Does Dell Stock Selloff Mean the Beginning of the End?

Dude, whos getting a Dell (NASDAQ: DELL ) these days? From recent financial
reports, it looks like only a precious few consumers. Founder and CEO Michael
Dell announced yesterday a meager growth projection of just 1% to 5% on the
year, and Dell shares took a tumble. Shares are off about 8% as of the opening
bell and early-morning trading. As a result, the question on everyones mind is
What happened to the iconic laptop provider and corporate darling to put it in
such dire straits and can Dell stop its free fall before it becomes a tech
dinosaur? First, lets talk big picture: Consumer spending is down dramatically
from the go-go days of tech. Corporate spending also remains stagnant, as
companies hobble along with older computers and Windows XP instead of upgrading.
And lets not forget that the entire landscape of consumer technology has changed
dramatically in the scope of a few years, as smartphones get smarter and the
Apple (NASDAQ: AAPL ) iPad is upending media, hardware and software paradigms
all at the same time. Now lets talk just about Dell. As my colleague Tom Taulli
writes in an article with the pithy title Dell: Death by iPad , there is
nothing fundamentally wrong with the corporation. DELL stocks P/E ratio is now a
mere 9, cheap compared to other major tech companies. And interestingly enough,
the bad news about Dells forecast came as the company actually posted a solid
quarterly report. Cash flows hit a record of $2.4 billion, and Dell is sitting
on a nice $16.2 billion in the bank. Whats more, Dell has remained true to its
longtime mission of efficiencies and a strong footprint in the corporate and
government markets. Unfortunately, this doesnt change the fact that Dell is
losing its grip hence the lowered guidance from its namesake CEO and the big
sell-off on Wall Street. Yes, Dell is suffering from the overall slowdown in the
global economy. But its also worth noting that despite moving into software and
storage companies the so-called cloud computing arena the company has shown a
lack of innovation. It has relied on the old idea that folks will have to buy a
laptop to go back to school or have to upgrade their office PC and give them a
ring. But the world has changed. The iPad continues to gain tremendous momentum,
and you can bet Google (NASDAQ: GOOG ) tablets will be right on Apples heels
thanks to this weeks massive buyout of Motorola Mobility and patents for its
mobile devices. Related: Can Google and Motorola topple Apple? The blessing and
the curse of technology is that it changes so fast. Just as Dell was in the
right place at the right time with its business model in the early 90s and rode
its success to meteoric heights, it might be ill-equipped for todays corporate
and consumer tech marketplace. Maybe todays selloff and the disappointing
forecast arent the beginning of the end, and Dell can turn it around. But the
tech sector isnt going to give the company a decade or two to sort things out.
Dell has to turn things around in a hurry if it wants to prevent todays decline
from becoming part of an unfortunate long-term trend. Jeff Reeves is the editor
of InvestorPlace.com. Follow him on Twitter via @JeffReevesIP and become a fan
of InvestorPlace on Facebook .