Interesting press release on Dell. Probably not a big deal, but one of the first ones I can recall where the picture painted was anything less then rosy.
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Tuesday June 9, 10:19 pm Eastern Time
Dell Computer cites growth, looks for cost savings
MINNEAPOLIS, June 9 (Reuters) - After several years of expansion and strong growth, direct computer marketer Dell Computer Corp. (DELL - news) said Tuesday it was looking for ways to cut costs and streamline its business.
Vice president of finance Jim Schneider said that while the company did not have a specific savings goal, inefficiencies were bound to be present after broad expansion.
''We're trying to pay more attention to places where we can be more efficient.... We believe those kinds of efforts should lead to cost improvements,'' Schneider told reporters after a presentation at a Piper Jaffray investors conference here.
''When you are growing at 50 percent a year, it would be pretty hard to say you are on top of all of your cost structures,'' he added.
Dell posted revenues of $12.3 billion for the year ended February 1, 1998. Two years earlier, for the year ended January 28, 1996, revenues were $5.3 billion.
Dell is changing its manufacturing process so it can produce more computers in the same factory space. In addition, the Internet allows for lower-cost sales and customer service, and Dell said it hopes to get half its revenue from Internet sales by the year 2000.
Dell said it could then pass cost savings along to customers.
''That can continue to drive a very aggressive value offering in the marketplace and fuel our top-line growth,'' said Don Collis, vice president of investor relations. ''That has really been the strategy we have followed since day one.''
Dell executives declined to comment on analysts' estimates for future earnings. In its fiscal first quarter, the Round Rock, Texas-based company earned $305 million, up 54 percent from a year earlier, on a sales gain of 52 percent.
As a direct marketer, Dell makes its computers to order and moves its inventories quickly. As component prices fall, Dell can trim product prices accordingly because it has essentially no inventory on hand.
''We think, if anything, the advantages Dell has had over our competitors are sustainable, and we think we may be in a position to deepen that position over some of our competitors,'' Schneider said in his presentation.
Schneider said the company would continue to focus on the high-end computer market for its corporate clients. But he said individuals can buy a stripped-down computer for about $1,000.
''We don't see that corporate buyers really want that technology at this point,'' he added.
While the company has significant cash flow, it is not looking for an acquisition at this point, Schneider said. In the past it has repurchased shares and currently has options contracts to buy about 40 million shares at around $40 a share.
Shares of Dell were trading up $1.19 at $84.875.
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