Professor Elam

Michael Dell held his first analyst meeting in three years.   Dell is closing an Austin manufacturing plant and looking to cut costs declaring there are no fixed costs. Operating expenses have ballooned 65% while sales only increased 10%, whoops.  Only a few years back one of the finance textbooks swooned over how wonderful DELL was, is, and will be. So much for that financial analysis!

The story here is that so often yesterday’s leader is today’s laggard in the swirl of business change. Monitoring costs and profits are sine qua non for managerial accountants.  DELL stock has fallen to twenty bucks while HPQ has advanced.  APPLE, scorned by Dell just a few years back is the investor success story of the last few years. Costs are important but so is innovation, as Apple demonstarted wtih its i Series of products.  Dell is now backing off its made to order system in favor of outsourcing manufacturing to ready built products with add ons.  Flush with success, Dell himself retired from day to day involvement a few years ago, now he is back facing monumental problems. Some things like management are best not outsourced!

Dvorak on lthe lack of Dell innovation. I am running into more and more people that are not totally frustrated with the new MSFT Office 2007 and have switched to an Apple laptop, have you or do you know someone who has switched?

Speaking of which, Apple is out of i Phones.