How does the resurrected Dell make money?




DELL (ticker: DELL) was founded by Michael Dell in 1984. Founder Michael Dell founded PCs Limited, a computer company, when he was a student at the University of Texas at Austin. He used his dorm room as his corporate headquarters and sold computers built from off-the-shelf parts and compatible with IBM PCs. Michael Dell believes that by selling personal computer systems directly to customers, PCs Limited can better understand customer needs and provide the most effective solutions to meet customer needs. After receiving approximately $300,000 in funding from his family, Michael Dell decided to drop out of school in order to focus all his attention on his undeveloped career.

With its direct business model (that is, cutting out the middleman and selling products directly to customers), the company is able to provide customers with a variety of products at cheaper prices and guarantee door-to-door delivery.

Across various electronic products

Dell is involved in almost all device products in the electronics industry, personal computers, servers, data storage devices, network switches, mobile phones, software, enterprise information services, printers and computer peripherals.

Initial public offering

On June 22, 1988, Dell went public for the first time; since then, Dell’s market value has increased from US$30 million to US$80 million.

Glorious past

In 1992, Dell was named one of the world’s top 500 companies by Fortune magazine, and Michael Dell became the youngest CEO ever among the top 500 companies.

Once delisted in disgrace

Dell and its peer Lenovo, two of the top three PC manufacturers, were all hit by the rise of mobile phones and cloud computing in the early 21st century. Both stock prices and company revenue continued to suffer sharp losses for a long time, resulting in It had to be taken off the market to protect itself.

On February 5, 2013, Dell announced its delisting plan. Group founders Michael Dell and Silver Lake spent US$24.9 billion to privatize Dell and delist it.

Second re-listing

Five years later, on December 11, 2018, Dell announced its relisting on the U.S. stock market.

Mentioned in my books

Ultra-low profit margin industry

In 3-1 of my book “The Rules of Super Growth Stocks Investing“, I take HP (ticker: HPQ) and Hewlett Packard Enterprise (ticker: HPE) as examples. 3-1 also specifically lists a series of industries to remind long-term investors not to touch.

Enter the enterprise market at the same time

In my book “The Rules of Super Growth Stocks Investing“, in order to explain the differences and valuations between personal consumption companies and enterprise companies, I also took Hewlett-Packard and Hewlett Packard Enterprise (ticker: HPE) in 3-2 of the book as an example. Dell is another typical example of a company that includes both consumer and enterprise sectors.

Major mergers and acquisitions


In 2006, Dell acquired fellow computer manufacturer Alienware.


Dell officially acquired EqualLogi on January 28, 2008, to gain a foothold in the iSCSI storage market, thereby lowering the company’s production costs.

Perot Systems

On September 21, 2009, Dell announced the merger with Perot Systems. Perot System mainly provides application development, system integration and strategic consulting services, and provides a series of outsourced service business processes, including claims processing and call center operations.


On August 16, 2010, Dell announced the acquisition of data storage manufacturer 3PAR.


On October 12, 2015, Dell and its founder Michael Dell will work with MSD Partners (Michael Dell’s investment firm) and Silver Lake private equity funds to acquire data storage device manufacturer EMC for US$33.15 per share. Shareholders including EMC will It received US$24.05 per share in cash and 0.111 shares of VMware tracking stock held by EMC. Taking into account the current value of cash and stock, the total value of this transaction reached US$67 billion, becoming the largest acquisition of a technology company in the history of the United States.

Selling non-core divisions

Due to the painful lessons of privatization and restructuring in 2013, Dell began to sell non-core assets to refocus on the company’s core departments. The sale of two major assets is particularly important and deserves to be mentioned here.

Information services

On March 28, 2016, Dell sold its IT technology services department to NTT Data, a subsidiary of Nippon Telegraph and Telephone (NTT), for US$3.05 billion.


On July 3, 2018, Dell acquired VMware for US$23.9 billion in cash and stock. On May 26, 2022, Dell sold VMware to Broadcom. For details, see my previous article “How does Broadcom make money? Significant changes in business approach“.

Jump on the bandwagon of AI

The turning point occurred in 2016. After the explosion of artificial intelligence technology, Dell realized that this was an opportunity to turn around. Then began to vigorously deploy artificial intelligence.

In 2018, Dell released the new high-end storage PowerMax, which has a built-in machine learning engine; in 2020, it released the artificial intelligence server PowerEdge and AI PC, from artificial intelligence servers to artificial intelligence storage platforms, to embedded artificial intelligence Dell has all the functional PC products!

At the same time, Dell is also making money softly. The fourth quarter performance report of fiscal year 2023 released in February 2024 showed that Dell’s fourth quarter net profit was US$1.16 billion, an increase of 91% over the same period last year. Dell chief operating officer Jeff Clarke said:

“Dell’s strong performance growth can be largely attributed to AI technology. AI-optimized server order volume increased by 40% sequentially, and the order backlog nearly doubled, reaching $2.9 billion at the end of our fiscal year”.

On April 4, 2024, Dell’s increase expanded to more than 5%, and its stock price hit a record high. Mainly because the company has launched two new nodes for all-flash products – the Dell PowerScale F210 and F710. Dell released the latest generation of high-performance file storage systems this time, relying on leading PowerEdge servers to help calculate the most intensive workloads.

Capital market performance

Comparison with peers

Company nameTicerShare price2023 share performanceYTD share performanceP/E
HP EnterpriseHPE18.056.39%6.62%12.42
S&P 500 index 5,175.2724.23%9.12%23.27
Note: numbers are as of 3/12/2024

Share price performs well

More importantly, Dell’s share price has risen by 309% in the past five years, beating Apple’s 245% share price increase in the same period. Dell’s stock price hit a record high of $166 per share, with a 110% increase from the beginning of 2024 to the end of May, with a market value of $113.8 billion.

credit: Ideogram

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