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Back in the world of hardware sales, Ashok Kumar of Piper Jaffray has again caused a message-board
stir, suggesting, ahead of the company's Feb. 16 earnings report, that Dell is not growing as fast as its
competitors. Measured by sequential unit growth, Kumar says, Dell is lagging its peers for the second
straight calendar-year quarter. He says Dell's worldwide market share dropped from 9.2% in the third
quarter to 8.5% in the fourth quarter.
Kumar's analysis runs counter to those recently offered by research firms IDC and Dataquest. IDC
figures, which are presented in a year-over-year format, show Dell's shipments growing at 56% for the
quarter. Compaq registered 17% growth and IBM (IBM), 14%.
And other equity analysts don't seem as concerned as Kumar. "I would tend to believe the IDC figures
that suggest that their revenue looks pretty good," says Mazzucchelli.
Dell stock is down 7% over the last two days, amid concerns over chip-price wars and widespread
technology-stock dumping. But shares are still up more than 30% in 1999. Even Kumar, who maintains
a Buy rating on the stock, admits that it's not hard to justify owning Dell.
"[Money managers] are at odds, because if they take their money out of Dell, where do they put it?" he
explains. Still, he thinks investors should remember that Dell's success is based on execution and not
on a proprietary product. Such a model, he says, requires slightly more skepticism than Dell buyers
are exhibiting.
All the more reason, perhaps, to leverage the model and diversify the product mix.
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