Dell Computer Rises as Some Optimism for PC Business Returns
<<Round Rock, Texas, July 9 (Bloomberg) -- Dell Computer Corp. shares rose as much as 6.1 percent amid optimism that the No. 1 direct seller of personal computers will prosper even as prices fall and more PC companies offer machines for free.
Dell rose 2 1/4 to 42 3/16 in midafternoon trading of 34.6 million shares, making it the most active stock in U.S. markets. Earlier, it touched 42 3/8, the highest since May 18, when Round Rock, Texas-based Dell reported fiscal first-quarter results that disappointed many investors.
Since then, analysts have been concerned about whether Dell will be able to keep up growth rates of close to 50 percent as PC prices fall to less than $500. Now, forecasts of strong PC demand and speculation that Dell will continue taking sales from its competitors have revived the company's stock.
''Dell is still tearing up the track,'' said Lou Mazzucchelli, an analyst at Gerard Klauer Mattison & Co., who rates Dell ''buy.'' ''The stock has been under-loved.''
In the first fiscal quarter, Dell's sales increased 41 percent, less than the year-earlier increase of 51 percent and slower than the 54 percent growth rate Dell averaged in the previous eight quarters. In the wake of that report, Dell shares fell as low as 31 3/8 on June 2.
A week later, market-research firm International Data Corp. said global shipments of personal computers were expected to rise 21.3 percent in the second quarter from a year earlier, up from an earlier forecast for 16.5 percent growth.
Moreover, Dell may dodge much of the price cutting because it caters to businesses and more sophisticated consumers, avoiding the entry-level market, where the competition is most intense.
Dell's least expensive computer sells for $899, compared with $500 for upstart emachines Inc. Others are giving machines away when customers sign up for Internet service.
Jul/09/1999 14:11
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