Throw This Stock Away: Dell Inc. (DELL), Google Inc (GOOG), Cisco Systems, Inc. (CSCO)

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The house rules are simple in this brutal column.

I bash a stock that I think is heading lower. I offset the sting by recommending three stocks as portfolio replacements.

Who gets tossed out this week? Come on down, Dell Inc. (NASDAQ:DELL).

PCs aren’t politically correct
It’s been nearly four years since Dell was the subject of this column.

The mother of all rallies has taken place in those 45 months. Many tech bellwethers have doubled or tripled in that time, but Dell hasn’t gone along for the ride. It was trading in the low teens then. It’s trading in the low teens now.

Dell Inc. (NASDAQ:DELL)There’s plenty of buzz surrounding Dell these days, but it has nothing to do with the struggling PC maker’s actual growth prospects. Dell Inc. (NASDAQ:DELL) is one of the few tech companies where analysts see revenue declining both this year and again in 2014. Dell has missed the boat on “good enough” computing, and it’s not as if even a crash course in tablets and smartphones would ever make Dell as popular as it was when costly desktops and laptops ruled the roost.

No, the Dell buzz these days is all about how it can be gutted.

Founder Michael Dell was hoping to quietly take the company private, putting public shareholders out of their misery. Dell has spent the past few years acquiring companies that will help the company provide end-to-end solutions, and that’s just not the kind of vision that plays out to Wall Street’s desire for results-driven performance quarter after quarter.

However, Carl Icahn has crashed the party, and he’s come with a wrecking ball.

The plan to take the company private in a $24.2 billion deal didn’t sit well with Icahn, and he feels that the fallen tech giant could do better than that. Instead of letting Dell try to fix itself behind the curtain of public scrutiny — which is really the only shot it has at a turnaround — Icahn wants Dell Inc. (NASDAQ:DELL) to take on enough debt to pay a $9 a share dividend.

If Dell’s struggling now, just imagine how constrained it will be as a leveraged dinosaur.

The market is mesmerized by Icahn at the moment. Why take $13.65 a share when it can grab a $9 payout in a few months? The stock has shot well past the proposed takeout price, even though one can only imagine how Dell’s empire will come undone if it ever did have to shell out that kind of distribution on borrowed money. The interest payments will swallow the thinning profitability until its assets are worth less than its debt.

Poof! You’ve seen this vanishing act before.

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