Dell's All-Time $700 Billion In Sales: Total Success Or Total Failure? (DELL, AAPL, HPQ, IBM)

Dell Inc. (NASDAQ: DELL) may have turned twenty-eight years old today but there is a figure that sounds massive and one which is being taken as not being a success by the market: $700 billion in sales since inception!  Michael Dell put out a tweet on Twitter today that sums it all up:

• Happy Birthday Dell!! What an incredible journey it’s been and continues to be. Revenue from the start to now is about $700 Billion!

Here is what is interesting about the milestone.  Apple Inc. (NASDAQ: AAPL) is the current love of technology in the current market, and expectations from Thomson Reuters show revenue projections of $162.4 billion for fiscal 2012 and $195.5 billion in 2013.  That is over $350 billion expected in only two years.  Sales in each of the last three years were $108 billion, $65 billion, and almost $43 billion, respectively, and that comes to a total of $216 billion more.

If you look at the last three years of sales for Dell it is $62 billion, $61.5 billion, and $52.9 billion, respectively.  Thomson Reuters has estimates of almost $62.5 billion in 2013 (January year-end) and $63.5 billion in 2014.

Dell is moving more and more towards services while it still competes head to head in PC sales (and services) against Hewlett-Packard Co. (NYSE: HPQ).  Gateway has been gobbled up and International Business Machines Corporation (NYSE: IBM) thought so much of the personal computer business that it sold that PC unit to Lenovo in China.

Up until April it was every new day that analysts were hiking their price targets almost daily and that Apple stock was rising and rising.  Apple experienced what Dell experienced in the 1990s.  Dell finds no such love from analysts and at $16.27 its consensus analyst price target is now almost $19.50 against a 52-week range of $13.29 to $18.36.  Dell has not been able to come close to $20.00 since the entire stock market recovery started in early 2009.

The market is in love with Apple even if the shares have finally decided to take a breather, yet it has little love for the likes of Dell.  Apple trades at 12.4-times its expected September 2012 (year-end) earnings and Dell trades at just under 7.7-times its expected January 2013 (year-end) estimates.  Apple is now paying a dividend, Dell is not.

What investors have to remember is that the stock market does not reward a company for its past.  It tries to act as a discounting mechanism for the future, or a prediction tool of sorts.  IBM is within 2% or so of its all-time highs and it is now over $100 billion per year in sales, yet that is entirely without the PC division and what is effectively no more real products sold retail to Joe Public.  Apple hit new all-time highs earlier in 2012 yet Dell’s all-time share price peaked above $59.00 at the peak back in March of 2000 during the tech bubble.

Is there a moral to the story?  Unfortunately, it is not what you did in the past… It is what you are expected to do in the future.

JON C. OGG