didn't see dell thread post this:
COMPANY NEWS (sm) provided by Dow Jones Online News
Symbol Searched: DELL
6/2/98 Dell Finance Chief Downplays Concerns About Falling PC
Prices
NEW YORK -(Dow Jones)- Fast-growing Dell Computer Corp.'s
finance chief, Thomas J. Meredith, Tuesday sought to ease
investors' fears about falling PC prices. "There's nothing to be
frightened about," Meredith said of the drop in Dell's average
selling price in the company's first-quarter results.
Meredith addressed a group at an investors' conference in New
York. Concerns about Dell's slight decrease in PC selling prices
and its valuation have contributed to a decline in its share
price since the first-quarter report was released May 19.
The stock (DELL) closed that day at $94.594, but has since
dropped 17% to $78.313 at Monday's close. At the close, the
shares were up $4.313, or 5.5%, at $82.625 on volume of 23.7
million shares. Average daily turnover is 16.6 million.
Meredith said the recent price wars between International
Business Machines Corp. (IBM) and Compaq Computer Corp. (CPQ)
"eventually" will work out, resulting in the top five PC makers
gaining a larger portion of the overall consumer market. He
noted that right now, the top five PC vendors control only about
half of the total market, but that is changing.
In his bullish comments, Meredith also seemed to address
investor concerns about Dell's valuation. He noted that Dell has
grown by more than 40% a year for five years and asserted that
Dell is trading "at a discount" to companies with comparable
growth, such as retailer Home Depot Inc. (HD).
Meredith flirted with the idea that Dell will meet analysts'
expectations of hitting $17 billion in revenue this year, up
from more than $12 billion last year. "We'll see how that plays
out," Meredith said.
Also, Meredith said Intel Corp.'s (INTC) decision to delay
introducing its own Merced chip until 2000 could work out to
Dell's advantage.
"For Dell, it's not a significant aspect," he said. "It will
give us a chance to learn about the high end of the market for
six months more."
Dell will perhaps address a sub-$1,000 computer when Intel
introduces its second-generation chip for that market, which is
code-named Mendocino.
Dell, based in Round Rock, Texas, is a direct seller of
personal computers noted for efficient production and low
prices. The company again blew by its competitors in the first
quarter, continuing the tremendous sales and profit growth that
had pushed its stock to lofty levels. In revenue, the company
passed IBM's PC division to become the world's second-largest PC
seller. Dell's revenue grew 52% to $3.92 billion.
Its top competitors - Compaq, IBM and Hewlett-Packard Co. -
are trying to streamline themselves to match Dell's
build-to-order and direct-selling efficiencies.
But Dell isn't immune from trouble. The company stumbled
before, during a period of hypergrowth in 1993. At that time,
sales were more than doubling but the company botched a move
into the retail market, had troubles overseas and misjudged
demand in notebook PCs, which forced it to leave that business
for a year while it redesigned products. It has fixed those
problems and become the industry leader in keeping costs down.
Separately, the Commerce Department said Dell's German unit
will pay a $3,000 civil penalty for two alleged violations of
the White House provisions that forbid companies from indirectly
helping promote certain boycotts.
The Commerce Department alleged the unit, in a transaction
involving a sale to Saudi Arabia, furnished information
regarding its business dealings with Israel. The department also
alleged the company failed to report its receipt of the request
for the information it furnished.
The Commerce Department said Dell voluntarily disclosed the
alleged violations. While neither admitting nor denying the
allegations, the company agreed to pay the penalty.
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