Indigo Equity Research Neutral on Dell

Indigo Equity Research is out with a research report on Dell (NASDAQ: DELL) and it has a Neutral rating on shares.

In a note to clients, Indigo Equity Research writes, "Dell's recent turnaround strategy has been focused on improving margins, which has sacrificed revenues. - Dell has grown its higher margin IT services, software and data centres (servers & storage in cloud computing) operations, and eliminated much of its lower-margin products (eg. cheap consumer PCs). - Cost cutting eg. outsourcing production & supply chain improvements, minimizing component costs. Fundamentally, Dell faces several significant constraints that will limit the EPS upside with this strategy: - Margin expansion is not a sustainable long term strategy for EPS growth, it only works short term. - Poor strategic position, especially in China (now the largest PC market). See SWOT Analysis below. In our opinion, Dell's turnaround is likely to fail as its comparative expertise is in low-cost manufacturing; it lacks presence & technological expertise in IT Services, software & data centres."

Shares of DELL are up 15 cents to $15.07, a gain of 1.01%.