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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (70685)11/17/1999 9:22:00 PM
From: jim kelley  Read Replies (1) of 132070
 
Michael,

DELL did say that they should not be affected by the Taiwanese situation. Apparently, they were not. They were
affected by the tight supply of LCD's and by the 150% increase in the cost of DRAM during the quarter. Both of the latter events were happening before the Taiwan earthquake.

Meredith said he expected the sudden 25% increase in DRAM prices in early October(apparently from Micron) to impact about 30 to 35% of their quarterly shipments. Extrapolating from what he said, the inference was DELL would take a 75 M hit on the earnings side. Actually, it looks like they took a 60 M hit to earnings.

So aside from your other issue of " management hubris", DELL does appear to have been lying.

I have not looked at the receivables yet, but here is a speculation: DELL is having to give terms on sales to the medium and large corporations on such things as servers and storage systems. The corporations are not used to having to pay in advance for their purchases!

DELL is looking very good compared to SUNW, GTW and CPQ. <g>
I believe that SUNW has a PE of about 90 on revenue growth off 20 to 25% including subsatnbtial acquisitions. Now GTW's PE exceeds DELL's PE despite annual growth rate of about 30% including acquisitions. DELL's PE prices them at about next years earnings.

So DELL looks fairly priced but the market is currently nuts as far as many other stocks are concerned.

Regards,

Jim Kelley
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