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Dear Mr. Berko:

A.P., Waukegan, Ill.

Dear A.P.:

I’ve always imagined a “dell” to be a small, secluded, wooded valley with a tiny stream running through, surrounded by trees and turf and a place of rest for farmers after a demanding day in the field. In 1984, a high-tech company from Round Rock, Texas, making desktops, personal computers, workstations, networking products, laptops, storage solutions, disk and tape backup systems and related software, trashed my bucolic and romantic image.

Since then, this iconoclastic technology company has put a computer in almost every farmer’s home and in nearly every corporate cubicle, library, school system and home in the U.S. of A. This year, Dell Inc. (DELL-$24.15) expects to sell some $64 billion to $65 billion of “stuff & things,” software and peripherals, servers, networks, desktops and PCs. And this year, the company also expects its low, single-digit revenue growth to segue into its 10th consecutive year of declining net profit margins as well as a significant deterioration of its return on equity.

Dell will now try to reduce its expenses by at least $3 billion. So management will close some factories in Texas, adjust product design, tweak its current business plan to lower costs, lay off some 8,000 employees and sell some of its receivables financing. Efforts to boost top-line growth and lower costs will be halfhearted and may be only marginally successful. That’s not going to be enough to compete with Apple Inc. (AAPL-$181.61).

Each of DELL’s 88,000 workers produces about $750,000 in annual revenues and contributes some $37,000 to the company’s bottom line. Meanwhile, each of APPL’s 23,000 employees produces about $1.6 million in revenues and contributes $200,000 to the bottom line. For every dollar of sales, APPL nets 15 cents while DELL nets just a niggardly nickel.

Apple is getting enormous help from, of all people, Microsoft Corp. (MSFT-$27.71), another listless, go-nowhere, Rust Belt tech company. Vista, MSFT’s latest version of its Windows operating system, is a bust that should bite the dust and may turn out to be one of the biggest missteps in software history. That may be one reason AAPL expects a sizeable increase (30 percent) in second-quarter revenues even in this recession economy.

The corporate market is becoming an Apple market as employees are requesting permission to use the Mac. AAPL is perceived as a cool company; DELL comes across as a grandfather clock with arthritis. Apple’s iPhone sales are sizzling, the iPod digital music player is going gangbusters and Apple retail stores are exposing a new generation of consumers to the enormous breadth of the product line. There’s great opportunity for AAPL to expand overseas, where its growth has been anemic but where it intends to generate new business.

AAPL’s net profit margins have almost tripled in the past decade to an expected 15 percent this year, while return on capital and return on equity have improved enormously. In the past 10 years, the stock has split 2-for-1 twice, increased in value over 20-fold, and talk is that AAPL might split 2-for-1 later this year.

The choice is an easy one.

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