From the rumored acquisition of Palm, to the announcement of entering the PAD handheld device market, and more recently the exposure of plans to acquire Motorola - in Michael Dell's mind, there seems to be an ever-present mobile phone dream.
Recently, there have been reports that Dell intends to acquire Motorola to enter the mobile phone market and launch a product similar to Apple's iPhone.
In an interview with CNET Technology Information Network, a relevant spokesperson from Dell China stated, "We cannot comment on such rumors. Even if any mergers or acquisitions were to occur, it would be a matter for the US headquarters, and the Chinese branch is unaware."
An industry insider analyzed that Dell has always placed great emphasis on its handheld and mobile phone business, but its PDA business has not been ideal. After exiting the PDA market in April this year, Dell continued to sell Palm and Dopod phones, which seems to indicate its reluctance to let go of the (handheld) mobile device market.
Dell's financial report for the third quarter of the 2008 fiscal year, recently released, shows that company revenue grew by 9% compared to the same period last year, setting a new record at $15.6 billion; operating profit increased by 13%, reaching $829 million; earnings per share reached 34 cents, growing by 26% year-over-year.
Cash generated from operations totaled $1 billion in this quarter, and the total amount of cash and marketable securities held by the company reached as high as $14.6 billion. The company plans to continue its stock repurchase program in early December.
Dell's Chairman and CEO, Michael Dell, pointed out that Dell's five current strategic priorities include consumer business, emerging markets, notebooks, enterprise-level and SME market businesses. The growth in profits is attributed to contributions from mobile business, strong customer demand for enterprise-level products, and continuously declining component costs.
Michael Dell revealed that in the future, Dell will continue to focus on core strategies, providing customers with greater value, while striving to achieve the best balance between capital turnover rate, return rate, and growth. In implementing these strategies, the company will continue to incur related expenses during adjustments, used for further improving productivity and execution, appropriately reducing staff, and investing in infrastructure and mergers and acquisitions.
The aforementioned industry insider also pointed out that Dell has "strong" financial backing, and it has recently successively acquired storage vendor EqualLogic and remote service management software developer Everdream, strengthening its capabilities in the enterprise-level market. Since mobile business has become Dell's largest profit growth point, acquiring Motorola seems like a good choice.
Recently, Motorola seems to be facing numerous troubles, apart from the rumors of being acquired by Dell, its Chief Technology Officer Padmasree Warrior resigned to join Cisco as CTO. However, if Dell truly intends to acquire Motorola, it will need to shift its industrial mindset. Previously, Dell excelled in low-cost, customized technology products, but these two experiences are not very effective in the mobile phone field.
Firstly, Motorola fell into difficulties because of price wars which damaged its brand value in the mobile phone market, and customization is currently not feasible in the mobile phone sector. The prospects of combining the two companies do not appear optimistic.