Stock Market News: Dell Inc (DELL) Announces Stock Buyback
Dell Inc (DELL) is announcing a stock buyback this morning. The company has been embattled recently, facing a downgrade of its stock and accusations that its business model is bloated and unwieldy. Reuters reports on the move by DELL to buyback some of its own stock:
“Historically, we have not taken on much leverage,” Carty told analysts at a meeting with analysts at company headquarters in Round Rock, Texas. “We do expect to access capital markets to increase our leverage.”
DELL hopes that the company will be able to get more capital inflows to help with its restructuring. (The company is hoping to move away from custom built computers to more ready-made computers.) But, unfortunately, that restructuring costs money, and that is cutting into Dell’s already-declining profits.
Previously, Dell announced that it would cut more jobs at a call center in Canada. Additionally, Dell will be closing its retail stores and instead concentrate on selling their computers through outlet stores. All of this represents big changes for the company. But as competition puts the squeeze on Dell, drastic measures are seen as necessary.
Dell is also working on expanding its service offerings. The company is trying to offer IT support services, and is trying to get into the business of making custom servers for business clients. Plus, in addition to creating more mass-market computers, Dell has been trying to break into the high-end consumer market.
Even though profits are dubious right now, the company has increased its gross margin, as well seen a rise in revenue in consumer computers and shipments. Now, that needs to be translated into solid profits. Dell hopes that the measures it is taking will lead to such profit increases — and eventually higher stock prices.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional.
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