HP has long been a respected computer brand and Compaq also had a decent share of the market prior to the merger. Together the companies have become a force to be reckoned and although HP has experienced some of its own problems recently, these problems have been internal issues that have not really affected the company's performance as it relates to profits.
Future of Dell / possible solutions
It seems that the problems at Dell have come in rapid succession; perhaps these issues can be overcome and perhaps they can not. The ability to overcome these problems will play a significant role in the ability of the company to be successful in the future. The primary thing that the company has to evaluate is the safety and the dexterity of the products that it sells. The company can not afford to cut corners as it relates to the development and manufacturing of the machines that it sells. This means that the company needs to be certain that what is being produced is safe for public use even if it means that there has to be a slight increase in the cost.
In addition the company has to ensure that the accounting methods that are being used are not misleading to the public or to shareholders. Many companies have been found to alter financial statements to make it appear that the company is performing better than it really is and this has led to the downfall of many large multi-billion dollar corporations. If this is the case with Dell, it may mean the end of the company.
As it relates to customer service and competition, the company needs to pay more attention to the manner in which customers are treated and not underestimate the strength of its competitors. The company must et back to a foundation of putting the customer first. As it relates to the competition, there isn't that much that can be done. Many of Dell's closest competitors have developed similar approaches to business wherein they sell to customers directly but competitors also maintain a presence in popular brick and mortar stores such as Wal-Mart, Circuit City and Best Buy. In some ways this gives competitors an advantage because some customers enjoy building their own PC's online, while others enjoy having the ability to touch and tryout a machine in a store before they actually make a purchase.
How's Dell affecting U.S. financial market (present)
Currently the situation at Dell is not a positive thing for the economy. A scandal such as the one that Dell is experiencing affects the confidence of investors. Investors begin to question whether or not investing in a company is worth the risk of being lied to and the stock not actually being worth anything. This often causes people to place there money in safer investments and as such their can be a negative effect on the stock market.
It is critical for public corporations to have the support of investors in order to operate. When Dell and other companies conduct their business affairs in ways that are unsavory, it can affect businesses that are operating in a manner that is legitimate. With this being understood Dell has a responsibility to report things accurately, even if it does mean that the company may have to suffer certain consequences in the short run.
Overall the problems at Dell do not seem to have this effect on the overall financial market at this time. However, it may affect, in some ways, investor confidence in technology companies. With this being understood that particular segment of the market may feel some effect as a result of the problems at Dell.
If Dell goes bankrupt, effects on U.S. economy
It is unclear whether or not Dell is in enough financial trouble to file for bankruptcy. After all, the company has only had serious problems for the last few quarters. However there is always a chance that a bankruptcy could occur that could impact the American economy.
If for instance the SEC finds that Dell was dishonest in its accounting practices and this along with slow sales, forces the company into bankruptcy there could be some serious effects on the economy in the United States. According to Dell's official website, the company employs thousands of Americans and as such the unemployment rate in certain states would definitely increase.
Such a bankruptcy could also have a serious effect on the consumer confidence. This impact would be present because Dell has been a trusted brand for many years and people may be reluctant to purchase products from any computer company, fearing that other companies are also acting in ways that are dishonest.
As it relates to supply and demand, it is unclear whether or not HP, Apple and other computer companies will be able to handle the demand in the absence Dell being in the market. It seems that the demand for computers has leveled out and people are keeping their computers longer because technology is not changing as rapidly as it once was.
Merger between Dell & HP
Perhaps a Merger between Dell and HP is possible as both of the companies are well-known and already hold large shares of the total market. Such a merger could perhaps create an extremely powerful and influential business. As was stated previously in this discussion it is unclear just how much trouble Dell is in and how it will effect t the company's future business dealings. It is clear however that HP benefited greatly from its merger with Compaq. With this being understood, a merger between HP and Dell could also be beneficial based on the types of products and services that both of the company's offer.
As it relates to HP, the company has experienced some serious internal issues related to the actions of its CEO. However, the company has maintained its profitability. In addition HP has adapted some of the same business practices as Dell as it relates to direct selling through the internet. In any case it seems that each company could learn form the expertise of the other and work together to form a company that is successful and profitable.
The actual merger of HP and Dell is yet to be seen. If such a merger does occur it seems that the single company would have a great deal of the market share as it pertains to computers, servers, peripherals, cameras, televisions, printers and business services. Such a merger would be extremely beneficial for consumers.
How will the merger affect the U.S. financial market?
Such a merger would provide a boost for the financial market in the United States. The merger of these two publicly traded companies could prove beneficial to the health of the stock market. It is evident that Dell's current troubles have caused its current stock price to plummet particularly if we compare the current price of $23.87 to the company's closing stock price for FY 2005 when it was $41.06.
The merger of these two companies would potentially be beneficial to employees, particularly if the company does very little downsizing as a result of the merger. Both companies employ a large amount of people both in the United States and abroad. If the companies were to merge the employees could enjoy a greater level of job security because the company would have such a large share of the market.
Overall such a merger may be complex because there are so many skilled executives and workers at both of these companies. However, if the companies could find a way to merge their ideas, then such a merger could be beneficial for the company and for consumers. It seems that a merger between Dell and HP would spawn a whole new generation of products and technologically driven ideas. However, it is still to early to tell whether or not such a merger will ever take place as both companies are still doing much better than their competitors in terms of sales and profitability.
Quote stock prices summary from the past 5 years (Taken From "Dell at a Glance")
Annual Financial Highlights in millions, except per-share and stock price)
Earnings Per Share (diluted)
Closing Stock Price
About Us." Hewlett Packard. Retrieved October 11, 2006 from; http://www.hp.com/hpinfo/abouthp/
Chairman of the Board. Retrieved October 11, 2006 from; http://www.dell.com/content/topics/global.aspx/corp/biographies/en/msd_index?c=us&l=en&s=corp
Dell Profile. Retrieved October 11, 2006 from; http://finance.yahoo.com/q/pr?s=dell
Dell at a Glance." Retrieved October 11, 2006 from; http://www.dell.com/content/topics/global.aspx/corp/background/en/facts?c=us&l=en&s=corp&~section=002
Rotham W. (2006) Dell's Battery Recall: How Bad Is the Danger?. Retrieved October 11, 2006 from; http://www.time.com/time/nation/article/0,8599,1227219,00.html
Schneiderman R.M., 09.11.06, 10:20 AM ET. Retrieved October 11, 2006 from; http://www.forbes.com/technology/2006/09/11/dell-earnings-delay-cx_rs_0911dell.html
The Dell Effect. Dell Inc. Retrieved October 11, 2006 from; www.dell.com/downloads/global/corporate/delleffect/DellEffect.pdf
Michael Dell is the chairman of the Board of Directors of Dell, he the company in 1984 with $1,000 (Chairman of the Board,).