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Technology Stocks : Dell Technologies Inc.

DELL 138.94

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Dec 5 9:30 AM EST

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To: Patrick E.McDaniel who wrote (53697)	7/23/1998 11:48:00 PM
From: jim kelley	Read Replies (4) of 176387

Patrick, If GTW was run by DELL their profits would have been more than double what they reported. In summary relative to Dell: "1.ASP declines were not as severe as may be expected." 2.4% sequentially 2".GTW's performance in Europe was like a Ken Starr appearance at a DNC fundraiser!" It is clear that GTW does not have European manufacturing. Just look at their tax rate of 36%. 3."GTW hasn't discovered Central/South America.(lets keep this our little secret)" They also have not discovered the eastern Bloc countries and China and India. 4."Gross margins were trending up." The margin improvements may be due in part to their ALR operations. 5."Portable sales are trending up." The Solo looks like a credible high end notebook. This could also explain their improved margins. 6."Dell's timing in this quarter is building momentum and does not include the weakest quarter GTW had." GTW started its underware program in late May so that it probably increased costs more than it improved sales for the quarter. 7."GTW does not comment on server sales.I did not see specific comments on the GTW report commenting on their server sales. I wonder why!!!! Dell has been growing server sales and thus improving margins." The ALR server offering is basically end of life with the new 4 and 8 way server standard from Intel. 8."Missing from the GTW report were comments on Internet sales. Can you wonder why? " GTW store approach to sales is not cost efficient. Their operating expenses were 100 Million dollars more than DELL's would have been for the same sales. So what have we learned about the approaching DELL report? Expect DELL consumer sales to be up more than GTW. Expect DELL notebook sales to be up. Expect Japan sales to be up. Expect China sales to be up. Expect European sales to be up. Tax rate should remain at 30%. Margins should be up due to sales of servers and notebooks. Unit sales up due to incremental consumer desktop an notebook sales. May sales in the US of consumer products was relatively weak for DELL but this is offset by strong June and July sales due to Windows 98. ASP may be slightly down say 1-2 % due to increased consumer sales. In conclusion, GTW does not have the same business model as DELL and it does not address the same markets. Moreover, it has not demonstrated the capacity to grow its revenues or profits at anywhere near DELL's rate. GTW is a survivalist company. It will not prosper like DELL. It is worth about $20 to $25 per share currently. This estimate is based on using the same method of valuation as I use on DELL. Also, it is owned only 30% by institutions. JMO Jim Kelley

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