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Technology Stocks : Dell Technologies Inc.

DELL 133.20

+5.7%

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To: kemble s. matter who wrote (72314)	10/27/1998 4:18:00 PM
From: stockman_scott	Read Replies (1) of 176387

**** Here are some insights from Michael Dell. This is a continuation of my report on my trip to Chicago (please see my post from last night -- #74713). Michael Dell's talk last Friday (10/23/98) was called "NETSPEED: The Supercharged Effect of the Internet." He spoke to over 1400 executives that attended The Executives' Club of Chicago lunch conference. I was fortunate to sit at a DELL table right up in the front of the ballroom. Michael was introduced by Arthur Martinez (Chairman and CEO of Sears). Mr. Martinez said that Michael had accomplished what no other S&P 500 company CEO had accomplished -- an ability to grow sales and earnings over 40% in each of the last three years. The internet clearly helped to facilitate this and Michael focused his talk on the DELL business model and the power of the internet. Here are some of my notes from what Michael Dell said last Friday: -"Buying a computer from DELL is more than a purchase...it's the beginning of a long term relationship." -DELL focuses on continuous re-invention in order to pioneer new standards in the computer industry. They constantly seek to question conventional wisdom and this has paid off in a big way. -The internet has had a profound effect on companies in many industries and on DELL. -The internet allows the value-add to be defined in some exciting new ways. -"The internet is an integral part of the entire corporate strategy at DELL Computer Corporation." -The internet has allowed DELL to create powerful real-time linkages with suppliers, manufacturers, and customers -- this provides DELL with a competitive advantage in the industry. DELL has successfully created "information partnerships" and this is transforming how value is created. -Online commerce is a major growth area for DELL. Two years ago DELL did very little business online and now they are selling more than $6 million/day from their website. In mid-November when quarterly results are released DELL expects to reveal record performance for their online commerce efforts. -In the last 12 months DELL had over 100 million visitors come to their website (http://www.dell.com). Twenty percent of the visitors come for service and support. Great economic value has been generated for all stakeholders by reducing the cost of transactions. The internet has helped facilitate this. -Every year DELL is becoming more and more efficient. They currently are developing real-time manufacturing and inventory control. DELL will soon have almost 90% of their suppliers hooked up into an online network. They are moving to "real time delivery of inventory" from major suppliers. -Here are some facts from a slide that compared DELL and Compaq: Firm/ Inventory Turns/ ROIC/ Growth DELL 46 217% 54% CPQ 13 -17% 6% -Quick access to high quality information is essential for customers. DELL has successfully rolled out "Premier Pages" for their larger clients that buy direct from DELL. The "Premier Pages" are customized versions or the DELL.com website and they are secure pages with all of the client's essential information. Large DELL clients like Shell, Ford, Sprint, and Bayer have saved millions in procurement costs by ordering and configuring products online. -"The internet is changing the way profits will be made and lost in almost every industry." -DELL is using the internet to add value to their partner and supplier operations. DELL is also able to make everyone more accountable--due to the real-time access of high quality information. -In this new information age DELL is trying to successfully blend their operations with their customers and their partners -- Michael DELL calls this virtual integration. DELL is effectively treating customers and suppliers as information partners. The company is constantly seeking to form deeper partnerships with all parties that they deal with. This will enhance efficiency and promote loyalty. -Recently DELL has started to use the internet to form collaborative R&D partnerships in order to speed the time to market. -DELL has also set up various online and offline forums to share some of their best tools with their leading customers. -DELL has hired about 8000 new people in the last 12 months. Attracting, motivating, and retaining top talent is a continuous challenge for top management. Intellectual captial has provided DELL with a competitive advantage. DELL segments its businesses as it grows and seeks to focus on providing a great customer experience. -"The internet is disrupting many existing businesses and creating massive new opportunities." -Many competitors are trying to successfully grasp onto one element of the DELL business model. "It's the integration of all of the pieces of the model that really drives value." -------------------------------------------------------------- The Bottom Line: Michael's lecture was outstanding. He also effectively addressed all of the audience questions and proved to me that he is focusing like a laser beam to make sure that DELL IS THE NEXT DELL!! -Scott

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