From the DELL thread.... To: grogger (0 )
From: Alohal
Saturday, Nov 13 1999 12:51AM ET
Reply # of 147394
From Jim Seymour @ TSC
Dell's (DELL:Nasdaq) 18-cent quarter, reported Thursday,
was far stronger than that quarterly-profit number suggests.
Third-quarter sales grew 41%, and profits were up 42% year
over year. The stock got a little kick in after-hours trading
Thursday, but ebbed Friday about 5% to a little over 41.
But the low 40s are not where this stock would be valued in
a rational world.
The real problem? Dell is always lumped in with its peers,
though it's increasingly difficult to call its traditional
competitors, strugglers like Compaq (CPQ:NYSE), its peers
because it keeps trouncing them, quarter after quarter.
Dell has become a singular company, not easily compared
to any other PC maker. But if the trading public keeps
seeing Dell as part of that crowd, it's going to keep valuing
the company way below realistic levels.
I think Dell is headed for a bang-up quarter going into 2000.
It has calmed its customers on Y2K issues (though many of
those customers still haven't yet resumed their traditional
rate of PC upgrades, and won't for another couple of
months, as they watch to make sure they haven't hit any
unanticipated Y2K problems).
It has an almost-perfect product lineup now, hobbled only by
supplier-related delays in rolling out its new, high-style
WebPC machine, which is going to be a big, big seller (as
is, probably, Compaq's iPaq, introduced this week but also
not yet delivered).
And the growth of Dell's Web-site-based sales is nothing
short of phenomenal -- now up to more than $35 million a
day, about 43% of total sales. (That said, we have to
remember the little secret of Dell's claims for Web sales:
Those aren't all sales made on the Web -- that is,
completed on the Web -- but rather, sales in which the
customer started on the Web, poked and fiddled around,
decided what he or she wanted, then, in many cases, called
one of Dell's 800 numbers to actually buy the computer. Fair
to call those "Web sales"? I think so. But not nearly such an
impressive story, eh?)
I think we're going to see a slew of analyst upgrades on Dell
over the next few weeks, with a corresponding rise in its
share price. Add in the robust market close to 1999 that I
see coming; plus foreign money coming into the U.S.
market, seeking security from local Y2K problems, plus the
January effect, and I think Dell could double very shortly.
I don't think the company can resume its traditional,
stratospheric growth-and-split rate -- those days are
probably over -- but it doesn't have to in order to restore its
star status among investors.
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