Dell has been suffering through some tough times. It has gotten outplayed at its own game at the low-end as competitors such as IBM and HP – and now Sun – have been eating into its business. And, according to analysts, it has been ousted as the leader in PC sales by HP, which now sits atop that heap.

Though Dell beat earnings estimates with its most recent financial numbers, it still reported a significant drop in profits, bringing in $673 million in the fourth quarter, compared to $1 billion during the same quarter a year earlier. What’s more, the computer maker is the subject of an accounting investigation by the Securities and Exchange Commission.

Founder Michael Dell returned to the helm of the company in January, replacing Kevin Rollins who had assumed the CEO position in 2004. Dell’s board said Michael Dell’s leadership would be critical to turning Dell around.

Last week, news reports broke detailing a memo that Michael Dell sent to his 78,000 employees on April 25. In the memo, Dell talks about “profound changes” and “well thought-out risks.” He also alludes to possible acquisitions and even suggests that the direct sales model he built the company on may be on its way out.

“The direct model has been a revolution, but is not a religion,” Dell wrote. The bottom line is that sales productivity at Dell needs to be improved, he says.

Dell already is the in the process of change. It launched its company overhaul, dubbed Dell 2.0 last year. More recently, it announced it would start selling Ubuntu Linux on its PCs.

What do you think Dell needs to do to turn itself around? What technologies or companies would it make sense for Dell to acquire? Should Dell scrap its direct sales model? Let me know.