Dell's (DELL) turnaround: More retail laptops

I've been keeping a keen eye on Dell, Inc. (NASDAQ: DELL) for quite a while, and the recent admission from the company about its internal financial accounting problems was long, long overdue. All things considered, the $150 million revenue restatement that spanned almost five years was a pittance compared to much larger accounting scandals the world has seen from other public companies. But that news overshadowed Dell's larger problem that is still in flux -- how to re-ignite growth.

It's true that the company surprised the market with a quarterly profit that was higher than expected and this was a good thing for the company. Did Dell all of a sudden have a great sales quarter? Not really, as much of that profit came from cost cutting under returning CEO Michael Dell along with server sales in the corporate sector -- a mainstay for Dell. But competitor Hewlett-Packard Co. (NYSE: HPQ) is still killing it in many categories where both companies operate.

For years, I've been of the opinion that Dell should re-enter the retail store consumer space with slick and elegant notebook PCs way back. It's corporate sales won't keep HP-like growth going, but if Dell can get its butt in gear and get its new and colorful laptop PCs on retail shelves, it may stand a chance. Dell's "direct only" model is still good but it's not the only leg the company needs to grow, and it knows this.

The retail experiment with selling excess and older Dimension desktop systems to Wal-Mart to gain a retail presence is a good start, but there is much more. Yes, Dell is making progress, but it could be making so much more with a full lineup of cutting-edge and price-sensitive laptop systems in many large U.S. retailers. Otherwise, HP and Taiwan's Acer will continue to eat its lunch in terms of consumer market share and shipment growth throughout 2008.