisoned as the transformation process begins. Old customers exit immediately, but the influx of new customers, even if successful, will take time. In the interregnum, the Company’s balance sheet and financial resources will be stressed.
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June 15th, 2013 Posted by Professor Zangwill