Can Dell Really Compete with IBM and Hewlett-Packard?

Dell (NASDAQ:DELL) is seeking to diversify into IT solutions in order to counter the effect of falling sales in its core PC business. Though PC shipments rose 3.2% YOY in Q3, Gartner reports that Dell’s market share fell 0.6 points to 11.6%. In fact, over the past five years the company has lost almost 25% of its market share to cheaper products manufactured by Asian rivals. In 2010, the company reported its biggest ever revenue decline. That’s not the path to competing with IBM (NYSE:IBM) and Hewlett-Packard (NYSE:HPQ).

“Dell (NASDAQ:DELL) is suffering through the commoditization of hardware,” Keith Wirtz, who oversees $16.7 billion as chief investment officer at Fifth Third Asset Management in Cincinnati, said in a telephone interview.

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Dell is sitting on $16 billion in cash and indicated the likelihood of further acquisitions at the inaugural Dell World conference in Austin, Texas, last week. Likely candidates include Citrix Systems Inc. (NASDAQ:CTXS) and Informatica Corp. (NASDAQ:INFA) as big software plays.

Dell (NASDAQ:DELL) is closed at $15.97 today, down 3.91%. Shares are up 14.70% in one year. The stock’s trading range for the year is between $12.99 and $17.60.

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