Dell Inc. (DELL): Do Tesla Motors Inc (TSLA)’s Security Problems Pose Risks?

IBM did see a bit of a revenue drop last year, a 2.25% slip to $104 billion . Still, operational cash control was quite good, since the company was able to get profits to tick up 4.7% to $16.6 billion in 2012 from 2011’s $15.8 billion income number . And even when a company like IBM sees a slight revenue slip, it doesn’t start taking digs at Tesla.

Putting it all together
Tesla is and will continue to be a technology company. Its ability to navigate a risky environment of security issues is something that Dell and IBM are very familiar with. What will be interesting to see is if Tesla someday exits the consumer “hardware” business like IBM has and Dell will likely do. To see the allure of such a shift, look at the margins: Dell’s product gross margin in its last fiscal year was 18%, versus the 33.8% margin for software and services, for a total of 21.4% across the entire company . IBM, in comparison, recorded a 51.8% gross margin for 2012 with a whopping 90.6% in its software business.

What would Tesla look like as a company that doesn’t actually make cars? Well, the company already has 504 patents — or patents that have been applied for — many of them for battery-related engineering . Tesla already licenses technology and sells powertrain components to other car companies, making $27 million in 2012 revenue for what it calls “development services” for Daimler AG and Toyota . The company could come to the conclusion that its ability to engineer automotive battery technology could be worth more than manufacturing cars. In the end, while the software portion of Tesla’s technology can have glaring and scary security holes, building cars might be the even tougher business.

The article Do Tesla’s Security Problems Pose Risks? originally appeared on Fool.com and is written by Daniel Cawrey.

Daniel Cawrey has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of International Business Machines (NYSE:IBM) and Tesla Motors.

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