.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:

Dear H.L.:

Founded way back in 1984 by several farmers in a small secluded valley, Dell Inc. (DELL – $14.19) has become a leading global computer system and service company, with 81,000 employees and $51 billion in revenues. Now, I like DELL. I like its PCs. I like its advertising. I even like and admire Michael Dell, who, at the age of 19, quit the University of Texas, borrowed a bundle from a skeptical grandfather and a year later (despite a number of setbacks) became the most profitable PC manufacturer in the galaxy.

Needless to say, Grandpa Dell’s loan was repaid, and Mike threw in a few shares of DELL as a bonus.

Now, though I admire the company and CEO Michael, I would not care to own the stock. I believe that the bloom is off the rose, and that the PC market is involved in a challenging struggle for the foreseeable future. DELL is losing market share to Hewlett-Packard, Acer, Lenovo and to a very innovative, aggressive Apple. Prices continue to decline, and DELL’s margins are falling like big hairy coconuts from tall palm trees.

In the past decade, operating margins have stumbled 40 percent, return on capital has tumbled 50 percent, and the share price plunged to $8 in early January 2009 from the $50 level. Meanwhile, Cisco Systems and Hewlett-Packard are much better positioned to meet the demand for high-blade servers, which is driven by cloud computing and rapid adoption of server virtualization technologies. Acquisitions could generate growth in these areas, and DELL certainly has the necessary war chest, but Mike and the board seem reluctant to make such moves.

Meanwhile, I’m skeptical of the touted synergies in DELL’s purchase of Perot Systems, and I, as well as other observers, believe that the company may have overpaid for its purchase. However, this acquisition does give DELL a business processing arm with a solid and (hopefully) profitable client base.

In 2010, the Street expects revenues to improve about 4 percent to $53 billion with earnings to reach $1.05 per share from a very depressed 80 cents in 2009. However, at 14 times 2010 earnings, I believe DELL is fully valued.

Wells Fargo’s ultra-short-term municipal income fund (SMUAX – $4.81) doesn’t scramble my eggs. Compared to the benchmark Barclays Capital one-year municipal bond index, the Wells boys have a little roadwork to do. SMUAX’s one-, five- and 10-year performance numbers are 3.35 percent, 2.68 percent and 2.89 percent, respectively.

Still, I like your broker’s conceptual recommendation, just not his choice of funds. Certainly a one-year 2.69 percent free return is a better alternative than a five-year certificate of deposit paying 2.75 percent.

Tell your broker to peek at some of the short-term municipal bond funds offered by Vanguard. For example, Vanguard Short-Term Tax-Exempt (VWSTX – $15.92) has a one-year average return of 3.30 percent and five- and 10-year average returns of 3.19 percent and 3.18 percent.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service